Dippin’ Dots CEO Scott Fischer On Manufacturing Trends And Managing Growth

dippin' dotsWhen CEO Scott Fischer acquired ice cream company Dippin’ Dots from bankruptcy in May 2012, there was a lot of work to be done toward making the brand profitable once again. But he decided to retain 100% of the company’s employees during the 2012 acquisition, and renewed all but two of its 1,300-plus customer accounts.

Since then, Fischer has guided the brand to 2017 gross annual sales of $300 million, with key acquisitions including Doc Popcorn, the largest franchised retailer of popcorn in the world, helping to fuel the turnaround. In 2018 Dippin’ Dots is celebrating its 30th anniversary, and summer sales were up 10 percent over last year.

Chief Executive caught up with Fischer to talk about Dippin’ Dots’ turnaround, the importance of company culture and how Dippin’ Dots is handling manufacturing demands. Here’s an excerpt from the conversation:

On managing the growth of the company through its turnaround

To go through and then sustain as much growth as we have is a very difficult process. I’ve always used the analogy with my team of a wooden ship, and the more it takes on, the more leaks you start to see in the ship. So, you could keep an eye on the ship and make sure that you know where the leaks are at, and make sure you can plug the leaks. One of the key pieces for us was communication with our team and making sure that we stay coordinated, because we’re a very horizontal company. So, manufacturing, production, marketing, wholesale, franchising. There’s a lot different pieces to the puzzle.

Having such strong senior management team was a key piece for us. When I came into the business, I kept the senior management team in place and then added to it. I went out there and found a lot of veterans in the industry. Guys who were 60, 65 years old who were very knowledgeable in their range of business and don’t have to work, but they were working because they love the game. And we constructed a very strong senior management team, and it is one that has no egos. And everyone has a voice, kind of like a nice little roundtable and for a 30-year-old kid like myself, it’s been a blessing to have that type of wisdom to pull from.

So, that was one important piece. And two was knowing when to pivot outside the box, and especially for a company like Dippin’ Dots that has its core product which was selling bulk Dippin’ Dots in national theme parks such as Universal Studios and Six Flags, which is good and that’s one of the main veins of our revenue. But by pivoting outside of the box, we’re able to go towards the impulse market with pre-packaged packages of Dippin’ Dots. And that impulse market would be the consumers at the grocery store or a convenience store or any locations who see Dippin’ Dots at the checkout lane, and they buy off of impulse. And that was one of our main segments of business that grew the fastest. And each year, our biggest challenge is just to be able to produce, supply enough demand for that segment.

Doc Popcorn was also a big piece. When the mall recession went through its process the last time, we lost a lot of our points of presence in mall locations. And Doc Popcorn has a very strong presence in malls. So, when we bought that franchise system, we were able to buy it and bring it within the infrastructure of our franchise department and started to pursue co-brands. So, it gave us an opportunity to do co-branding with Doc Popcorn and Dippin’ Dots and get our Dippin’ Dots product and brand come into those mall locations. And that strategy has worked really, really well for us, and also well for our franchisees because a franchisee who previously just had one product such as Doc Popcorn in a mall location would have a least amount of a rent of X each month. And then by adding Dippin’ Dots, most of them kept their same rent cost but would double their revenue stream. So, it was a mutual benefit both to the corporate business and to our franchisees.

The importance of company culture at Dippin’ Dots

Culture is such a big part of every business. I know it was a huge part of ours, and one of the strong attractions I saw when I bought the business was a lot of employees had stayed with the business and stuck with the business through its difficult times. So, after acquiring the business, one of the cultures and qualities I wanted to keep was that family feeling, especially as the business grew. I didn’t want to lose that type of strong family feeling, values, and loyalty that the employees in the Dippin’ Dots family had. So, creating the right senior management team is an important piece, and I think employees, franchisees and consumers follow that culture.

So, by having a senior management team without any type of egos and creating a culture where everyone has a voice really created that strong corporate infrastructure for communication. And that is something that I think is really important for a company that needs to have innovation is to make it comfortable for employees to be able to participate, to contribute to the thought process and guidance and drive of the company. That’s been one important piece for us—to make sure that everyone has the ability to contribute, and to voice their ideas, because there’s a lot of good ideas out there and having that type of ability for the employees to contribute was a very strong piece.

How Dippin’ Dots keeps on top of manufacturing challenges

Going from bankruptcy to growing the business to having over $300 million of annual retail sales, one of the aspects that I noticed was as we started to produce more dollars, our cost to produce the dollars also went up. So, that’s been one of our items of focus is to look at ways to create more efficiency, to be able to produce more for less of the cost to produce that dollar. So, we’re in the process of going through and looking at other technologies, other types of packaging, those types of logistics to increase our efficiency and reduce our cost. But we’re also balancing that with our need to grow. And each year, we’ve been growing so fast that we always hit a ceiling to the amount we can produce.

So, being able to produce enough to supply the demand has been obviously a challenge but a point of focus. It’s a good challenge to have but it’s definitely been a point of focus. So, we’re looking at expansion to our current facility. We also just opened up our corporate operations in China. So, we have the challenge there of the tariffs which is around 36% right now. We’re looking at other manufacturing opportunities in Australia to supply our demand in China, which is forecasted to be a market that will double in growth for us each year of the next five years. There’ll be a lot of demand that we have to supply there.

And then also, expansion here domestically. Right now, we spend around $500,000 a year into shipping to ship to the West Coast and more than that for the east side of the U.S. with the aggregate of the northeast and the southeast. So, if we expand by creating new manufacturing on each one of those sides, then we’re saving the $500,000 of just shipping to either side, which you put that on amortization schedule of 5 to 10 years and you can pay for the manufacturing facility. So strategic expansion from a manufacturing perspective is an important piece for us.

How his personal leadership style has evolved over the years

I always try to stay grounded, and I always try to stay humble. And one of my biggest fears is to not know what I don’t know. So, I always pull from the wisdom around me, and try to learn from every challenge, every opportunity that comes up. I’ve learned that the best way to grow is to be in the trenches and learn from it. And that’s been one of my points of focus as the CEO is to be a learner, not a knower. And that type of composure for me has been really important, and I’ve gained a lot of knowledge, and I’ve been able to execute a lot of opportunities that has brought a lot of success.

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