In February of 2020, we made the difficult decision to close our store, despite how popular it was. Why? If it was so popular, why did it have to close?

The answer requires a bit of math. Most people have no desire to follow me down the mathematical rabbit hole I am about to go down to explain it. So for those TL;DR readers, here's the quick answer:

Due to choosing a bad location, we were paying $6.88 to acquire each of our 4,800 impulse customers per year, who would spend between $5 and $6 with us. That means we were already $0.88 to $1.88 in the negative with every impulse customer before even considering all of the business costs of providing the impulse customers the goods we sold them. That combined with another lease issue made overall business profit close to impossible, despite having established a very popular public goodwill that was feeding us 43,200 destination customers per year. 

Okay, for those who want more than the TL;DR version, what is the breakdown of those numbers? Before we dive deeper you first need to understand that ice cream shops (and many other types of businesses) have two different types of customers: 1) destination customers; and 2) impulse customers. 

Destination vs Impulse Customers

A destination customer is a customer where your business was their destination. Before they left the door of their residence or place of work, they had made a plan that your business was a destination.

An impulse customer is a customer where your business wasn't part of their plan. Their decision to be your customer was an impulse they experienced while going to, or leaving, other destinations. 

Destination vs Impulse Locations

Ice cream shops that are in high foot traffic locations like Easton Town Center and the Short North (both in Columbus Ohio) find the vast majority of their customers are impulse customers. The customers decided on an impulse to get some ice cream while being in the area for different reasons.

But ice cream shops can also be in low, or even zero, foot traffic locations. A great example of this is Young's Jersey Dairy in Yellow Springs, Ohio. They exist in the middle of farmland. They do not get much, if any, impulse customers at all. Nearly every customer of Young's Jersey Dairy has Young's Jersey Dairy as their destination in mind. And the Young's Jersey Dairy ice cream shop is HUGE, because people will drive from hours away to make Young's Jersey Dairy their destination.

Rent vs Advertising Costs

Ice cream shops as a whole find the majority of their sales are made to impulse customers. However, as seen above, ice cream shops can survive anywhere on the spectrum as long as they allocate their funds properly to their strategy. 

When an ice cream store choses a strategy to focus on impulse customers, it should be in a high foot traffic location, or at least with a lot of visibility to vehicle traffic. Which means they will likely pay high rent for that location. But when an ice cream store choses a strategy to focus on destination customers, it can be in a little to no traffic location, which should have very low cost rent. With the low rent the ice cream shop can afford to advertise much more, which produces the destination customers of their strategy.

In a way, rent and advertising costs have an inverted relationship with each other. One is usually high while the other is low. Or there is a balance somewhere in the middle between the two... when one increases the other has to decrease. It's rare to have both high rent costs and high advertising costs work, as doing so would require a sacrifice somewhere else on the profit/loss spreadsheet, such as a labor reduction, or a profit reduction. 

We Chose The Impulse Location Strategy

Given we were a completely unknown brand, we felt we needed to use the impulse location strategy, especially given we knew that most ice cream purchases are made as an impulse. The dollars we spent to focus on acquiring impulse customers would allow them to immediately try us upon learning about our existence, as opposed to us focusing our dollars to advertise to them, and then them having to make an additional step of making plans to commute to us after learning about our existence. 

The lease we signed at the Shops of Worthington Place was priced based on it being a high foot traffic location. In 2015 we could have leased a spot in a cheap strip mall for around $15 per square foot. Our lease with the Shops of Worthington Place was for $44 per square foot, nearly 3 times as much.  

The mall had just undergone a multimillion dollar facelift and renovation, and we saw many new businesses there with a healthy amount of foot traffic. Other high foot traffic locations we wanted (and preferred) were locked out to us, because of exclusivity agreements with ice cream shops already in the shopping centers. The Shops at Worthington Place was the best high foot traffic location available to us at the time.  

The Shops at Worthington Place Died On Us

And for our first year or two, we benefited from the high foot traffic we were paying for at the Shops at Worthington Place. But over the four years we were open, the mall died on us. We watched an endless parade of retail shop after retail shop close, pack up and leave the mall. By 2020 65% of the retail stores that existed when we opened were gone. And the foot traffic declined by even more than that. 

There is a cliche on the internet that says that the tell tale sign that a mall has died is the day that GNC closes up and moves out. And sure enough, GNC was one of the many retail shops that pulled out of the Shops at Worthington Place. 

The mall did replace those retail stores that left, but not with new retail stores. They were replaced by a large gym, a fitness coach business, a taekwondo club, a yoga studio, numerous medical offices, and one of the largest square foot nail salons I have ever seen. The fact that the mall was over 90% occupied meant nothing to us. The customers of those new businesses weren't the kind of people that have a high rate of conversion into impulse ice cream consumers, like retail shoppers are. People in a shopping mindset are far more impulsive than those who are doing something else. An office building could be 100% occupied, but that doesn't make an office building a good spot for an ice cream shop. The decline of the retail shopping foot traffic killed our impulse customer revenue.

Observing The Sources of Our Customer Base

Given the drastic change in dynamics of the mall, I would take time to study what kind of customers we were getting. I would sit in the parking lot in front of Kroger and watch where our customers came from and where they would go after a visit to us.

More than 90% of the customers that went to Cookie Dough Creamery arrived in the parking lot, walked directly to our business, walked directly back to their car after leaving Cookie Dough Creamery and drove away. That means that over 90% of our customers had nothing to do with the mall. Those 90% of customers were "destination customers" for us. This was the exact opposite of the impulse location strategy we chose when we signed the lease. We expected, and we were paying a lot of money for, the majority of our customers to be impulse customers sourced from other mall retail businesses.  

Less than 10% of our customers were "impulse customers". But, I can't really say that the entire group that interacted with the mall were impulse customers for us though. Because we may have been their destination, but they got the impulse to also do business with another mall tenant. But for the sake of the numbers, I am going to assume that all of those 10% were impulse customers to us, which makes the numbers I am going to present generous in the favor of the mall, when in reality it was probably an even worse situation for us than these numbers suggest. 

In 2019 we had approximately 48,000 visitors to our store. With the 90% destination customer percentage we observed, that extrapolates to 43,200 destination customers for the year. Which means the other 4,800 customers were impulse customers. 

The Cost of 4,800 Impulse Customers

We were paying $48,000 per year in rent. Had we decided on a cheap strip mall for $15,000 per year (yes, they existed back in 2015, if you were willing to exist off the beaten path for a 1000 sq foot space), the vast majority of our 43,200 destination customers would likely be entirely retained at the different location, as they would have come to us wherever we were located, as long as it was somewhere around the north central outer-belt area. Which means we were paying an extra $33,000 per year for the 4,800 impulse customers the mall was providing to us. 

$33,000 divided by 4,800 is $6.88 per customer. So we were paying the mall $6.88 to acquire every impulse customer the mall provided to us. The average customer spends between $5 and $6 on their visit. That means our impulse customers were spending less with us than what we were spending to acquire them. 

Not Getting What We Were Paying For

That additional $33,000 per year in rent we were paying needed to be sending us an amount of customers that would result in us paying less than $1.00 per customer to acquire them, given the price point of ice cream sales. $1.00 is about 16% to 20% of the amount they spend on average ($5 to $6). Anything more than a $1.00 per acquisition and acquiring those customers becomes questionably profitable. 

For the $48,000 in rent we were paying to be justified, we should have been seeing at least 33,000 impulse customers or more per year (an amount we probably did hit in year one). Add that 33,000 to our 43,200 year 4 destination customers, and we should have had 76,200 customers in 2019, an increase of 59% more than what we had. 

That increase in customers would have resulted in $50,000 to $70,000 in profit ($1.52 to 2.12 per customer), as those additional 33,000 customers would not increase overhead costs at all, and with a self serve business model, the additional labor to serve them is minimal. Additional customers are more profitable than initial customers. 

But the mall died, so we weren't getting the impulse traffic we were paying to get. So, after our overhead and labor costs, the profit we were making from our 43,200 destination customers was being be wiped out by the $33,000 in rent that we were essentially just flushing down the toilet. Pretty much all we were getting in return for our rent was four walls and a ceiling. Nothing more. Our unexpectedly high amount of destination customers was the only thing that was keeping us in business. 

Most ice cream shop brands are not capable of succeeding with the destination strategy. It takes a very popular public goodwill to pull it off. What we learned though is that Cookie Dough Creamery is one that could pull it off. We established a very popular public goodwill. That was not something we could have assumed we would do before we opened. Our idea could have been a complete flop for all we knew at the time.  

Could Cookie Dough Creamery succeed in the middle of farmland like Youngs Jersey Dairy? Probably not. But we definitely didn't need to chose the impulse customer strategy that we chose, and the high rent that came with that strategy. We could have existed in some back alley and likely succeeded.

That $33,000 we were throwing away in rent would have been far better spent in advertising. It would have nearly quadrupled our advertising budget (from $1,000 per month to $4,000 per month), which potentially could have at least doubled our destination customer count of 43,200, if not more.

The Additional Labor Costs the Mall Caused Us

The mall was also a source of another financial problem for us. Two thirds of all ice cream sales worldwide are made after 6 PM. And two thirds of all ice cream sales worldwide are made in the Spring and Summer. This means that daytime hours, especially during the work week, and especially during the Fall and Winter, are periods of dead sales. Many ice cream shops close completely in the Fall and don't reopen until the Spring. Others will stay open during the Fall and Winter but only for nights and weekends. During the work week they are closed during the day. 

Our lease with the Shops at Worthington Place required us to be open by 11 AM Monday through Saturday, and by 1 PM Sunday, 52 weeks per year. We were contractually forced to be open despite having very little business until hours later in the day. The amount of sales we would make Monday through Friday from 11 to 3 during the Fall and Winter was less than the labor it cost us to be open. The mall's lease requirement for us to be open added nearly $10,000 per year in unnecessary labor costs to our bottom line. 

The $33,000 in worthless additional rent, and $10,000 in increased labor costs means our out of balance lease with the mall was wasting us $43,000 per year. In other words, just under $1.00 that every one of our 43,200 destination customers spent with us was being lost due to this bad lease.  

Despite How Popular We Were, We Operated As a Zombie Business

We weren't losing money as a result of these issues with the mall, but we also weren't making money. $1.00 is 17 to 20% of what a typical customer spends with us ($5 to $6). And, 17 to 20% is also around what a typical ice cream shop hopes for as a profit margin. So yes, our 43,200 destination customers were producing the profit an ice cream shop should expect from 43,200 customers... around $43,000 per year. But in our case that profit from our 43,200 destination customers was being wiped entirely out by the bad lease. It was a wash! The net gain to us from our 43,200 destination customers was $0. 

We had become the very definition of a "zombie business". A business that isn't dead, but also isn't living, because all the life we were producing from our 43,200 destination customers was simply being sucked away by our out of balance lease with a dead mall. The dead mall was the only entity that was benefiting financially from our popularity. We were investing a ton of time and energy in operating a popular business for nothing in return. 

Why We Were Unable To Renegotiate Our Lease

We tried renegotiating with the mall, but they weren't interested. We found that very odd given we were one of the minority of the mall's remaining businesses that was producing 100+ daily in foot traffic for the mall. But then we came to learn later that it wasn't an issue that they wouldn't renegotiate, but it was that they couldn't renegotiate. 

The mall was for sale. And it turns out that due to the retail activity at the mall having completely died, the only buyer they could find bought it with the intention to tear 87% of the mall down and replace it with two 10 story office buildings. No one with the intent to keep it running as a mall was willing to buy it. The building itself had become worthless real estate despite being 90% occupied. Only the land had value anymore. And this is why they couldn't renegotiate with us. Renegotiating a new lease commitment with us would have made it harder to sell to a buyer who wants to tear it down. 

And even after the sale, the new owners refused to even talk to us. Probably because we were in the north end of the mall they planed to demolish first. While we didn't know exactly what their plans were until Fall of 2020, we could tell in February 2020 that we weren't a part of their plans. 

"You should have just moved and opened up somewhere else!" 

While the above is easy to say, it's not so easy to do. Our business model requires a significant amount of both electrical and plumbing work. The four soft-serve machines we use are 220 volt, 3 phase, water cooled machines. You don't just move them to a new spot and just plug them in like a dorm room fridge. It costs over $100,000 in leasehold improvements (electrical, plumbing, under floor piping, carpentry) to get those four soft serve machines and the six other fridges and freezers we use up and running, in addition to the rest of the kitchen, dining room, and bathroom work. 

And investing in all that doesn't make the problem go away. The problem being that the mall is still entitled to $48,000 per year in rent from us, and would be until Fall of 2023, more than 3.5 years away.  Our new rent costs for a new location would become the rent for the new location PLUS the $48,000 in rent we were still obligated to pay the mall. 

The mall being torn down would have released us from our lease obligation, but it was unknown as to when the deconstruction would take place. The new owners of the mall were not going to start the deconstruction/reconstruction until they signed their first office space tenant. No one knew when that would be. In fact, due to the pandemic that followed, and many companies going to "work from home" models, the office space market died.  It's now Spring of 2025, and they still have not signed that first office space tenant, and thus the mall still stands even today. Our sign is still up above our old space. And the space is only used for "pop up" businesses who apparently don't care that the Cookie Dough Creamery sign is still up above their door. 

We had no way of successfully escaping our lease obligation to stay in business. 

"Why not keep the zombie location up and running (no profit) and make profit from the new shop in a better location?"

With this plan, now we aren't just moving existing equipment to the new shop. We would need twice the equipment to run two shops. Each soft serve freezer costs $18,000. Four of them cost $72,000. Then we need six other fridges and freezers, plus tables, shelves, POS, menu, etc... the total cost to build out a new store entirely (equipment and leasehold improvements) is around $250,000. An amount of money we weren't close to having, nor could we get it. We tried to get it, but the banks didn't consider our open shop to be an asset because they saw that is was a zombie business, and we didn't have enough other assets to be used as collateral.  

Unfortunately we were in a situation where we were pretty much financially screwed by the mall despite having a business people loved and were going out of their way to come to us 43,200 times per year. There was no pivot move we could find to get out of the corner we were stuck in. 

"Would Cookie Dough Creamery succeed in a better location?"

Yes. It absolutely would. It was not the business model of Cookie Dough Creamery that failed. It was our decision to build it in the Shops of Worthington Place for three times what we should have been paying in rent that was the problem. As the old cliche says, the three most important things in business are: location; location; and location. We did everything right, except for one thing... our choice of location, and that one thing killed us.

43,200 destination customers per year is a nothing to sneeze at. Most ice cream sales in general are to impulse customers, not to destination customers. Given inflation those customers would spend an average between $6 and $7 per visit now. That is $259,000 to $302,000 in revenue just from destination customers alone. Given most ice cream sales as a whole are made to impulse customers, a decent location should produce an equal amount of impulse customers and destination customers (50% impulse/50% destination), if not more from the impulse side. That means Cookie Dough Creamery in a decent impulse traffic location could do $500,000 and $600,000 per year or more, especially with a good amount of advertising dollars that isn't being choked by high rent costs, like we found ourselves in. 

However, despite having the great opportunity on our hands I just described above, Kelly and I are done gambling in the commercial retail real estate game. We've been burned twice playing in that game. We have learned that while we have great skill and talent in producing tasty treats, we don't have similar skills in commercial retail real estate speculation and lease negotiations. The commercial retail real estate game is not a game that we are qualified to be making financial bets on, especially bets that cost hundreds of thousands of dollars to place. Read The Story of Kelly's Famous and Cookie Dough Creamery for more details on why we won't open up another ice cream shop.

But us not having the skills to play in the commercial retail real state game doesn't mean there aren't people who do have those skills. And those people that do have those skills can benefit by combining their commercial real estate speculation and lease negotiating skills with our skills in edible cookie dough production. It's a win/win opportunity. 

"Would you let someone else build out, own and run their own Cookie Dough Creamery branded ice cream shop?"

We think all ice cream shops would be more successful if they moved towards the Cookie Dough Creamery business model, and let cookie dough be to their ice cream shops like French fries are to fast food restaurants. What the ice cream shop is named doesn't matter. Whether the ice cream shop sells soft serve ice cream or hand dipped doesn't matter. Whether the ice cream shop uses self serve or full serve doesn't matter. Those are all just format preference decisions, and they all work. Cookie dough can help in all those different ice cream shop formats.

That being said, if one our customers decided to call their shop Cookie Dough Creamery, make numerous flavors of soft serve ice cream, and offer a self serve sundae buffet, would we have some nostalgic attachment to it? Of course, yes! It would be fun and exciting to us to see it live once again. But we would not show favoritism to them over our other customers. 

As long as they are buying Kelly's Famous Cookie Dough Mixes to produce their cookie dough, we would have zero issue with them using the Cookie Dough Creamery trademarks. We will even provide the logo files. In fact, we would even do this if they chose hand dipped ice cream and a full service format. In addition, Kelly's Famous isn't in the ice cream making business, but if our customers want to know how we made our ice cream at Cookie Dough Creamery, we are an open book to them. And by them, we mean all of our customers, and not just the ones that decide to use the Cookie Dough Creamery name. Using the name is simply an option our customers have if they chose to use it. 

Some people claim that "Cookie Dough Creamery closed because the cookie dough fad died."

Not only do we disagree with this claim, the facts show that this isn't true.

First of all, the claim takes a broad view of what they fad was. When you read Cookie Dough is to Ice Cream Shops as French Fries are to Fast Food Restaurants you will see that the fad was not "edible cookie dough" in general. The fad was "shops focused entirely on cookie dough".

These shops that popped up every where were NOT ice cream businesses. They would sometimes offer a flavor or two of ice cream, as an "oh yeah, we have that too". But they were not what anyone would consider to be an ice cream shop. The article link above shows why "shops focused entirely on cookie dough" don't work, while also showing that edible cookie dough is a powerful asset to ice cream shops. Not only is edible cookie dough not a fad, it's an asset that most ice cream shops are not currently leveraging as much as they should. 

If you look at the cookie dough scoop shops that popped up during the fad that have survived, you'll notice the vast majority of them operate as ice cream shops now (e.g. Cookie Dough Bliss), or they only still exist because they are in heavily crowded tourist areas or in sporting event stadiums. Or look at the oldest example of all... Cookie Dough Creations has been operating for 31 years (since 1994) in Naperville, IL, offering 8 flavors of hand dipped ice cream and 8 flavors of scooped cookie dough. The fad just came and went for them as if nothing had happened at all. Why? Because they are first and foremost an ice cream shop. 

Cookie dough only shop = fad

Ice cream shop with a great cookie dough offering = powerful combination

And secondly, the link above also provides data on when the fad died. It was the summer of 2019 that Dough Life and it's 50 or so franchised locations collapsed and literally seemed to vanish overnight. The summer of 2019 was when most of these cookie dough scoop shops saw their customer counts failing due to their fad dying. Cookie Dough Creamery on the other hand had 43,200 destination customers in 2019. This is a healthy number of destination customers for an ice cream shop. Most ice cream shop owners would love to have that destination count. We did not exist in the fad.

We used to frequently say, "people will try us because of our cookie dough, but they will come back because of our ice cream". When we saw the fad of cookie dough scoop shops in 2017 and 2018, we knew it was a fad, that it would fail, and that we did not exist in that fad. Our customers were still coming back to us in 2019... a lot! Our problem was the mall was costing us $43,000 per year without providing the foot traffic we were paying for. The fad dying was not the reason we closed. 

And if the above argument isn't enough, we have nearly 20,000 Facebook fans who will also tell you that the claim isn't true. They want their ice cream and cookie dough experience back!

Let's send Cookie Dough Creamery Fans to Your Ice Cream Shop

Cookie Dough is to Ice Cream Shops as French Fries are to Fast Food Restaurants

The Story of Kelly's Famous and Cookie Dough Creamery

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