How to Start a Frozen Yogurt Stand

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Quick Reference

Frozen yogurt is a popular alternative to ice cream, and you find frozen yogurt stands in many malls and other shopping areas.  If you are looking for a business to start, having your own stand could be an opportunity for you to make a living and be your own boss.

Business Overview

A frozen yogurt stand offers various yogurt treats with all kinds of flavors and toppings available.  It may also offer a variety of beverage choices or other sweet snacks.

Industry Summary

According to IBIS World, the frozen yogurt store industry size is $676.6 million in 2021 and is expected to grow 2.3% during the year.  Over the last five years, it has declined 11.5% per year.  According to Mordor Intelligence, the industry is expected to increase 3.4% per year through 2025.

The popularity of froyo has grabbed the attention of frozen yogurt franchises such as TCBY, PinkBerry, Yogurtland, Red Mango, making it difficult for independent shops to compete.

Industry Trends

The industry is being driven by consumers’ desire for healthy alternatives to other sweet treats, and yogurt is low-fat and high in protein.  Since spending on desserts is considered discretionary, the industry is sensitive to economic fluctuations, decreasing during economic downturns.

Target Market

Your target market will be those seeking frozen treats that are a healthy alternative to ice cream.

Skills, Experience, and Education Useful in Running a Frozen Yogurt Stand

There are several specific skills that you will need to open a frozen yogurt stand.

  • Experience.  Experience working in a frozen yogurt stand is valuable, particularly in management.
  • Business knowledge and experience.  You will need to have at least some basic knowledge of marketing, finance/accounting, and human resources.
  • People skills. You’ll need to be able to build rapport with your customers and listen to their comments to pick up on trends and new flavors to keep customers coming back.

Costs to Start a Frozen Yogurt Stand

Here are the typical costs you will face when you open a frozen yogurt stand.

  • Monthly shop lease $1,500 – $5,000
  • Initial deposit for shop, insurance, utilities, etc. $1,500 – $5,000
  • Industrial mixer $10,000 – $15,000
  • Shop setup (refrigerator, freezer, work tables, cash register, initial ingredients, utensils, etc.) $5,000 – $15,000
  • Initial marketing such as Facebook ads or search engine optimization for your website $500 -$1000

Steps to Starting a Frozen Yogurt Stand

Step 1: Write your Business Plan

After coming up with the idea, the next step in starting your frozen yogurt stand should be to write a business plan.  The business plan will make you focus on some important aspects of the business, such as who your customers are, how you plan to reach them, competitors, projecting sales and expenses, your value proposition to use for marketing, and more. You’ll also need to do some research to calculate exactly what your startup expenses will be and what your ongoing costs will be.

Not only will a bank require you to have a business plan if you need financing, but multiple studies have shown that having a good business plan increases the odds of starting a successful business. Writing the plan helps you to think through all the aspects of the business and then serves as a guide as you begin.

Related:
How to write a business plan
Free sample business plans

Step 2: Name the Business

Finding the perfect frozen yogurt stand name can be challenging. Not only does the business name have to reflect what you do and be appealing to customers, but it also has to be available to use. You can check your state’s website to see if the name is available and register your name.  Your name should make you stand out, reflect your brand, and tell potential customers exactly what you do.

Step 3: Form a Business Structure

A business structure refers to how a business is legally organized to operate. There are four primary business entities to choose from, which include a sole proprietorship, partnership, corporation, and Limited Liability Company (LLC).  Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.

RelatedComparison of Business Entities

Step 4: Select your Location

Finding a location to purchase or lease that is conveniently located near areas with high traffic or foot traffic is important to the yogurt stand’s success.

Related: Choosing a business location

Step 5: Apply for Business Licenses and Permits

Dealing with food will typically require education on food safety and licensing to handle food, which is typically administered by the local health department.

Additionally, the is a general business licensing such as a business license, sales tax permit, Employer Identification Number, and more.

Related: Common business licenses, permits, and registrations by state

Step 6: Find Financing

Coming up with a good business idea and having the skills to run it are one thing but getting the funding to start a frozen yogurt stand is another.  In order to get a loan, the borrower(s) will need to have good credit and be able to invest 15-25% of their money towards the total startup costs.

Related: Finding the money to start a business

Step 7: Open a Business Bank Account

Keeping your business and personal finances in separate business bank and credit card accounts makes it easier to track the income and expenses of the business.

Step 8: Get your Marketing Plan in Place

A frozen yogurt stand will need to set aside a budget to cover marketing costs on a continuous basis. Common marketing techniques for a frozen yogurt stand include social media marketing and online advertising. Developing a website can be a significant expense, but it can also give your frozen yogurt stand greater visibility online.

Related: Low-cost ideas to market a new business

Step 9: Get Insurance

A frozen yogurt stand needs several types of insurance for full coverage:

General liability insurance can help protect you from third-party claims of bodily injury and property damage.

Worker’s compensation insurance covers expenses like medical bills and legal fees that a business might face if an employee were ever hurt while working.

Insurance policies will vary. To get the most accurate idea of what to budget for insurance, request quotes from multiple providers. When comparing the quotes, consider not only the premiums but also how the plan exclusions, coverage limitations, and deductibles compare.

Related: Common types of insurance a business may need

Step 10: Hiring Employees

You may need employees to help you run your frozen yogurt stand.  Make sure that you select people with appropriate experience and training.

In addition to labor costs, your budget will also need to include other employee-related expenses. Workman’s comp insurance, unemployment insurance, and paid time off are common expenses that a business will need to cover when hiring staff.

Related: Hiring your first employee

Step 11: Set up an Accounting System

Setting up an accounting system for your frozen yogurt business is critical to the long-term success of your business.

Staying on top of taxes not only keeps the business out of trouble with the government but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.

Related: Setting up accounting for your business

How Much Can You Potentially Make Owning a Frozen Yogurt Stand?

If your average sale per customer is $7.00 and you serve 50 customers per day, you could make $127,750 in revenue per year.

Things to Consider Before Starting a Frozen Yogurt stand

Running a frozen yogurt shop or any business will have its challenges.  You need to be prepared and make sure that you know what you’re getting into.

Marketing and acquiring customers will be your biggest challenge and an ongoing expense.  Your location is critical to getting customers, so your stand needs to look appealing with good signage.

You will face competition, so you need to offer high-quality products and good customer service with competitive prices.  Looking for other specialty items like cakes, candy, smoothies, protein shakes, and other desert items can help boost profits.

Talk to other business owners for tips on starting a business and do your homework to determine costs.  Research other frozen yogurt stands to see what they offer and what prices they charge.

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