A Cool Business Model

19 Sep

A few weeks ago while visiting Dallas during its record-breaking heat wave, I came across a gem of a franchise. A cupcake shop? Taco stand? Nope, none of the above. Ice House America, as the name suggests, manufactures and franchises ice vending machines that automatically dispense cubed or chipped ice on-demand. The commoditization of such a simple product, frozen water, has proven to be a success not only for the company, but for the franchisees as well.

An Ice House America Vending machine beckons in the 108-degree Texas heat

The vending machines range in size from 30” x 30” miniature units to 200 square foot stand alone sheds with the capacity to make 6,750 pounds of ice each day, enough for 525 separate sales. According to a press release, Ice House is transforming the $2.5 billion U.S. packaged ice industry by producing ice at the point of sale providing a more cost-effective, superior product than the traditional direct store delivery pre-made bagged ice trucked from a central ice plant, and touts the smaller carbon footprint of its unique delivery model.

Ice House America’s franchised vending machines can cost up to $100,000 to get up and running, and the company suggests that franchisees take on average $90,000 – $110,000 per year, per machine. The ice business is a regional market, so the barriers to entry are pretty low, with sizeable profit potential. Since it’s founding in 2003, the company has sold more than 2,200 vending units – that’s a lot of cold, hard…ice. Continue Reading»

Not that I’m trying to get into the ice business, but one has to imagine there are myriad locations where one of these vending machines would make a killing. Campsites, beach towns, college campuses and high-traffic event venues are just a few of the areas that I imagine would have a strong demand for bulk ice.

Is ice the new gold? Probably not, but it’s still a solid investment, at least according to Ulysses Management, LLC. Ulysses, a NY-based investment firm, announced its acquisition of the Jacksonville, Florida-based Ice House America and its affiliated companies in May 2011. Whether the franchise will enrich its investors and franchisees is uncertain, but one certainly can’t disagree with the fact that the homegrown company is putting a lot of people to work and doing its part to keep the economy from “overheating”!

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