How Mini Melts Built a $250M+ Beaded Ice Cream Business With a Nationwide Network of Automated Kiosks

If you’re like me, you’ve probably bought a beaded ice cream at your local ballpark or fairgrounds during the dog days of summer. You know the kind, that ice cream that comes in tiny cryogenically frozen balls that melt as soon as you scoop a spoonful into your mouth.

My experience with beaded ice cream has been primarily with Dippin’ Dots, but today there are also a number of other beaded ice cream brands out there, the biggest non-Dots alternative being Mini-Melts.

After getting its start in Europe in the 90s, Mini Melts landed in the US a couple of decades ago when one-time Dippin Dots distributor bought the North American rights to the beaded ice cream brand. After successfully withstanding a legal challenge from Dippin’ Dots, Mini Melts ice cream can be found nowadays across the country, sold primarily through automated kiosks that store the ice cream at negative 40 degrees Fahrenheit.

The company grew from a single kiosk in 2005 to over two thousand in the field today, but the journey to wide availability was a winding one. After experimenting with a few different kiosks in the initial years, the company started working with a single third-party vendor to build the machines from 2009 to 2019. After a decade of tinkering and adapting machines, they decided to build their own robotic kiosk starting in 2019.

Recently I caught up with Mini Melts USA CEO Dan Kilcoyn to hear the story of how the company went from a Dippin’ Dots alternative available at a few storefronts to building out a network of over two thousand automated kiosks that collectively serve beaded ice cream to the tune of 30 million servings and an estimated $250 million+ in sales per year.

So how did you first roll out Mini Melts in the US?

So we used to run physical retail locations mainly in shopping malls. In 2004, we started to get out of those retail locations, and we wanted to test the automated kiosk concept. We started with one kiosk. Unfortunately, we didn’t really know what we were doing at the time. So rather than read the manual, we essentially broke the first one, but it was a good learning experience for us, and we kind of built upon that to the kiosk that we have today.

Initially, you used a third-party kiosk?

Yes. We started with a couple of different third-party options that were out there, but some just didn’t work from a temperature perspective. We really needed to make sure that we could have our remote telemetry and we have a probe that downloads our sales information as well. So we tried a couple of options. From 2004 to 2009, it was all very experimental. Then when we were with one supplier from about 2009 to 2019 before they ultimately went out of business.

So in 2019, your third-party supplier goes out of business. Was it at that point you started developing your own kiosk?

You know, while we were taking these different third-party units, we were doing a lot of the work ourselves to make it work for Mini Melts. So prior to 2019, we started to ask, ‘What would this look like if we wanted it to be our own kiosk?’

What were the key considerations?

We wanted to know what was important to the location. Most of our locations are high-traffic tourism locations like zoos, aquariums, and theme parks. And they traditionally focus on face-to-face retail. So when we started initially with the vending machines, there was a pretty steep hill to climb because typically, if someone is at a location, they expect to be served by another human being. As we started to really hit our stride in 2019, we needed to make sure that the kiosk held the right amount of units because, in a given day, we could sell 200 or more cups of Mini Melts.

Was accommodating different forms of payment a consideration?

By 2019, we saw that our consumers really shifted from a cash-based system to credit card payment, Apple Pay and Google Wallet. So we really needed to make sure that the board on our machine was able to accept all that changing payment dynamics.

How did customers pay in the past compared to today?

In 2005, about 5% paid with credit cards. By 2019 it was 50%. Today it’s 60%. in 2019, mobile pay was less than 1%, and today it’s about 5%, growing by 2% every year.

Where is your ice cream made?

So when we started out, we started in the Philadelphia area, originally, and our manufacturing facility is in Connecticut.

And that one facility serves the entire country?

Yes. What we’ve built is we have 23 distribution centers across the US. It’s our own team that’s in 23 cities across the US. It’s our trucks, our technicians, and they’re going in and handling everything from the manufacturing of the product all the way down to the retail of the product.

How do you get the ice cream across the country?

We have negative 40-degree tractor-trailer units that we own, and we pull the tractor-trailers to our depots.

Your new kiosks remind me of a game I’d see at Chuck E. Cheese. How do they compare to the older machines?

The new ones definitely more like the claw-style game that you’re referring to. The only difference is there’s a prize every time you don’t have to worry about the robot missing. The old units are either the traditional kind of a bunker freezer where one would slide up and you would just remove a unit out, or it would work off of like a pulley system.

What is the mix of new vs old machines in the field?

About fifty-fifty.

And have you updated the old machines?

Yes. We went back and retrofitted all of the legacy kiosks in the field to make sure that they were able to take the payment systems and kind of upgrade everything from a technology standpoint.

What are some examples of locations for your kiosks?

We’re at the National Zoo in Washington DC, Philadelphia Zoo, Mystic Aquarium, Georgia Aquarium. Larger family entertainment centers would be Dave and Busters. Round One, Urban Air and Sky Zone Trampoline Parks. We’re at ollege campuses, a lot of rest stop areas, nontraditional retail locations.

Any one that is trending up at the moment?

Interestingly enough, our rest stop business is starting to kick up more as they add more electric vehicle chargers, because those guests tend to stay longer because they’re charging for longer. We see that there’s more of a need for retail there.

Thank you for your time.

You’re welcome.

You can watch the Mini Melts kiosks below in a video provided by the company.

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This post originally appeared on TechToday.