Tag Archives: Acquisition

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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Google’s Acquisition of Zagat Feeds Push to “Local”

14 Sep

Zagat posted this cheeky review upon the Announcement of the acquisition

The rest of us might be keeping a tight grip on the purse strings as we weather the storms of this epic recession, but not Google. The search giant has been on a spending spree as of late, and its latest two acquisitions of Motorola Mobility and Zagat show its commitment to growth and innovation regardless of the economic environment. I think that it will be particularly interesting to see how Google integrates Zagat, a company that will give Google another foot in the door of the “local” services market, because Google is so well positioned to compete against other B2B restaurant service providers such as OpenTable.

Zagat put itself up for sale in 2008, when it was said to be valued at $200 million, but Google acquired the company for considerably less (many commentators have noted Google must have paid less than $66 million because there was no automatic FTC antitrust review).  The restaurant grading service was one of the most influential tastemakers in the world of haute cuisine long before the advent of user-generated content on online platforms such as Yelp (which, coincidentally, Google tried to acquire in 2009 for ~$500 million), but has since ceded popularity to competitors.

A Zagat guide in a hungry consumer’s hands can drive dining decisions, but what about a Zagat business in the hands of Google? Upon the announcement of the acquisition, OpenTable’s stock tumbled 8%; clearly the market anticipates that Google might expand into the restaurant reservation services with the acquisition. OpenTable’s restaurant management solution is a combination of software and hardware that requires a significant upfront investment. The service helps restaurants to manage demand and market their businesses, but the breadth of services pales in comparison to those that Google could offer. With the Zagat acquisition, Google could develop a software restaurant management solution, and derive revenues from the sales its other B2B services.

Additionally, Zagat will strengthen Google’s foray into the world of location-based services and daily deal offerings, and one can imagine a mobile solution that would be a mash-up of all the above, a la Living Social’s Instant Deals.

Google made a name for itself by aggregating information and returning information sought out by users in the form of search results; will the company leverage Its acquisition of Zagat to move from aggregation to recommendations based not only on user’s searches, but also their location and prior consumption history? Time will tell. In the meantime, I’ll whet my appetite for innovation in the food services industry with a healthy serving of Willie Nelson and Chipotle in this brilliantly animated video.