ci

A FEASIBILITY STUDY OF ESTABLISHING A

SOFT SERVE ICE CREAM SHOP

IN HAGERSTOWN'S NORTH END

IN PARTIAL FULFILLMENT OF THE

REQUIREMENTS FOR

MBA 599 INDEPENDENT RESEARCH

EDWARD INGRAM

AUGUST 23, 1988

 TABLE OF CONTENTS

Introduction . . . . . . . . . . . . . . . . . . . 1

Product . . . . . . . . . . . . . ........ 3
Market ............ . ........ 5

Business Design . . . . . . . . . . . . . . . . . 9

Insurance . . . . . . . . . . . . ........ 12

Regulations . . . . . . . . . . . . . . . . . . . 13

Advertising . . . . . . . . . . . . . . . . . . . 15

Financial . . . . . . . . . . . . . . . . . . . . 17

Conclusions . . . . . . . . . . . . . . . . . . . 20

Exhibits . . . . . . . . . . . . . . . . . . . . . 21

Notes . . . . . . . . . . . . . . . . . . . . . . 38

Bibliography . . . . . . . . . . . . . . . . . . . 39

i
 INTRODUCTION

The peerless sensation of something icy and flavorful

melting on the tongue is not new to the world's food lovers.
A delicacy once reserved for nobility, American's eat more

than 800 million gallondof ice cream each year. Moreover,

Gourmet calls ice cream "America's favorite dessertii.2

It is not difficult to understand the worldis passion

for ice cream. Aside from the obvious pleasure of satis-

fying ones own taste buds, almost everyone has a fond mem-
ory of a Birthday party, picnic or romance which included
some form of ice cream.

Another American passion is the dream of owning ones

own business. Having the ability of setting ones own pri-
orities in life, controlling ones own destiny, being inde-
pendent from direct supervision and receiving profits from
ones own labors are a few of the rationales for this dream.
This research paper unites these two passions; the
love for ice cream and the dream of owning ones own busi-
ness. Moreover, it is a feasibility study for opening a
soft serve ice cream parlor near the north end of Hagerstown,
Maryland.
This feasibility study describes the product which the
ice cream parlor will offer to the public. The study defines

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the target market and describes the business design; presents

insurance needs and. various regulations facing the business;

and describes an advertising plan and evaluates the potential

profitability of the ice cream parlor.

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 PRODUCT

The primary product of the restaurant will be soft serve

ice cream offered in two flavors: vanilla and chocolate. How-
ever, the primary product will be offered in many variations.
(Exhibit 1).
First, the menu will offer the traditional ice cream
served in a cone or cup either plain or coated with chocolate.
Also, the traditional thick shake will be offered in three

flavors: vanilla, chocolate and strawberry.

Another favorite to be served will be the old fashioned
sundae with a choice of chocolate, hot fudge, pineapple, straw-
berry, marshmallow or butterscotch toppings. In addition, the
parlor will offer ice cream floats.

Moreover, the parlor will present an ostentatious pre-

sentation of specialty desserts. The banana split will feature

three heaping mounds of ice cream, three toppings, banana and
whipped cream, topped with a cherry. Another treat featuring
a moist brownie with a generous portion of ice cream and hot
fudge will also be on the menu. Two other items on the menu

will be an old fashioned strawberry shortcake dessert and the

ever popular parfait. Taking advantage of seasonal items,

special desserts will be featured which w i l l center around
a particular fresh fruit.
3

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 4

The innovative side of the menu will include candied

shakes and sundaes which combine the cool creamy texture

of ice cream with the customers favorite candy bar or

candy. In addition, the parlor will offer two sizes of

ice cream cakes.
Soft drinks will be the parlors secondary product.
The drink menu will include Coca Cola, Diet Coke, Sprite,
and Root Beer.
An important factor in the success of the restaurant
is the atmosphere. The atmosphere of the parlor will be

part of the product. Customers will be greeted with

friendly, courteous and efficient employees and the phys-

c' ical building itself will be kept clean and orderly both
inside and outside.
 MARKET

Markets consist of buyers which differ in one or more

respects. They may differ in their wants, resources, buy-

ing practices, buying attitudes or geographical location.

Any of these variables can be used to segment an entre-

preneur's market.
Since ice cream is liked by almost all American's
regardless of age, race or social status, the most logical

method of market segmentation is by geographical location.

For presentation purposes, the geographical location of the
target market for the proposed ice cream restaurant can

be defined as Election Districts 13,27,25, and 21 (Exhibit

#2) or the north and northwestern sections of Hagerstown
and the northern and northwestern parts of Washington County
which are adjacent to the City of Hagerstown. This geograph-
ical area has approximately 21,000 residents of which 26%

are less than 18 years of age, 57% are between the ages of
18 and 62 and 17% are older than 62 years of age.3
The proposed location for the soft serve ice cream
parlor is in a shopping center currently being constructed
at a location one half of a mile North of Hagerstown, Maryland
on Route 11 (Exhibit #3). According to the developer, Office

Suppliers Inc., the shopping center will be completed by early

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spring and will include a large supermarket and eight retail

spaces of approximately 7 5 0 square feet each. In addition,
there will be ample parking for the center. Access in an6
out of the shopping center is already controlled by a traffic
light. Beyond this, the developer was unable to give any
additional information.
The projected growth of the proposed market is extremely
promising. According to records at the Washington County
Planning and Zoning Commission, there are six new housing

developments already approved (Exhibit # a ) . In the Maug-

ansville area there are 2 3 single family homes and 40 multi-
family homes approved for development. Slightly northeast
of the proposed location are three areas approved for develop-
ment: Forest Hills, Fairgreen Acres, and Fountain Head Meadows.
The Forest Hill and Fountain Head Meadows housing developments
have been approved for 7 0 and 29 (respectively) single family
homes. Fairgreen Acres was approved to contain 20 single
family and 29 multi-family housing units. One half of a
mile southeast of these developments is another mass of land
called Orchard Grove which has been approved for 255 single
family homes. Immediately southwest of this area is Fountain
Head Extended which was approved for 18 single family housing

jl
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units.

I1 Combined, these six developments increase the housing

I
units of the proposed market by 4 1 5 single family and 69 multi-
(-:
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family housing units. Currently development has begun in

four of the six proposed sites and development of the remain-
ing two areas is scheduled to begin by the end of the 1 9 8 8
calendar year.
In April of 1 9 8 8 a developer showed the Planning and
Zoning Commission of Hagerstown his plans for a 40 acre
tract of land on Route 11 within city limits. His plans
include a massive development of 2 8 0 tounhornes and 8 0
apartments.

According to the 1 9 8 5 State of Maryland Traffic Volume

Map, the proposed location on Route 11 has a daily traffic
count of 16,600 vehicles (Exhibit # 5 ) . Therefore, this
good traffic count coupled with any shopping mall traffic
should make for an excellent location. In addition, the
proposed location is centrally located in the target market.
Route 11 from Maugans Avenue into the City of Hagerstown
has various small businesses and industries and a large Mack
Trucks Inc. plant adjacent to the proposed location which
employs approximately 2,200 people4. Behind the various
businesses on either side of Route 11 are housing developments.
Competition for the proposed ice cream parlor is n o t
strong- (Exhibit #6). On Route 11, adjacent to the proposed
location is Olympia Candy Kitchen which serves a homemade
style hand-dipped ice cream. Their prices tend to be very
expensive with one scoop of ice cream costing the customer
 8
$1.25. Another competitor is Long Meadow Ice Cream which
is located in the Long Meadow Shopping Center, one and one
half miles southeast of the proposed location. Although
Long Meadow Ice Cream's concentration is on ice cream
alone, they serve only hand-dipped and are expensive.
Franchises such as McDonald's and Hardee's each have a
location in the proposed market. Both serve limited
variations of soft ice cream. One quarter of a mile
north of the shopping center is a small diner which also
serves soft ice cream with little diversification.
Outside the proposed market are two soft ice cream

shops very similar to the proposed parlor. Dairy Queen,

an international franchise, is located on Route 40, south-
east of Hagerstown. The other ice cream restaurant, Big
Dipper Drive-In, is located on Route 11 south of Hagerstown.
Dairy Queen will probably be an indirect competitor because
of advertising support from the franchise,however,both

competitors are inconveniently located.

 BUSINESS DESIGN

Available to the entrepreneur are three basic forms of

ownership: Proprietorship, Partnership and Corporation. The
most appropriate form of ownership is determined by weighing
the advantages and disadvantages of each type of ownership
against the requirements of the business.
A proprietorship is a business owned and controlled. by
one individual who takes all the risks and receives any profits

It is the most popular business form and is commonly found. in

retailing and personal services. The advantages of a propri-
etorship include ease of formation, freedom and mawinurn in-
centive. Disadvantages include unlimited liability, limited
life and limited funds.
Partnerships are the least favorite form of business
organizations. As the title implies, they are an association
of two or more persons as co-owners of a business. Partner-
ships are commonly found in retail and personal service
indu.stries. Significant advantages include having more
funds for expansion and improved credit rating. DisaGvantages
are unlimited liability, divided authority and frozen invest-
ment.
Corporations are the most complicated form of business.

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A corporation is a legal entity created by law which exists
apart from its owners. The major advantages of corporations
are limited liability, ease of transferring ownership, con-
tinuous life and ease of raising funds. Disadvantages in-
clude double taxation, expense and difficulty of organiza-
tion and government regulations.
Probably the best form of organization for the small

ice cream parlor is a proprietorship. Although corporations

enjoy limited liability, the lengthy and expensive process
of incorporation is probably best suited for a larger busi-
ness with additional start up cash. Also, the entrepreneur
in a small business such as the ice cream parlor would prob-
ably want to maintain the authority rather that share it
with a partner.
Personnel needed for the ice cream parlor would. vary
according to the season. Restaurants typically utilize
both part-time employees and high school students because
they will work for a lower hourly rate. Aside from a full-
time manager, year-round, the parlor will probably need a
staff of 13 employees during the summer and 5 employees
during the winter months working approximately 20 hours
per week (Exhibit # 7 ) .
Since students can not work daytime hours during the
school year, the entrepreneur should try to secure approx-
imately three employees capable of working daytime hours
during the winter months. A job title of "Senior Employeell
 ll
can be given to this category of employee to justify the
higher rate needed to secure these people. The manager
will probably need to pay "Senior Employees" a rate of
$3.75 per hour. The other part-time employees can be
hired at the minimum wage of $3.35 per hour. Restaurants
typically have a high employee turnover, therefore, the
manager should maintain a good employment application
file.
 INSURANCE

By law, if a person has employees, they must carry

Workmen's Compensation insurance. Workmen's Compensation
provides medical insurance for all employees while they
are on the job. If an employee is injured while on the

job, all medical costs will be covered by the employer's

Workmen's Compensation insurance. The cost of the insur-

ance is determined by the type of work. The expense to

the employer is between $ .41 and $6.00 per hundred
dollars of payroll5. The rates are regulated by the State,
therefore, all insurance companies will charge the same.
A comprehensive insurance policy is called a multi-
peril policy which contains two parts: property and
liability. The property coverage will explain all condi-
tions and stipulations in the event of physical damage to
the business. The liability coverage will insure against
three conditions: criminal behavior against the insured
(not including customer and employee theft), legal respons-
ibility by a contract which harms the insured and tort li-
ability which covers harm due to negligence. An adequate
multi-peril policy can be bought for the ice cream parlor
for approximately $ 6 0 0 . 0 0 6 .

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 REGULATIONS

One of the major obstacles of opening the ice cream

parlor is getting beyond the regulations of the Health

Department. Two pamphlets are published which outline
the requirements for this type of business: 10.15.03
Food Service Facilities and 10.15.05 Manufacture and
Sale of Frozen Dairy Foods and Ices.
According to Health Department Regulations, prior
to opening, the business must submit a "finishing" sched-
ule which outlines the materials which will be used to
finish the walls, ceilings and floors. The materials
used must be smooth and easy to clean. A list of food
service equipment must be submitted including the manu-

facturer, model number and a descriptive pamphlet for

each piece. Per the regulations, the business must sub-
mit a detailed floor plan showing where every item is
located in the building. The plumbing layout must be

inspected and if city water and sewer are not used, then
there must be approval. A three compartment sink (wash,
rinse, sanitize) must be installed. In addition, the
business must apply for a license yearly and agree to
be inspected by the Health Department twice a year.

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A traders license must also be bought on a yearly

basis from the Clerk of the County Court €or $ 2 5 . 0 0 7 .

The Milk Control Board. must also issue a license
for a fee of $ 2 5 . 0 0 8 per year and must test the ice cream
machine once a month for bacteria levels. The lab fee
for this test is $31.009 monthly.
In order to collect revenues, the business must
register with the State of Maryland to collect sales
tax. After a simple form is sent with a $ 2 5 . Q 0 1 0 fee,
the operator will receive a Sta-te registration certifi-
cate with an identification number and forms to include
with sales tax collections. Sales tax is payable monthly.
F--

.- The ice cream parlor will need to register with the

City and County in which it resides in order to receive
an occupancy license. The fee is $30.0011 and is re-
newable yearly. A federal tax identification number is
needed to comply with tax regulations involving F.I.C.A.
and federal income tax withholding procedures.

..-.
 ADVERTISING

The ice cream parlor's most important advertising

objective will be to inform customers of its existence.
Two types of customers must be informed; those who live
in the target market and those who will be traveling

through the target market. For the money, the best

method of reaching both markets is by newspaper.
A newspaper is the primary advertising medium in
terms of daily readership, advertising revenue and
preference as an advertising medium by the public.
Moreover, newspaper readership is a daily ritual in
most homes. The newspaper offers everyone something:
whether it be current events, sports, comics, entertain-
ment, financial or shopping information. One of the
greatest advantages of newspaper is that all of these
can be described and illustrated. to the reader. From

line ads in classified to full page ads - the reader

can find it all in one place.
The Herald-Mail newspapers are the major newspapers
in Washington County, publishing both a morning- and evening
edition. These newspapers have a combined daily circula-
tion of 44,00012. The circulation area includes Washington

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and Frederick Counties in Maryland, Franklin and Fulton

Counties in Pennsylvania, and Jefferson, Berkeley and
Morgan Counties in West Virginia.

Advertising in the Hagerstown newspapers seems a

logical choice because it not only is the primary news-
paper for the customers living in the target market, it
also reaches many of the potential customers who travel
to and/or by the shopping center.
The newspaper advertising budget for the first year
allocates funds for promoting a grand opening and funds
for advertising the business continuously throughout the
year. A display advertisement, 2 columns by 7 inches
(Exhibit # 8 ) , will be published in the newspapers on the
Wednesday and Friday prior to the grand opening and will
also appear on the Sunday of the grand opening. Also
budgeted for the grand opening is a 1 column by 3 inch
back page advertisement (Exhibit #9) which is scheduled to
be published on the Sunday, Wednesday and Friday prior to
the grand opening. These particular days were chosen be-
cause they are promoted by the Herald-Mail as the best
advertising days. The money budgeted for the rest of the
year is for one back page advertisement per week. Since
Wednesday is the largest advertising day of the week and

the circulation is the greatest, nearly 46,00013, it would

be the best day of the week for the greatest exposure.
 FINANCIAL INFORMATION

The sales forecast is comprised of an estimate for

the summer season (June through August) (Exhibit #lo),
and an estimate for the winter season (September through
May) (Exhibit #11). Within each season a projection is
some for purchasing service minutes (PSM). The PSM are
divided by an estimated time it takes to wait on a cust-
omer (two and one half minutes) to produce the number of

purchasing customers distinguished by purchasing type

(A = small purchase; B = large purchases).
An ice cream sale projection is calculated by
multiplying the estimated number of purchasing customers
by the average sale per customer for each customer type.
The soda projection is based on an assumption that one
out of every ten customers will purchase a soda. Cake
sales are estimated at two per day in the winter and
ten per day in the summer.
Sales are allocated to each item on the menu to
derive an estimated number of sales units f o r each item

(Exhibit 12). A cost of goods sold estimate was then

derived by multiplying the sales units times the medium
cost (Exhibit # 1 2 - A ) .

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According to the projected Income Statement, (Exhibit
#13), the ice cream parlor will lose more than $34,000.00

the first year. Reviewing the operating expenses (Exhibit

#14), an obvious problem is the rental expense and the
associated fees of the shopping center. Combined, these
expenses account for 64% of the operating expenses.
Moreover, the Income Statement presents an optimistic
presentation. Negative variations in the sales forecast
would increase the loss to even greater proportions. Also,
the cost of goods sold estimates assume the ice cream machine
can produce the product for $ .07 per ounce. Salesman for
the machines estimates a range of $ .07 to $ . 1 0 per ounce.
Currently the prices are identical to the competitors
outside the market. Pricing for the soft ice cream tends
to be very elastic, therefore, increasing prices will sacri-
fice sales on an already marginal gross profit margin. In
order for the restaurant to break even using the current

financial estimates, the entrepreneur would need. to in-

crease the price of each ice cream product by $ . 1 5 .
The Balance Sheet (Exhibit #13) for the ice cream
parlor assumes the entrepreneur has working capital of
approximately $77,000.00 to purchase equipment, leasehold

improvements and to contribute to working capital. There

are places in the equipment purchases (Exhibit #16) where

money can be saved. Eliminating seating in the ice cream

parlor would save $1000.00. There are less expensive models
 - ----
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of ice cream makers which could save as much as $3,000.00,

however, they d o not have the same cost of goods profit-

ability .
A current ratio of 1 : l is very good for an ice cream

parlor. However, this good ratio is caused by the assump-

tion the entrepreneur needed no financing for the endeavor.

.”.-

L_

,-.,

...
 CONCLUSIONS

The ice cream parlor is not feasible as proposed.

An optimistic projection of revenues nets to a loss of
almost $31,000.00 on the Income Statement. Moreover,
cost of goods sold may be understated by as much as
$ .03 on 242,220 ice cream prod-ucts or possibly $22,000.

Also, the depreciation on the equipment was calculated

on a 10 year straight line method to produce a more
profitable number. The depreciation should probably
be calculated on a five year accelerated method which
would increase the net loss.
An alternative for the restaurant would be to
offer food items. Currently, Dairy Queen does not

offer stores to prospective franchisees which feature

only ice cream. Instead, they offer the franchisee a
Dairy Queen/Brazier plan which is a total food service

program with a line of soft serve dairy products and

fast foods. It appears the gross profit margin for soft
serve dairy products is not sufficient to cover the cost
of leasing space.

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EXHIBIT 1

MENU

Customer Type
A B Item Price

.20 .13 Cones .70 .60 .45

.10 .05 Cones Dipped .85 .75 .60
.20 .05 Sundae 1.15 1.05 .80
.10 .12 Shakes 1.20 1.05 .95
.10 .05 Floats 1.20 1.05 .95
.04 .08 Banana Split 1.70
.04 .08 Brownie Dessert 1.70
.04 .08 Strawberry Shortcake 1.70
.03 .06 O l d Fashion Soda 1.70
.04 .08 Parfait 1.50
.08 .16 Candy Shake 2.25 1.80 1.35
.03 .06 Candy Sundae 1.85 1.50 1.25

Cakes 11.50 8.50

Soft Drinks e 70 .60 .50

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8-

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EXHIBIT 3
:k Proposed Location
 24
EXHIBIT 4
Additional Housing

-
Planned
Approved
 26
EXHIBIT 6

COMPETITION
 27

EXHIBIT 7

Work Hours Paid.

Winter

Time Total Hrs.

1 1 1 1 1 1 1 1 1 1 10
1 1 1 1 1 1 1 1 1 1 10
D 1 1 1 1 1 1 1 1 1 1 10
A 1 1 1 1 1 1 1 1 1 1 10
Y 1 1 1 1 1 1 2 2 2 1 13
1 2 2 2 2 2 2 2 2 1 18
-1 2 2 2 2 2 2 2 2 1 18
89
5 Employees

Summer

Time Total
M 2 2 3 3 2 2 3 3 3 3 3 2 x 31
T 2 2 3 3 2 2 3 3 3 3 3 2 x 31
D W 2 2 3 3 2 2 3 3 3 3 3 2 x 31
A T 2 2 3 3 2 2 3 3 3 3 3 2 x 31
Y F 2 2 3 3 2 2 3 3 3 4 4 4 3 38
S 2 3 3 3 3 3 3 3 3 5 5 5 3 44
S 2 3 3 3 5 5 5 5 5 5 5 3 x 49
255
13 Employees

Winter: 3 @ $ 3 . 7 5 x 2280 hrs = $ 8550

2 @ 3 . 3 5 x 1102 = 3692
$12242

Summer: 3 @ $ 3 . 7 5 x 840 h r s = $ 3150

10 Q 3 . 3 5 x 2730 h r s = 9146
$12296
 28

EXHIBIT 8
.
.
a
...I

cnI. . . .%” deep Insertior

2 COIS . . . 2” deep
3 r o l ~ ., . . 3” deep - Cols. 3
l’.( 1. H o x 439
I O 0 Summit Avenue
Ilagt-rstown. MI). 2 1740
:Io I /7:19-5 I.? I

1 COL 2 COL

Sunday, Xxxxxxxx XX
10 AeMe 10 P e M e
XXXX Pennsylvania Avenue
000~0000
Stop By ForA Taste!
 29

I EXHIBIT 9

Ice Cream Shoppe

invites you to our
Grand Opening
Celebration
Sunday, Xxxxxxx XX
10 A.M. - 10 P.M.
at
XXXX Penna. Ave.
IBring this ad to purchase a large cone fo
the price of a medium -
3 I
3"

4; 4g
Copy Below
 30

EXHIBIT 10
Summer Sales

TYPe Period Days Time Lines SM 1 4 W k s SM

A Mon-Fri 5 10-12am 1 600 8400
B Mon-Fri 5 12- 2pm 2 1200 16800
A Mon-Fri 5 2- 4pm 2 1200 16800
A Mon-Fri 5 4- 6pm 2 1200 16800
B Mon-Fri 5 6- 9pm 2 2700 37800
B Mon-Thu 4 9-10pm 1 240 3360
B Fri-Sat 2 9-10pm 3 360 5040
B Fri-Sat 2 10-llpm 2 240 3360
A Sat-Sun 2 10-llam 1 120 1680
B Sat-Sun 2 11- 2pm 2 720 10080
B Sat 1 2- 7pm 2 600 8400
B Sat 1 7- 9pn 3 360 5040
B Sun 1 2- 9pm 3 1260 17640
B Sun 1 9-1Opm 2 120 1680
152880
A: 43680/2.5 = 17472 customers x $2.00 = $ 34944
B:109200/2.5 = 43680 customers x $4.00 = 174720
Total Ice Cream Sales $209664
Soda Sales 61152 customers x .1 =6115 x rf.60= $3669
Cake Sales 980 x $10.00=$9800
 ;c[ 31

EXHIBIT 11
Winter Sales
I Type Period Days Time Lines SM 38 Wlcs SM
A Mon-Thu 4 11- 6pm 1/4 420 15960
~ B Mon-Thu 4 6 - 9pm 1/4 180 6840
A Fri 1 11- 6pm 1/4 105 3990
B Fri-Sun 3 6- 8pm 1/2 180 6840
B Fri-Sun 3 8 - 9pm 1/4 45 1710
B Sat-Sun 2 12- 6pm 1/2 360 13680
B Sat-Sun 2 11-12am 1/4 30 1140
50160

A: 19950/2.5 = 7980 customers x $2.00 = $15960

B: 30210/2.5 = 12084 customers x $4..00 = $48336
Total Ice Cream Sales $64296
Soda: 20064 customers x .1 = 2006 x $ .60 = $ 1204
Cakes: 532 x $10.00= $ 5320
 32

EXHIBIT 1 2
Cost Of Goods

A Sales Units CGS Item B Sales Units CGS

.20 10182 16968 6477 Cones .13 28998 48330 18448
.10 5090 6787 3256 Dip Cone .05 11153 14871 7134
.20 10182 9697 5366 Sundae .05 11153 10622 5878
.10 5090 4848 3352 Shakes .12 26768 25493 17626
.10 5090 4848 2684 Floats .05 11153 10622 5880
.04 2036 1198 1253 B. Split .08 17844 10496 10974
.04 2036 1198 963 Brownie .08 17844 10496 8432
.04 2036 1198 1022 Stwb Short .08 17844 10496 8957
.03 1527 898 483 Soda .06 13383 7872 4230
.04 2036 1357 1107 Parfait .08 17844 11896 9701
.08 4072 2262 2084 Can Shake .16 35689 19827 18269
.03 1527 1018 869 Can Sundae .06 13383 8922 7614
Winter $28916 Summer $123143
 33

EXHIBIT 12 A
COST OF GOODS BY PRODUCT

cost
Cones Ice Cream Cone Napkin Choc Plain Dip
Small (302) .2100 .0220 .0020 .0600 .2340 .2940
Medium (502) .3500 .0297 .0020 .0800 .3817 .4797
Large (802) .5600 .0316 .0020 . 0 1 0 0 ,5936 .6936
Sundae Ice Cream Dish Napkin Spoon Top Cost
Small (302) .2100 .0318 .0020 .0080 . l o 0 0 .3518
Medium(5oz) .3500 .0434 .0020 .0080 .1500 .5534
Large (802) .5600 .0434 .0020 .0080 . 2 0 0 0 .8134
Shakes Ice Cr Flav Milk Cup Napk Straw/Lid Cost
Sm (1Ooz) _.;35OD + l o 0 0 .0700 ,0189 . 0 0 2 0 .0135 .5544
Md (1202) .4200 .1500 .0840 .0210 .0020 .0144 .6914
Lg (1602) .5600 ,2000 .1120 .0313 .0020 .0178 ,9231
Floats Ice Cr Soda Cup Napk Straw Lid cost
Sm (1002) .2100 .0500 .0189 .0020 .0026 .0109 .2944
Md (1202) .3500 .0600 .0210 .0020 .0026 .1180 .5536
Lg (1602) .5600 .0800 .0313 .0020 .0026 .1520 -8279
Banana Split Ice Cr Top Bana Spoon Dish Napk cost
,5600 .3500 .0800 .0080 ,0455 .0020 1.0455
Brownie Dessert Ice Cr Top Brown Spoon Dish Napk cost
.3500 .1500 .2500 .0080 .0434 . 0 0 2 0 -8034
Short Cake Ice Cr Top Cake Spoon Dish Napk cost
.3500 .2000 .2500 .0080 .0434 .0020 .8534
Soda Ice CR Flav Cup Napk Straw Lid cost
Sm (1002) .2100 . l o 0 0 ,0189 .0020 .0026 .0109 .3444
Md ( 1 2 0 2 ) .3500 .1500 .0210 . 0 0 2 0 .0026 .0118 .5374
Lg (1602) .5600 .2000 .0313 .0020 .0026 .1520 .9479
Parfait Ice Cr Top Dish Napk Spoon cost
.5600 .2000 .0455 .0020 .008 .8155
Candy Shake Ice Cr Flav Milk Cup Napk Str/Lid Cost
Sm (1002) ,2800 ,2500 .0700 .0189 .0020 .0135 .6344
Md (1202) .3500 .4500 .0840 .0210 .0020 ,0144 .9214
Lg (1602) .4900 .6500 .1120 .0313 .0020 .0178 1.4399
Candy Sundae Ice Cr Dish Napk Spoon Top Candy Cost
Sm .2100 .0318 .0020 .0080 .lo00
.1500 .5018
Md .3500 .0434 .0020 .0080 .1500 .3000 .8534
L9 .5600 .0434 . 0 0 2 0 .0080 .2000 .4500 1.2634
Cakes Ice Cr Center Icing Fudge Box cost
8 Inch 2.1000 .3500 .2500 .2000 .0300 2.93
10 Inch 2.8000 .5000 ,3500 .3000 .0400 3.99
 34

EXHIBIT 1 3

Income Statement
For Twelve Months

Sales
Ice Cream $273,960
Soft Drinks 4,873
Cakes
Total Sales

Cost Of Goods Sold

Ice Cream $152,059
Soft Drinks 650
Cakes 5,232
Total Cost of Goods $ 1 5 7 I 94.1

Gross Profit $136,012

Operating Expenses (Stmt A )

Income/Loss Before Tax $ (34,072)

 35

EXHIBIT 14
Statement A - Operating Expenses
Salaries - Manager $ l8,OOO
- Hourly 24,538
Rent 108 I 000
Employer Payroll Taxes 3 I 200
Advertising 3,158
Legal 2 ,000
Depreciation 2 ,646
Accounting 1,000
Repairs & Maint 1,000
Supplies 1,000
Insurance 600
License 447
Real Estate Taxes 400
Workmen's Comp 215
Association Fees 200
Common Area Maint 200
Utilites 3,480
Total Operating Expenses $170 I 084
 36

i.

EXHIBIT 1 5

Balance Sheet
Current Assets
Cash $ 2,000
Inventory 3 ,0 0 0
Total Current Assets $ 5,000

Fixed Assets
Equipment $18,125
Leasehold Improvements 25 000
Total Fixed Assets $43 125

Total Assets $48,125

Current Liabilities
Accounts Payable $ 5,000

Owners Equity
Paid in Capital $73,997
Net Loss ( 3 0 ; 872)
Total Equity $43 125

Total Liabilities & Equity $48,125

 38

NOTES

1Cindy Mills, "The Scoop on Ice Cream", Haqerstovn

(Maryland) The Daily Mail, 13 July 1988, sec. C, p . 1.
2Joyce and Christopher Dueker, The Old Fashioned
Ice Cream Cookbook (New York: The Bobbs-Merrill Company,
Inc., 1974), 11.
3Census Population and Housinq 1980. (Washington,
DC, 1980) Summary Tape File 3A.
4Wasl~ington County Economic Development Commission ,
Business and Industry Directory (Hagerstown, Maryland:
1988), 20.

5James W. Halloran, The Entrepreneur's Guide to

Starting a Successful Business. (Blue Ridge Summit,
Pennsylvania: TAB BOOKS Inc., 1987), 153.

6Al Twiss, interviewed by author, Frederick,

Maryland, 8 July 1988.

7Clerk for County Court House, interviewed by author,

Hagerstown, Maryland, 12 July 1988.

*Donald Hummer , interviewed by author, Greencastle

Pennsylvania, 14 July 1988.

loclerk for the Comptroller of the Treasury, inter-

viewed by author, Hagerstown, Maryland, 19 July 1988.

11Clerk for the County Court House, interviewed by

author, Hagerstown, Maryland, 12 July 1988.
laaudit Bureau of Circulations, ABC Audit Report:
N&Tspapcr, January 1988.
131bid..

---
c 39

BIBLIOGRAPHY

Audit Bureau of Circulations, ABC Audit Report: NepTspaper,

January 1 9 8 8 .

Census of Population and Housinq, 1 9 8 0 , Washington, DC:

SUmmary Tape File 3A.

for the Comptroller Of the Treasury, Interviewed by

author, 1 9 July 1 9 8 8 .
Clerk for the County Court House, Interviewed by author,
1 2 July 1 9 8 8 .

Coltman, Michael M., Start and Run a Profitable Restaurant.

Vancouver, Canada: Self Counsel Press, 1 9 8 3 .
Corley, Robert and William Robert. Principles of Business
-
Law. Englewood Cliffs, NJ: Prentice Hall, 1 9 8 5 .
'C Duelcer, Joyce and Christopher. The Old Fashioned Homemade
Ice Cream Coolcbook. New Yorlc: The Bobbs-Merrill Company,
Inc., 1 9 7 4 .
Holloran, James W. The Entrepreneur's Guide to Startinq A
Successful Business. Blue Ridge Summit, Pennsylvania;
TAB BOOKS Inc., 1 9 8 7 .

Hummer, Donald, proprietor, Antrim House Restaurant. Inter-

viewed by author, 14 July 1 9 8 8 .

Kotler, Philip. Marketinq Manaqement. Englewood Cliffs, NJ:

Prentice Hall, 1 9 8 4 .

Mills, Cindy. "The Scoop on Ice Cream." Haqerstown (Maryland)

The Daily Mail, 13 July 1 9 8 8 .

Roberson, Cliff. The Small Business Tax Advisor. Blue Ridge

Summit, Pennsylvania: TAB BOOKS Inc., 1 9 8 7 .

Rusell, Thomas and Glenn Verrill. Otto Kleppner's Advertisinq

Procedure. Englewood Cliffs, NJ: Prentice Hall, 1 9 8 6 .

(;.,I
Walthall, Wylie. Gettinq Into Business. San Francisco, CA:
Canfield Press, 1 9 7 5 .

Washington County Economic Development Commission. Business

and Industry Directory. Hagerstown, Maryland. 1 9 8 8 .
\ 25

EXHIBIT 5
State Of Maryland Traffic Volume Map

I
 40

Weaver, Linda, former owner of Long Meadow Ice Cream.

Interviewed by author, 20 J u l y 1988.