Higher milk prices and rising health awareness will soften revenue
New York, NY (PRWEB) December 25, 2013
Ice cream is a popular dessert treat for American consumers however, the emergence of frozen yogurt and healthy substitutes has recently challenged the Ice Cream and Gelato Store Franchises industry. This is because health conscious Americans have been moving away from ice cream and gelato treats, which has negatively impacted the industry. In the five years to 2013, IBISWorld estimates that the industry's revenue will decline.
Throughout the recession, the industry performed relatively well as compared with other industries, and this is largely due to the inexpensive nature of industry products. However, increasing health consciousness in the United States is expected to reduce demand for ice cream and gelato. Furthermore, per capita dairy consumption in the United States is expected to decline in the five years to 2013. As more consumers substitute ice cream and gelato for healthier frozen yogurt products, the Ice Cream and Gelato Store Franchises industry is expected to increasingly face external competition for revenue. This struggle has led to declines in the number of industry operators and in the five years to 2013, the number of companies is expected to decline.
A medium level of concentration characterizes the Ice Cream and Gelato Store Franchises industry, with the top four players (Dairy Queen, Baskin-Robbins, Cold Stone Creamery and Rita's Italian Ice) accounting for more than 50.0% of industry revenue in 2013 (see IBISWorld report OD5547 for major player market shares). However, it should be noted that revenue is attributable to the brand and not the company itself. Companies in the industry generate only a fraction of revenue through royalties and franchise fees, while the franchise holder generates other revenue. In 2013, Dairy Queen stands as the single largest industry player with a significant market share.
According to IBISWorld Industry Analyst James Crompton, “Industry operators have also been combating rising costs and in the five years to 2013.” That is to say, the price of milk is expected to rise, continuing through 2018. Higher milk prices increase the cost of ice cream, especially if it is produced on site. Consequently, “the average industry profit margin is also expected to drop in 2013, falling further in 2018,” says Crompton. Furthermore, consumers' eating habits are expected to continue trending towards more healthy snacks and desserts. Thus, per capita sugar and sweetener consumption is expected to decline in the five years to 2018. Industry revenue is expected to subsequently decline at an annualized rate, over same period.
For more information, visit IBISWorld’s Ice Cream & Gelato Store Franchises in the US industry report page.
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IBISWorld industry Report Key Topics
Industry operators primarily serve ice cream or gelato. Corporate-owned establishments and frozen yogurt stores are not included in this industry. Reports in IBISWorld’s Business Franchise collection focus solely on the operation of franchised outlets and exclude non-franchise data. These reports also show the total number of franchise outlets, franchise revenue and the average profit margin earned by franchisees. Our reports also highlight the largest franchisors by market share.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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