The Retired Investor: Can Neighborhood Ice Cream Man Keep Trucking?

The demise of the neighborhood ice cream truck business has been predicted several times over the years. Higher costs, new delivery methods, and lots of competition from grocery stores and other sources threaten the business. But don't count them out quite yet.

 

Earlier this summer, The New York Times published an article, "Melting Profits Threaten the Ice Cream Man," which prompted me to delve a little deeper into this business on the local level.

 

Nationally, most ice cream vendors are individual entrepreneurs who lease their trucks from a regional company on a yearly basis. Many lessees also buy their ice cream products from the same company. They are on the hook for all their costs, and in an inflationary environment like we are in now, those costs could sink an inexperienced vendor in a competitive market such as New York City.

 

The internet and a variety of takeout apps have increased competition to the street tucks. Walmart sells any number of Good Humor products and ice cream parlors promise not only designer ice cream but all sorts of exotic experiences. Illegal street vendors and food carts also provide alternatives, and more often than not, can undercut prices charged by the trucks.

 

Selling ice cream on the street has been around in American urban centers since before pasteurization was invented. In 1904, the ice cream cone was introduced at the St. Louis World Fair. In the 1920s, Harry Burt of Youngstown, Ohio, developed a smooth chocolate coating over ice cream that was eaten on a stick like a lollypop called a Good Humor Bar. Burt purchased 12 refrigerated trucks in 1922 so that he could distribute his new ice cream bars throughout the neighborhoods. The company expanded its truck fleet, especially after World War II, when ice cream production boomed. However, the competitive landscape began to change.

 

During the 1950s, when I was a kid back in Philadelphia, the Good Humor refrigerated truck was a fixture on my block.  Several times a week, a white-shirted driver opened his rear door and for 25 cents presented me with my favorite, the original chocolate-covered ice cream bar.

 

In 1956, competition came to my Philadelphia neighborhood. A new ice cream truck entry, Mister Softee (founded by two brothers in my hometown), arrived complete with a fantastic new kind of soft serve ice cream. The arrival of this new sweet treat vehicle was preceded by the enticing sounds of a catchy tune that could be heard several blocks away.

 

In my neighborhood of row homes, kids (and many parents) listening for the approach of this new Pied Piper of ice cream, would line up. Everyone had enough change jingling in our pockets to sample these afternoon delights, covered in multi-colored candy sprinkles, and all sorts of wonderful toppings on many a hot summer day.

 

The Good Humor company finally sold off its truck fleet in the 1970s, preferring instead to concentrate on distribution of its ice cream products to grocery stores and other sales avenues. Unilever purchased the company in 1989. Mister Softee trucks are still plying the streets. However, as time goes by, ice cream trucks are becoming less and less common. But not in the Berkshires.

 

Several days a week this summer, while I was day trading the markets, the dulcet tones of the "Theme from The Godfather" drifted up through my windows. In the street below, a white Mr. Ding-A-Ling truck drives slowly by on his usual route.

 

It is one of a fleet of 66 trucks owned and then leased to independent operators by Brian Collis, the 70-year-old owner of Ding-A-Ling Inc., a family business, established in 1972. Headquartered outside of Albany, N.Y., the company distributes ice cream products, which he buys from the Good Humor company. His trucks roam territories within a 150-mile radius, which includes parts of Vermont, Massachusetts and New York. Three of his trucks service the Berkshires, including Lenox, Lee, Great Barrington, North Adams, and Pittsfield.

 

"It is a steady business and fairly predictable," Collis said. He laughs at the dire predictions of his imminent demise. "Back in 2012, when gas prices were $4.29 a gallon, there were predictions that we would suffer and some ice cream trucks would be run out of business, but that never happened."

 

He admitted that ice cream costs, like everything else, have risen, but so far customers seem to accept the higher prices. As for the independent operators who lease the trucks and sell the ice cream, "I have a waiting list of drivers who want into the business."

 

I chased down one of his independent operators this week. Notebook in hand, I simply followed the "Godfather" music. Ding-A-Ling operator, Richard Rockefeller just turned 59, and has been serving the same route for the last 15 years, working seven days a week. "I have built up a lot of repeat customers over the years," the gray-bearded, neon, T-shirt-clad entrepreneur reminisced. "Pregnant mothers were customers back then, and now their children are customers, too. Just seeing these kids grow up and the joy on their faces when I come around, well … ."

 

Inflation, he admits, has taken a heavy toll on his wallet. "I spend $210 a week on gas alone. You add in the lease on the truck, the local fees, background checks, etc. that I'm paying, plus everything else, and I need to make $120 per day just to break even."

 

But he's not singing the blues. "I make a good living, but it wasn't like that at first," he explained. Starting out years ago, he had to learn where and when to find repeat customers and then stick to a predictable schedule to build his client base. "Sometimes, when I have a party to serve, I get holy hell from my customers when I don't show up."

 

I asked what keeps him driving and showing up day after day. "Three words," he answered, it's fun, enjoyable, and it's a commitment." Sounds like a recipe for success in my opinion.

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.