I 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.

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

Moreover,

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.

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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.

ice cream cakes.

In addition, the parlor will offer two sizes of

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.

part of the product.

friendly, courteous and efficient employees and the phys-

ical building itself will be kept clean and orderly both

inside and outside.

The atmosphere of the parlor will be

Customers will be greeted with

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 750 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.

additional information.

Beyond this, the developer was unable to give any

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

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

ansville area there are 23 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.

units of the proposed market by 415 single family and 69 multi-

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The Forest Hill and Fountain Head Meadows housing developments

have been approved for 70 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 ! I

units.

Combined, these six developments increase the housing j l I 1

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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 1988

calendar year.

In April of 1988 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 280 tounhornes and 80

apartments.

According to the 1985 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

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$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

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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.

therefore, all insurance companies will charge the same.

The rates are regulated by the State,

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 $25.007.

The Milk Control Board. must also issue a license

for a fee of $25.008 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 $25.Q010 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.

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 # l o ) ,

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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i a 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 $ .10 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 $ .15.

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.

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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Customer Type A B

. 20 .13

.10 .05

. 2 0 .05

.10 .12

.10 .05

.04 .08

.04 .08

.04 .08

.03 .06

.04 .08

.08 .16

.03 .06

2 1

EXHIBIT 1

MENU

Item

Cones Cones Dipped Sundae Shakes Floats Banana Split Brownie Dessert

Price

.70

.85 1 .15 1 . 2 0 1 . 2 0 1 .70 1.70

Strawberry Shortcake 1.70 Old Fashion Soda 1.70 Parfait 1 .50 Candy Shake 2.25 Candy Sundae 1.85

Cakes 11 .50 Soft Drinks e 70

.60

.75 1 .05 1 . 0 5 1 .05

1 .80 1 .50

8 .50 .60

.45

.60

.80

.95

.95

1 .35 1 . 2 5

. 50

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EXHIBIT 3

:k Proposed Location

2 4

EXHIBIT 4

Additional Housing

- Planned Approved

26 EXHIBIT 6

COMPETITION

D A Y

D A Y

M T W T F S S

27

EXHIBIT

Work Hours

Winter

Time

7

Paid.

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 1 1 2 2 2 2 2 2 2 2 1

- 1 2 2 2 2 2 2 2 2 1

5

Summer

Time

Total 10 10 10 10 13 18 18 89

Hrs.

Employees

2 2 3 3 2 2 3 3 3 3 3 2 x 2 2 3 3 2 2 3 3 3 3 3 2 x 2 2 3 3 2 2 3 3 3 3 3 2 x 2 2 3 3 2 2 3 3 3 3 3 2 x 2 2 3 3 2 2 3 3 3 4 4 4 3 2 3 3 3 3 3 3 3 3 5 5 5 3 2 3 3 3 5 5 5 5 5 5 5 3 x

Total 31 31 31 31 38 44 49

255 13 Employees

Winter: 3 @ $3.75 x 2280 hrs = $ 8550 2 @ 3.35 x 1102 = 3692

$12242

Summer: 3 @ $3.75 x 840 h r s = $ 3150 10 Q 3.35 x 2730 h rs = 9146

$12296

2 8

EXHIBIT 8 ...I ...a

cnI . . . .%” deep 2 COIS . . . 2” deep 3 r o l ~ , . . . 3” deep

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

Insertior - Cols. 3

2 COL

Sunday, Xxxxxxxx XX 10 AeMe 10 P e M e

XXXX Pennsylvania Avenue 000~0000

Stop By ForA Taste!

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EXHIBIT 9

3

4;

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

- I 3"

4g Copy Below

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EXHIBIT 10

Summer Sales

TY Pe A B A A B B B B A B B B B B

Period Mon-Fri Mon-Fri Mon-Fri Mon-Fri Mon-Fri Mon-Thu Fri-Sat Fri-Sat Sat-Sun Sat-Sun Sat Sat Sun Sun

Days Time Lines 5 10-12am 1 5 12- 2pm 2 5 2- 4pm 2 5 4- 6pm 2 5 6- 9pm 2 4 9-10pm 1 2 9-10pm 3 2 10-llpm 2 2 10-llam 1 2 11- 2pm 2 1 2- 7pm 2 1 7- 9pn 3 1 2- 9pm 3 1 9- 1 Opm 2

SM 600 1200 1200 1200 2700 240 360 240 120 720 600 360 1260 120

14 W k s SM 8400 16800 16800 16800 37800 3360 5040 3360 1680 10080 8400 5040 17640 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

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EXHIBIT 11

I Type A

~ B A B B B B

Period Mon-Thu Mon-Thu Fri Fri-Sun Fri-Sun Sat-Sun Sat-Sun

Winter Sales

Days Time 4 11- 6pm 4 6- 9pm 1 11- 6pm 3 6- 8pm 3 8- 9pm

2 11-12am 2 12- 6pm

Lines SM 1/4 420 1/4 180 1 /4 105 1/2 180 1/4 45 1/2 360 1/4 30

38 Wlcs SM 15960 6840 3990 6840 1710

13680 1140

50160

A: 19950/2.5 = B: 30210/2.5 =

7980 customers x $2.00 = $15960 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

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A Sales

. 20 10182

.10 5090

.20 10182

.10 5090

.10 5090

.04 2036

.04 2036

. 0 4 2036

.03 1527

. 0 4 2036

.08 4072

.03 1527 Winter

Units

16968 6787 9697 4848 4848 1198 1198

EXHIBIT 12

Cost Of Goods

CGS Item

6477 Cones 3256 Dip Cone 5366 Sundae 3352 Shakes 2684 Floats 1253 B. Split

963 Brownie

B Sales Units CGS

. 13 28998 48330 18448

. 0 5 11153 14871 7134

.05 11153 10622 5878

. 1 2 26768 25493 17626

.05 11153 10622 5880

.08 17844 10496 10974

.08 17844 10496 8432 1198 1022 Stwb Short . 08 17844 10496 8957

898 483 Soda .06 13383 7872 4230 1357 1107 Parfait .08 17844 11896 9 7 0 1 2262 2084 Can Shake .16 35689 19827 18269 1018 869 Can Sundae .06 13383 8922 7 6 1 4

$28916 Summer $123143

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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 .0100 ,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 .2000 .8134

Shakes Ice Cr Sm (1Ooz) _.;35OD Md (1202) .4200 Lg (1602) .5600

Floats Ice Cr Sm (1002) .2100 Md (1202) .3500 Lg (1602) .5600

Banana Split Ice Cr ,5600

Brownie Dessert Ice Cr

Short Cake

Soda Sm (1002) Md ( 1 2 0 2 ) Lg (1602)

Parfait

Candy Shake Sm (1002) Md (1202) Lg (1602)

Candy Sundae Sm Md L9

Cakes 8 Inch 10 Inch

.3500

Ice Cr .3500

Ice CR .2100 .3500 .5600

Ice Cr .5600

Ice Cr ,2800 .3500 .4900

Ice Cr .2100 .3500 .5600

Ice Cr 2.1000 2.8000

Flav Milk Cup Napk Straw/Lid Cost + l o 0 0 .0700 ,0189 .0020 .0135 .5544 .1500 .0840 .0210 .0020 .0144 .6914 ,2000 .1120 .0313 .0020 .0178 ,9231

Soda Cup Napk Straw Lid cost .0500 .0189 .0020 .0026 .0109 .2944 .0600 .0210 .0020 .0026 .1180 .5536 .0800 .0313 .0020 .0026 .1520 -8279

Top Bana Spoon Dish Napk cost .3500 .0800 .0080 ,0455 .0020 1.0455

cost Top Brown Spoon Dish Napk .1500 .2500 .0080 .0434 .0020 -8034

cost Top Cake Spoon Dish Napk .2000 .2500 .0080 .0434 .0020 .8534

Flav Cup Napk Straw Lid cost . l o 0 0 ,0189 .0020 .0026 .0109 .3444 .1500 .0210 .0020 .0026 .0118 .5374 .2000 .0313 .0020 .0026 .1520 .9479

Top Dish Napk Spoon .2000 .0455 .0020 .008

cost .8155

Flav Milk Cup Napk Str/Lid Cost ,2500 .0700 .0189 .0020 .0135 .6344 .4500 .0840 .0210 .0020 ,0144 .9214 .6500 .1120 .0313 .0020 .0178 1.4399

Dish Napk Spoon Top Candy Cost .0318 .0020 .0080 . l o 0 0 .1500 .5018 .0434 .0020 .0080 .1500 .3000 .8534 .0434 .0020 .0080 .2000 .4500 1.2634

Center Icing Fudge Box cost .3500 .2500 .2000 .0300 2.93 .5000 ,3500 .3000 .0400 3.99

3 4

EXHIBIT 13

Income Statement For Twelve Months

Sales Ice Cream Soft Drinks Cakes

Total Sales

Cost Of Goods Sold Ice Cream Soft Drinks Cakes

Total Cost of Goods

Gross Profit

Operating Expenses (Stmt A )

Income/Loss Before Tax

$273,960 4,873

$152,059 650

5,232 $157 I 94.1

$136,012

$ ( 3 4 , 0 7 2 )

35

EXHIBIT 14

Statement A - Operating Expenses

Salaries - Manager

Rent Employer Payroll Taxes Advertising Legal Depreciation Accounting Repairs & Maint Supplies Insurance License Real Estate Taxes Workmen's Comp Association Fees Common Area Maint Utilites Total Operating Expenses

- Hourly $ l8,OOO 24,538 108 I 000

3 I 200 3,158 2 ,000 2 , 646 1,000 1,000 1,000 600 447 400 215 200 200

3,480 $170 I 084

36

i.

EXHIBIT 15

Balance Sheet

Current Assets Cash Inventory

Total Current Assets

Fixed Assets Equipment Leasehold Improvements

Total Fixed Assets

Total Assets

Current Liabilities Accounts Payable

Owners Equity Paid in Capital Net Loss

Total Equity

Total Liabilities & Equity

$ 2,000 3 , 000

$ 5 ,000

$ 1 8 , 1 2 5 25 000

$43 125

$48,125

$ 5 ,000

$73,997 ( 3 0 ; 872) $43 125

$48 ,125

38

it---

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-

11Clerk for the County Court House, interviewed by

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

author, Hagerstown, Maryland, 12 July 1988.

laaudit Bureau of Circulations, ABC Audit Report: N&Tspapcr, January 1988.

131bid..

c

' C

(;., I

39

BIBLIOGRAPHY

Audit Bureau of Circulations, ABC Audit Report: NepTspaper,

Census of Population and Housinq, 1980, Washington, DC:

January 1988.

SUmmary Tape File 3A.

author, 1 9 July 1988.

1 2 July 1988.

for the Comptroller Of the Treasury, Interviewed by

Clerk for the County Court House, Interviewed by author,

Coltman, Michael M., Start and Run a Profitable Restaurant. Vancouver, Canada: Self Counsel Press, 1983.

Corley, Robert and William Robert. Principles of Business - Law. Englewood Cliffs, NJ: Prentice Hall, 1985.

Duelcer, Joyce and Christopher. The Old Fashioned Homemade Ice Cream Coolcbook. New Yorlc: The Bobbs-Merrill Company, Inc., 1974.

Holloran, James W. The Entrepreneur's Guide to Startinq A Successful Business. Blue Ridge Summit, Pennsylvania; TAB BOOKS Inc., 1987.

Hummer, Donald, proprietor, Antrim House Restaurant. Inter- viewed by author, 14 July 1988.

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

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

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

Rusell, Thomas and Glenn Verrill. Otto Kleppner's Advertisinq Procedure. Englewood Cliffs, NJ: Prentice Hall, 1986.

Walthall, Wylie. Gettinq Into Business. San Francisco, CA: Canfield Press, 1975.

Washington County Economic Development Commission. Business

Prentice Hall, 1984.

The Daily Mail, 13 July 1988.

Summit, Pennsylvania: TAB BOOKS Inc., 1987.

and Industry Directory. Hagerstown, Maryland. 1988.

\ 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.

I