We had Lyle in town today and I grabbed him to go over a flavor cost experience we had at IAAPA this year. We have these conversations with people a lot, but we have not put it online until now.
We met up with one of our customers at IAAPA who had one of our stands and our block ice shaver. His stand is privately labeled and was not operating under the Snowie name. His initial concern was that his ice shaver was not putting out the same quality shaved ice as the block we were using in our booth at IAAPA. He asked us to visit his stand that night and take a look. We did so, and let me say, this visit was very educational.
His first problem was that his ice merchandiser was not maintaining its temperature. So we had to set it lower than desired in order to get a better freeze on the ice. This was a problem for him because his ice was coming out of the freezer tempered. We speak often about the importance of tempering your ice, but you must have the ability to temper to your desired temperature. If your ice is already tempered then you cannot make it colder. When your block of ice is extremely cold, it will make perfect, wonderful snow! It is harder to manage, but it is perfect. By harder to manager, I mean it will stick to the shaft, the topper, and will not pack to itself. The snow in this form is amazing, but in order to sell shaved ice more quickly, you must get the temperature of that block to the perfect place, where you have insanely soft snow but can manage it as well. This can occur when you have a block that is too cold to start with. You cannot do it if your freezer will not get the block colder than desired.
So, while he and I were fixing the temperature of the freezer, Carl, Gordon, and Lyle were trying the flavors in his stand.
As we returned to the building we could hear them discussing his flavors. They asked him, “why not use Snowie’s flavors?” He mentioned that we were simply too expensive, that there was a $20 gap between his supplier and Snowie. While they discussed this, I tried his flavors. Let me just say that they were not good.
It was educational for us to see how curious he was about how he could get his snow absolutely perfect, yet he flavored it with a cheap version of snow cone flavors.
At that moment, we discussed the math and why the difference in cost is almost nothing. I wish I was able to do a live broadcast on why premium flavors are absolutely necessary, especially when you break down the actual cost and find that it is nominal. For literally less than one penny per shaved ice, you can have your customers coming back again and again and even have them saying, “Wow!” Would you pay an extra penny for that? I would, all day long!
We often speak about the R&D we put into our flavors, but I am not sure that everyone picks up on that message. What that means is we simply put the very best ingredients go into our flavors and nothing less. We even have flavors that we lose money on because we know it is critical for your customers to buy shaved ice that is insanely delicious. By constantly improving our flavors, we can assure you and your customers that they will experience the best in snow cone flavors available.
So, want us to prove the penny? Make sure you watch the video, but I will spell out the Math here as well:
First, we took the comparison from this guy who said we were $20 more per gallon than his supplier.
The first thing we need to ask ourselves is, how far will your concentrate go?
First, if you are buying our concentrates by the pint, then for $50, you can buy five pints. If you buy that concentrate in a gallon form, you are getting 8 pints for the same $50, which is a 38% discount. This is our first piece of advice when trying to save money.
Now, let’s see how far that gallon will go. Your gallon of concentrate that cost you $48.71 will make you 32 gallons of flavor. That 32 gallons will make you 2048 8oz shaved ice using two ounces of flavor in each.
If you are selling those two ounce shaved ice for $3.00 each, you have now made $6144 from $48.71 That is quite the increase.
Now, lets calculate the cost difference between having Snowie’s premium flavors and a cheap alternative. Take that extra $20 and divide it by 2048. It is literally $0.01 for each shaved ice more. Are you willing to have people actually react to your flavors negatively over one cent per shaved ice?
Now, let’s calculate it the other direction and see how quickly we can recoup that extra $20 from gaining repeat customers by using Snowie Flavors.
On $3.00, lets lump every cost you have, (rent, labor, cogs, etc.) into that shaved ice and say you are going to make $2.00 profit on each shaved ice Your profit is higher than that, we are just simplifying the math. At that $2.00, you only need 10 people to come back and buy another to totally recoup that extra $20. That is 4/10 of 1% of your customers returning. Let’s say you even have 2% of your customers return, that is 40 customers giving you $80. That pays for your extra $20, plus it buys you another gallon and puts $10 in your pocket. That is if you are only getting 2% of your customers to return. But if they experience the Wow factor with your shaved ice flavors, that percentage will be much higher! Using Snowie Flavors does not cost you more money, it makes you more money. If you don’t believe us, try it out, you will be pleasantly surprised!