have you ever wondered just how much money an ice cream factory makes well this is the Rossy Ice Cream Factory and we bought it just a few years ago and we set up this new facility I'm going to break it all down for you pull back the curtains and tell you the inner workings of a food manufacturing business specifically ice cream do they make money let's find out now the ice cream factory in question is this one the Rossy Ice Cream Factory it's one of the oldest ice cream manufacturers here in the United Kingdom it
was Ed by these guys the original Rossy family back in the early 30s they actually left Italy and moved to Glasgow and started selling ice cream things went well so they treated themselves to a holiday they went to South End on sea and they couldn't buy an ice cream so they thought hey let's move from Glasgow let's go to South End and things went like Gang Busters very quickly they ended up owning four shops including one of their original shops 99 High Street with their signature ice cream being the 99 and that's where we say
the 99 came from from Rossy opening 99 High Street South End on sea back in the 30s things went really well it went through four generations of Rossy but the last Rossy family member had no children and so the shops got sold off to separate people and the factory and the brand got sold off to separate people now a group of businessmen then bought the brand in the factory and they started building the business up and tried their very best then covid came along that was very difficult ult trading time and they were coming near
to retirement there was an entrepreneur that came along and bought said ice cream brand and tried to turn things around and now this Treasure Trove of ice cream the Rossy Ice Cream Factory and brand is now ours and we make all this delicious ice cream so through here we have the pasteurizing room is where we start the base of the ice cream Mak all the big ingredients go and then the ice cream goes along these pipes over here and they're put into them aging V to get all those flavors to come out and then go
through the continuous freezers which are these very very expensive machines you can see here those machines can be anywhere between 80 and quar of a million pounds depending on how much throughput they can put through it's really important when you're doing these ice cream days that you try and get one flavor a day because between each flavor you've got to clean through all these pipes and that can take a long time and time is labor and cost so we want to do a whole day of vanilla a whole day of mint chock chip a whole
day of chocolate so that we're breaking down all those clean times to get as much bang for our buck on our return on investment in terms of Labor invested into those days any good food manufacturer knows that volume is their best friend the team are making over 30 flavors of ice cream and we're coming up with new delicious flavors each and every single year whether it's RAM and raisin or birthday cake gelato it's all made in this amazing Factory delivering great Rossy ice cream being a food entrepreneur or food manufacturing is not as easy as
it may sound it's actually deviously difficult to make money you got these huge giant corporations like uni proon gab Mars that are Billion Dollar Plus industries that have the scale to be able to do stuff at such a rate of KNX if you're an entrepreneur and you really like the idea of manufacturing a little delicate tent bakery or ice cream like I was you might find it's much much tougher than you first thought see you've got these commodity prices that massively affect you sugar cocoa coffee one of the biggest Commodities in the world fluctua in
price often now yes you can do a bit of pre- buying and set your price in but actually the whole Marketplace is so competitive if you want to be in supermarkets like us it's very hard to put your pricing up and that can cause massive margin erosion in your profit and loss if you get yourself used to the ingredients prices changing more than the British then you've also got these things this little selection of stainless steel over here are ice cream machines you've got date doters you've got ingredients feeders you got Ripple pumps and this
thing what we call a robot Which packs all the ice cream little pots that you would have in a theater with a spoon in L you want to buy a new one of these you're talking £80,000 and that just does the little Bots what if you've got 500 Ms and then you've got one liters and you've got napes you could easily spend another million pounds on robots just to robotize your factory all of that means you have to do volume to make money now there is some Artisan options if you've got one little shop but
then you've really tying yourself to the business and I don't want to do that I want to be on my business not in my business that's how my mindset works so if you want to be a food entrepreneur and you want to have some days off scal is where you need to be some of the big shocks for me when we became a food manufacturing business in little Eco system was just how much the specialist ingredients cost over here a selection of ice cream paste so you make your base mix you know with your milk
and your cream and your sugar and then you add all the other flavors whether it be chocolate or mango or even pistachio little pot of pistachio mix like that could be 200 quid to make some ice cream napes napes are the Scoops that you see in an ice cream shop this is big money I mean over here is a good few th000 just sitting on those shelves I'll tell you another thing that really did shock me when we got into this is actually sometimes the packaging can be more than the actual ice cream that goes
inside I spoke earlier about those little theater pots well those theater pots with the spoon and lid will cost more than the ice cream Madness I mean yes if you buy a million of them you might turn it the other way around but packaging costs a lot of money and you got to buy a lot of it you've got to by a huge amount and that causes you a big cash flow problem over here you can see packaging the guys are getting ready for a next production run and they'll use all of those boxes packing
everything up so you've got outer packaging inner packaging all of that good stuff it's all got to be food grade safe as well and it's got to be good enough that it can last in a freezer and not degrade so much more goes into it than you first thought now when I bought Rossy remember at the beginning of the video I told you once was a very big ice cream manufacturer in fact the last Rossy found2 million estate back in 2007 but when it was taken over by my predecessors the people that I bought the
business from and massively scouted back down and these are two little Vats three here that you can see when I bought the business we had this and just one of these little ice cream freezers and if one of them breaks that means you can't manufacture and in food manufacturing you think about this all these machines got electric going through them they've got air compressed air going through them they've got liquids uh they've got cold liquids hot liquids things are moving all the time at a rate of knocks so everything breaks you need to have back
up back up back up and then you need these specialist Engineers which cost you a lot of money to come out and put everything right you see here this whole room cost me over a million pounds to set this up with the labor all the White Rock on the floor on the walls or the specialist freezers and I've got plans to invest another million pounds in this Factory over the next couple of years regulation in food manufacturing is huge especially if you're like us supplying supermarkets you've got independent accrediations to always meet and you got
all these computers now and all your Machinery that tracks all the temperatures and all of the processes that you're going through and you put that all into software and you need to do so much testing all the time especially when you're using dairy products like we are this is not for the fainthearted but now let's go one step further let's really break those numbers down let me tell you what it costs in electric let me tell you what it costs in Staffing let me tell you what it costs in rent and rates for the whole
of the building and all of the other little nuances of being a food manufacturer let's get on the Whiteboard I'll break it all down for you quick side note here before we go into the numbers we're standing here in the Rossy ice cream parlor and actually bought this back I bought all the shops back so it's all under one ecosystem now and that really does help me it gives me a competitive Advantage see any good entrepreneur and business owner knows they need to be a bit of a magician they need to have some tricks up
their sleeve that helps them be more longevity in business most businesses foul so if you can own the whole supply chain that gives you a massive competitive Advantage now there's three things I want to think about and I want you to think about at home when when you're thinking about competitive advantages leverage that's the biggest one great entrepreneurs use leverage they leverage brand systems Equity management teams really leverages explained by doing the work once and getting paid forever think about this you write a book and then you can sell it a million times over we
come up with an ice cream flavor we do all that work for that new flavor and then we can replicate it again and again so Leverage is one of them the second one is vertical integration where you can buy your supply chain out so that all your cash flow stays within your ecosystem and the third one is when you can find businesses where you can be direct to Consumer which is this place the Rossy ice cream parlor and also B2B so the factory is a business to business sort of thing you know we're supplying Asda
we're supplying other Hospitality businesses and then they sell onto the end consumer but what if you can have both it's really like having your cake and eating it so we manufacture we sell to lots of wholesalers but we also sell to oursel and sell direct to Consumer and that's one of the ways that I've managed to keep all this business together because as you're probably going to find out in the numbers in a minute making ice cream selling it wholesale unless you're doing it at horrific scale 20 30 40 50 million plus going to be
really hard to make a living out of it but actually if you mix it all together and look for those competitive advantages that could be really good right let's get on that white board and it's not just those ice cream parlors and shops that we own we also own a big chain of visitor attractions and family entertainment centers like this one Roller City which is our roller skating rink fun fact for you behind that wall is actually the ice cream factory Russy so we own both of the buildings and that's what we're doing we're creating
an ecosystem where we can supply each other keeping the cash flow within it goes one step further than that and that's our Transport company we own the wheels now that can deliver ice cream and other Food Services all around London and the home counties you might have seen on a few videos ago we bought Cafe Delhi wholesale 10 million turnover Wholesale Food business delivering all around the southeast of this country and actually I have plans at looking at other companies just like Cafe deli around the country so that we can create our own network so
we never have to deal with another Food Services Company L owning the ecosystem thus owning the cash flow in house now there are some other winds I've got a big piece of baby here I decided not to use the Whiteboard I decided to use a big piece of paper so you can really see the spider web of how this business Works Rossy ice cream that's the company so I'm going to write Rossy up here and I'll talk you through just the manufacturer of ice cream the factory in its own right first question what's our Revenue
well we do around1 million pounds worth of wholesale factory make making ice cream and that goes to our own venues we charge ourselves plus we've got hundreds of of independent wholesalers restaurants customers Leisure attractions what do we make out of that well at the moment we losing around £250,000 worth of money on that million quid it's just not enough turn over to turn a profit from there now there are some things look we've got quite heavy Staffing cost we've put brilliant management team into place I think if I was managing it owner managing it that
would be a profit overnight because I would money much more leaner but you guys watch me on YouTube I've got a big business and uh I can't manage everything myself you know and I believe in the philosophy of e+m equals s which is entrepreneurship plus management equals success and because of our size I can have a longterm view thinking well in 10 years time Rossy is going to be a commercially profitable Enterprise that works without me in it which to me uh defines a really good business so I'm investing in this and I knew that
it was going to be losses but actually this loss has reduced compared to when I first owned it it was losing many many more hundreds of thousands of pounds and it's been reducing over time I actually think in the next financial year because of us buying Cafe Deli putting it into more locations and general growth I'm going to get this to a break even number which will be an Allelujah moment for us so what is that Staffing we've got a production manager um we've got an overall head for Rossy we've got marketing but actually this
here is mixed in with the whole ecosystem of the business we've got a commercial director that looks after Rossy but also Cafe Deli wholesale leverag there that's a big thing in entrepreneurship where we can dilute overhead and just good stuff happens we've got 1 million a turnover we're losing quarter of a million pounds just on the factory overall but when you mix it into the ecosystem of course it's okay um how do we price well we list all of our ingredients we get all of our ingredients and then we plus 40% for overhead and that's
what pays for this and transport and utilities and all of that good stuff and then we add on 25% for our margin for our profitability so we get all the ingredients we plus 40% whatever that costs for our overhead paying for the factory and the core staff that actually make the ice cream and then we put 25% on top now you might think well James how can you lose money you're covering all of this this is good but actually you need huge economies of scout so I asked you what our Revenue was and I told
you it's 1 million we're losing quar of a million what does it really need to be well I think the fund begins if we could get our ice screen Factory to start making 5 million plus worth of gear now here's the good thing I do a competitor analysis and bigger ice cream companies have audited accounts and you can check them on company's house um unlike me I got 27 different companies and I try and keep out of the audit threshold by spreading all of my revenues over those 27 companies but some people people put all
their revenue in one company and you can see their competitor analysis once they go over I think it's 11 a half million of turnover and I've actually worked out lots of those people that have got 11 to 15 million pounds worth of Revenue end up making around a million pounds worth of net profit or half a million pounds of net profit and a few have gone bust over the last few years so even on this level of turn over 11th 15 million it can still be deviously difficult for an ice cream business to make money
because you might think well a million quids good but what if you want to invest in a new bit of gear next year or you want to extend your factory you can very quickly eat up that million pounds and I gave you some analysis on just how expensive that Machinery is you go and buy £100,000 here and a 250,000 robot there or you want to put a big massive freezer in you could spend half a million quid putting a big freezer in that you can drive a forlift in to store your stuff or you could
even get one of these things called a blast freezer that gets your ice cream down to minus 40 really quickly so that you can get all that flavor locked in getting a bit technical here but one of those blast freezers can be a lot of money um and you you just keep on investing and investing so I really believe I really believe once you get it to 15 million plus you can really start having a great life out of your ice cream business but once it gets to 5 million of manufacturing turnover you can start
investing in really good people you start getting the economy the scowl and everything gets really good and that really has been from my analysis of looking at other companies so the profit in the round from an Excel spreadsheet before you take into a pra uh take into account Staffing and all of these other bits we're going to go for in a minute the profit in the round can be really good as long as long as you get that scal and at the moment we're only manufacturing a million pounds worth of wholesale ice cream um and
that makes it very difficult because you in this no man's land what you get in business let me just explain this to you so if you look at lots of businesses you know you you you're an owner manager over here and you get these huge savings and then you want to go to the next level but the next level is 5 million but when you're doing a million of turnover you sort of need to be here and here and that can be very very difficult that's where lots of business owners find things really tough we
call this the middle ground in business where you can't really afford the investment A5 million pound company gets but you actually need to be as Frugal as a small company but actually you're going and you're going through the desert period and that's why big companies like me where I've got an ecosystem we can afford to get through those desert periods but I've been there in the past when I first started out very very difficult right I've answered how do we price list of ingredients 40% for the overhead a 25% profit for us that's how it
works depreciation I think it's really important we talk about depreciation ation in these um uh in this type of business because those machines don't last forever there's lots and lots of wear and tears so you buy that 100,000 machine actually after a year it's probably lost 30% of its value straight away after three years it's lost another 20% of its value and at the end of 5 10 years um you probably want to get a better machine that's got all new pistons and you think oh is it worth refurbishing that so you are depreciating your
equipment all the time yeah you might not have to replace the fixed assets the walls and the mezzanines and stuff like that maybe the pipe work and the and the White Rock but the Machinery does depreciate in value over time just CU it's getting used all the time just like a van or a vehicle if you like so what is the cost of Ops the operations the building I own the freeold of that building so that's a massive winner winner chicken dinner for me but actually a building like that you'd have £100,000 rent it's a
11,000 sqt building at least you would have business rates um which would be around £50,000 payable um you would have insurance another £5,000 and then your Staffing cost your Staffing cost would be around 25% all in if you get past that million pounds worth of Revenue at the moment we're working to about a 38% Staffing cost because we're overlaying it with more management because we want to get to that 5 million turnover Mark which we will over the time utilities are big we're actually spending around £1,000 a month on electric to keep all those freezers
going all of those lights going and all those machines that need working on so we're considering solar right now what's the cost of that can we get enough solar we're doing all the work on that let's talk about our wins though first of all next sorry our wins for us as a business is we own the transport now this is really powerful for us if you want to be a food manufacturer this is where where you should start working out how you're going to get your product to your customers is really important and if you
want to deal with one of these big food services companies they're getting everyone approached them all the time list our stuff list our stuff and they want to be sure they want to be sure that they're getting the best prices and can they be bothered to change so my mind the way it works I did try and get listed with all these big food services companies and I was spending many millions of pounds with them through my family entertainment center business but they still didn't want to list me even though I was spending millions of
pounds with them they didn't say no but they made it very difficult for me to do so I just thought I'd go and buy my own wheels and that's what I've done because then I decide who gets listed and I'm going to decide to list myself and actually when you own the transport you own the manufacturing because actually a Food Services business although very predictable income very regular income um has many overheads running transport costs and running fleets of vehicles is not for the faint-hearted there's huge depreciation costs huge fuel costs huge amounts of responsibility
but when you have it in an ecosystem where you own the whole supply chain things can get very exciting the other thing the big wins for me is supplying my own venues um means that I don't have to worry about being delisted in my own venues because I control that supply chain and in addition owning the properties that we operate out of gives us that real stability as a business so there you have it gang I've given you a brief overlay of just how much money an ice cream factory makes and how desly difficult food
manufacturing is you're going to need scow you're going to need transport if you want to win in this game it's not for the faint-hearted and I tell you now I've done lots of things in my career hotels roller skating rinks zoos Farm Parks play centers day nurseries it's a fun business it's a business that will always be there people will always need to eat but it's difficult it's difficult because you're going up against people that have got billions of Revenue profitability expertise and huge scale economies which I even admit I'm going to get nowhere near
and I don't want to get nowhere near them but I do want to create my own little Mecca within the food services and food manufacturing business that means that I don't have to answer to anyone and that was always my intention and I'm very proud to own the Rossy ice cream company and carry on that Century old lineage into the the future and if you stick around on the YouTube channel I keep telling you what I'm up to if you've loved watching this video there's a couple of things that I'd love you to do please
subscribe to the channel like the video um let me know in the comments if you're in a food manufacturing business or if you like this video I love reading the comments don't forget to check out the podcast Channel and if you want to hear my weekly musings on entrepreneurship and business all the things that frustrate me um a much more personal approach to my entrepreneurial Endeavors why not receive my letter it's called the James Sinclair newsletter I release it at 7:00 a.m. every single Monday morning to help entrepreneurs and business owners in their darkest times
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