A small newspaper article about challenges that faced Dippin
Dots. Just to have a broader knowledge about the company!
Ice cream treat hit
could lead to 'fresh-brewed' coffee version
(c) USA TODAY, 2009
More than two decades
ago, microbiologist Curt Jones devised a way to flash-freeze ice cream into
colorful pellets about the size of BB's. Now in a tough economy, the
outside-the-box company he founded, Dippin' Dots, is searching for a new
concoction to take it beyond the quirky-but-costly ice cream's seasonal
popularity in amusement parks and stadiums. "We changed the way folks eat
ice cream," Jones, 49, half-boasts. "Now, we've got to change our
business model."
Summer is the season
when Dippin' Dots rise to the top of every kid's must-eat list. The company
does 60% of its business in summer. But in this coming summer-of-the-recession,
all bets are off for a sweet treat that at $5, $6 or even $7 a pop can cost
cash-strapped parents as much as they're used to plopping down for a burger.
The dots, cryogenically
frozen with liquid nitrogen at 320 degrees below zero, are so tongue-tinglingly
cold and flavor-packed that it's hard for most kids to resist. The question is:
Do Dippin' Dots have legs?
"You've probably
made up your mind that you're going into poverty when you step inside an
amusement park," jokes Howard Waxman, publisher of Ice Cream Reporter, a
trade magazine. "But something this pricey is an especially tough sell at
retail outside the amusement park."
Which is precisely
where Jones hopes to go with the brand this summer via upcoming rollouts of
Dots 'n Cream ice cream blends and ice cream cakes. Yet that may be the least
of Jones' challenges. Dippin' Dots is several million dollars in debt after
years of lawsuits and countersuits. Jones says although his company has
millions of dollars in assets, the bank can foreclose on it at any time. Rivals
have successfully sued Jones for filing an invalid patent. After stepping aside
and letting someone else run the company for several years, founder Jones
recently returned as president in a recession.
It hasn't been easy.
With sales tanking, he found himself laying off nearly a quarter of the
company's payroll -- including the president and operations chief. And
desperate for cash, he came within a whisker of selling the company.
So why is Jones still
smiling?
Because Jones -- whose
company has regularly ranked high atop Inc. magazine's list of fastest-growing
privately held companies and Entrepreneur magazine's fastest-growing franchises
-- has got another big idea.
This one, Jones hopes,
will finally take Dippin' Dots outside the arena of seasonal treats. He's about
to take a similar colder-than-cold instant-freezing process that makes Dippin'
Dots so delectable and redirect that technology to fresh brewed coffee. That's
right, coffee dots. Add hot water and presto, "fresh-brewed" coffee
without brewing. Just as he dubbed Dippin' Dots the "ice cream of the
future" two decades ago, he says the new coffee dots will adopt the slogan
"coffee of the future." It's still early, but he's thinking about
naming the new coffee dots Smokin' Joe. He will roll it out next month in Las
Vegas when the specialty coffee world gathers for its trade show, Coffee Fest.
His once-kid-targeted dots will get a very adult twist. "I hesitate to
tell you about this," admits the microbiologist, entrepreneur and go-to
idea guy. "I'm afraid someone will steal it."
He's got good reason.
After spending more than $10 million the past decade in court battles, the
company was stripped of what may be its most important franchise: the Dippin'
Dots patent. After a rival's lawsuit, a court ruled in 2003 that Dippin' Dots
did not supply all the required information for its original patent. So now,
anyone and his brother -- with access to liquid nitrogen -- can make 'em using
the process that Jones devised.
Lots of competition
Several companies are
making similar versions. There's IttiBitz. There's Mollicoolz. And there's Mini
Melts, which is the company that successfully challenged the Dippin' Dots
patent. More competition is likely on tap. Dippin' Dots is so wildly popular at
family attractions including Hershey Park and the Santa Cruz Beach Boardwalk,
that it outsells all other desserts by more than 2-to-1 at both locations.
"It's become the benchmark
in our industry," says Ken Whiting, CEO of Whiting's Foods, food and
beverage operator on the Santa Cruz Beach Boardwalk. "Everyone wonders:
What's going to be the next Dippin' Dots?" Jones isn't sure what will be
his next hit. "It's hard to create a product that people really
like." Which is why he's got several new products in the hopper.
For one, there's Dots
'n Cream, an ice cream with Dippin' Dots mix-ins that can be sold at
supermarkets and kept in conventional freezers. He's also working on ice cream
cakes that he thinks can compete with those from Carvel and Baskin-Robbins.
He's close to coming out
with low-cal, low-fat Dippin' Dots that could be sold at schools. He's
considering "frappe dots" that, when mixed with milk, would mimic the
taste of Frappuccinos. And he's working on Fridgets, which are Dippin' Dots
clustered with candy or cookie pieces.
Then there are the
coffee dots on tap next month. "I've always been a big thinker," says
Jones. "A part of me still thinks anything is possible." That's been
his motto since he was a twentysomething in 1987, when Jones and a neighbor
were making ice cream. The two were trying to figure out a way to freeze
homemade ice cream faster so it wouldn't taste so icy. Jones, a microbiologist,
realized a project at his work related directly to the ice cream he wanted to
make. He took the ice cream mix to his lab at work and ultimately concocted a
way to cryogenically freeze ice cream into tiny beads. The instant freezing
means the ice crystals are one-thirtieth the size of ice crystals in
conventional ice cream, so the product tastes much creamier -- and much less
icy.
People who tried it
liked it. So, less than a year later, Jones left his day job to produce Dippin'
Dots out of the garage at his parents' farm in Grand Chain, Ill. Within two
years -- with amusement parks starting to nibble at the kid-friendly junk food
-- he moved the operation into a former liquor store in Paducah.
Things took off from
there. By 1995, it moved into a giant facility in Paducah, then nearly doubled
its size a year later. Its popularity grew so fast that by 2002, hundreds of
McDonald's on the West Coast started to sell it. Celebs caught on, too.
Basketball star Shaquille O'Neal is a big fan. Even A-lister Lindsay Lohan has
been spotted with them.
The Oprah effect
Then, the big break:
Oprah Winfrey had Jones as a guest on a show about quirky ways people get rich.
Sales surged, says Jones, after the often-dieting Winfrey nibbled some Dippin'
Dots on the show -- and gave them a thumbs-up.
Of course, Oprah's
blessing can only take you so far. If the costly lawsuits weren't enough to
rock the financial stability of the $40 million company, along came the
recession, which resulted in Dippin' Dots' sales slipping 11% in 2008. Even
before the recession, the company suffered its first loss in 2007.
"We went from
being a company whose product everyone loves -- and a company that makes money
every year -- to one that couldn't even get financing," Jones says. But
with the new product rollouts, Jones hopes Dippin' Dots will stop losing money
in 2009 .
One possible path to
profitability: retail sales. The company has 200 franchisees that sell Dippin'
Dots at everything from stand-alone storefronts to mall kiosks. Its biggest
store sits off the town square in Metropolis, Ill., also known as the adopted
home of Superman. It's where Cathe Glass of Metropolis hosted son Jacob's
college graduation bash this month. "Dippin' Dots were the big draw,"
she says, as more than 125 guests showed up. At a mall store in nearby Paducah,
6-year-old Paige Pope makes the twice-a-month trek with her mom for the same
reason. She goes for the rainbow Dippin' Dots. But, says her mom, Alisha,
"She asks for them more than she gets them."
(c) USA TODAY, 2009
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