Frozen-treat chains are taking advantage of the unseasonably warm weather that has occurred around the country the past four months, seeking not only to make hay while the sun is shining, but also to prepare for potential storms ahead.
The nation’s warm spell, particularly in the eastern half of the United States, has been notable for its breadth and duration. A total count of cities’ record daily temperatures tallied by the National Climatic Data Center from just March 9 to March 19 exceeded 4,300, according to a report from The Weather Channel.
The favorable weather has been a springboard for Florence, Ky.-based Kona Ice, a franchised chain of trucks selling shaved ice, said founder and president Tony Lamb.
“This year, [the weather] has made a two-month difference in when I can start operating,” Lamb said. “We’re up tremendously.”
For the month of March, Kona Ice is running a 50-percent increase in sales across its 242 trucks in 40 states, Lamb said. His three company-owned trucks in Florence, a suburb of Cincinnati, are up 130 percent, he said, and many franchisees in markets from New Hampshire to North Carolina are up well above 50 percent.
The seasonable climate is helping Kona Ice put away some extra income, as well as earn back some lost revenue from previous bad weather, Lamb said.
“We’re a weather-dependent company, and to some degree we feel blessed and cursed,” he said. “Last year, when a major hurricane came through, we had 10 franchised units in North Carolina struggle for 30 days, but now we’re all up a lot. We’re filling coffers that were empty from adverse weather before.”
Dairy Queen has felt the benefit of better weather even longer, going back to November, said chief operating officer Troy Bader. While he declined to quantify the lift in business at Dairy Queen’s approximately 5,000 locations in North America, he said the “phenomenal” weather has had a “very favorable impact on sales and traffic.”
“In November through February, both food and treat sales were way up, and food actually was impacted more,” he said. “Now, going into March, with the weather and our buy-one-get-one offer for the Blizzard, the sales mix for treats is up much more dramatically.”
The Blizzard deal — which lets customers who purchase a treat buy another Blizzard for 99 cents — as well as the reintroduction of Frozen Hot Chocolate planned for April, was planned far in advance of the change in weather, but is a favorable coincidence, Bader added.
Sales have also sprung this month for Rita’s Italian Ice, the Trevose, Pa.-based chain of more than 550 units in 18 states, said president Jonathan Fornaci.
For the week ended March 18, locations in Rita’s same-store sales base rang up average weekly sales of $8,720, a 49-percent increase compared with the same period a year earlier. The sales growth was more dramatic week to week. All Rita’s locations, including newly opened ones, averaged weekly per-unit sales of $8,597, a 90-percent increase over the $4,516 per-unit average for the week ended March 11.
The chain also gave away Tuesday 1.4 million cups of Italian ice for its annual first day of spring promotion. A national ad campaign, local marketing push and improved morale among Rita’s franchisees contributed, Fornaci said, “but the weather also has a huge impact, no ifs, ands or buts.”
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Putting certainty into the forecast
Such a significant weather benefit can’t last forever, and could make for difficult comparisons in 2013, so chains enjoying sales bumps now are reinvesting and saving to normalize the benefits. Kona Ice, Dairy Queen and Rita’s identified marketing investments as the way to sustain sales, whether through cause marketing, television advertising or local marketing.
Kona Ice is putting its extra money into its fundraising model, which the chain developed the last time it had a significant swing to the negative side, Lamb said. Because Kona’s margins allow it to be a constant local fundraiser — food costs and labor costs each hover between 6 percent and 8 percent — the brand has given back about 25 percent of operating profits to local schools, sports teams and charities, to ensure guest loyalty and frequency.
“We hadn’t been able to raise any money for the past two years for a spring baseball league near me, but I just talked to their director, and now they’re running more practices and making arrangements to travel to more tournaments,” Lamb said.
He also is investing corporate profits into a prototype for an indoor cart to sell shaved ice in schools, offices or sports complexes, giving the business another revenue stream for cold-weather months.
All but three of Dairy Queen’s locations are franchised, Bader said, “and our franchisees recognize they’re in a fortunate period and are wise with the increased dollars.”
“In the summer months, we could get rain, and those profits could get diminished,” Bader said. “They are conservative and preparing themselves well, either reinvesting in their local marketing or putting it away for that proverbial rainy day. [Dairy Queen] has some nice initiatives planned for the future, so the timing is good for them to have extra cash.”
Rita’s marketing changes were starting to get some sales traction already before the unseasonably warm March, Fornaci said, but the boosted sales should pump up the brand’s national marketing fund.
“From the corporate end, we’ll continue to reinvest in TV and will hire more field marketing support staff,” he said. “Our corporate staff still will focus on operations, but now we’ll mostly get focused on helping franchisees go into their community and do local-store marketing, getting connected with those Little League teams, while will generate more traffic.”