Boardwalk Hospitality: The 1st Ben & Jerry's on the world's most popular beach

Klaus Moeller

CEO

Co-founded Genius Brands International Inc., owners of the Baby Genius Brand, Co-Founder of Capital Art Inc. Specialties: Marketing/Sales.

Mike Meader

Co-Founder/President

Former President at Genius Brands. Mike has previous experience in the food service industry as a franchisee of Dairy Queen International and working as a Food and Beverage Cost Controller.

Investor Q&A

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What does your company do?

Later this year we will open a beautiful Ben & Jerry's Ice Cream franchise and a Peet's Coffee shop on the Venice Beach Boardwalk in Los Angeles, California. Venice Beach is the most popular beach in the world, with over 16 million annual visitors.

Where will your company be in 5 years?

To run the most popular Ben & Jerry's franchised location in the world. With our perfect location, our own franchising experience, we believe we can do it. We've already secured a 5 year lease, with a 5 year option to renew, for a 2000 sq. ft property right across from the world-famous Venice Beach Skatepark.

What is Boardwalk Hospitality?

Boardwalk Hospitality is a company that is owned jointly by Mike Meader and myself. Mike and I have been best friends and business partners for over 20 years. We've taken a couple of companies public and created several other businesses. In December 2014 we secured a Ben and Jerry's Ice Cream franchise for the Venice Beach Boardwalk which is the #2 tourist location in Southern California with 16 million annual visitors and the #1 visited beach in the world. Once we were accepted by Ben and Jerry's we started looking for a space on the Venice Beach Boardwalk where we could build and operate the perfect ice cream store. That took us over two years since very few space ever become available on the two mile long Boardwalk. Through friends we heard about a 2,000 square foot space in the prime location across from the skate park and the public showers that was going to become available. The owners of the building loved the idea of getting a Ben and Jerry's into the space and after some negotiations we signed a five year lease with an option for an additional five year period and took possession of the space this past June. We believe we have secured the best possible location for the best possible franchise. The great part of our location is that we don't have to create a market or build a clientele of customers because of the existing high foot traffic. We are currently designing the interior of the space and doing a final equipment layout. We also have the benefit of our consulting partner who has been a Ben and Jerry's franchisee for over 15 years and is an owner of two existing and highly successful stores in California.

Why did you guys decide to start Boardwalk?

We believe in the franchise business model and we love the idea of having a big company behind us. Brand recognition and quality products are very important for today’s consumers. Ben and Jerry's is a fun brand that both adults and kids can relate to. Ben & Jerry’s also supports our belief that charity and quality should be the guide to a successful and valuable business.

What gives you the experience and the wherewithal to start an ice cream shop on the beach?

Mike has a degree in hotel and restaurant management and is a former Dairy Queen franchisee. My family owned eight restaurants in Europe and I ran one for several years. We both have extensive food and beverage experience. Mike, our CFO Jeanene and I have a long history of working together. We took two companies public. We developed the famous Baby Genius brand and distributed products to mass market retailers. We also founded a jewelry company that became a major vendor to the Home Shopping Network. We are very optimistic about the potential of this business.

What is the process of becoming a Ben and Jerry's owner? Why is that so hard to get and how did you come to acquire that license?

Ben and Jerry's, like any franchisor, is very protective of their brand and of course by owning a store you become their ultimate brand ambassador. The management team reviews your financial strength and the proposed store location. They are headquartered in Vermont and they do on-site visits to check foot count of how many people are walking by at different times and days before approving the location. Once you have the location approved, you fly to Vermont to meet the upper management team of the company and are individually interviewed by each about your knowledge of their area of expertise. They confer and there must be a 100% consensus to approve you as a franchisee. On our way out of the interviews one of the managers said "Look, I'm going to drive you to the airport, and the good news is, we already chatted and you guys are approved." The Ben & Jerry’s corporate mission is to be charitable, involved with the local community and benefit the local community. Both Mike and I have big charity backgrounds. I've been running and funding an orphanage in Thailand for 28 years that started with 20 kids that has been expanded to add a school for handicapped children and a place for street kids and we currently look after around 800 kids. Additionally, we came up with some ideas for the boardwalk to help local charities like “Heal the Bay” and the “Venice Free Clinic”.

What support does Ben and Jerry's provide you guys? What will that relationship look like once you open the store?

They support you through just about everything. As an owner/manager you have to go to Scoop University for eight days where they teach everything from management, how to make a perfect scoop and how to roll a waffle cone, so that we really know every single aspect of the business. We worked together to design the entire build out based on top Ben and Jerry's stores. They put you in touch with the people you're going to buy all the equipment from. They have an existing POS and accounting system. Obviously, they provide all the merchandise that you sell. They give you support through advertising ideas. While we are independent and responsible for our own success, their involvement is really strong and obviously we really love that.

How long is your lease for the space?

We have a 5 years lease with an additional 5 year option to extend. We love the location and hope to stay there forever.

Now that you have the license and the space, how long will it be until you open? What’s left to do?

We have hired an architect and a builder. We are having meetings at the site with our architect, the builder, and our consulting partner to determine what needs to be done in the space. We believe that the permitting process will take about 8 to 12 weeks. Our aim is to open the store in early October.

What is the seasonality like in Venice, and how will that affect sales and staffing?

The amazing weather in Southern California means the traffic on the Boardwalk continues throughout the year. The high season, where you can barely move, runs from June through October. Those months are beyond crazy. Weekends are busy year round because you have the local community that comes out to enjoy the beach. Our estimated sales range will be from a high of $300,000 a month in August to a low of $80,000 in January. We anticipate 70% of our business will be during the five high season months with and the remaining seven months accounting for the other 30% of business. We will also supplement that by building a catering business where we will offer catering to office parties and birthday parties. The fluctuation in sales really isn’t problematic because most of your staff, except for your main manager, are all seasonal and hourly employees. The people that scoop the ice cream and make the smoothies, which is the bulk of the people you hire, are students often from the local colleges. We are a couple of miles away from Loyola Marymount and from Santa Monica Community College.

What are your plans for marketing?

Marketing is one of the things that Ben and Jerry's liked so much about this location. This is not a High Street location where you're going to do community outreach and talk to all the local people. We won’t really have to do much in the way of marketing because of the amount of foot traffic that passes directly in front of our store. The marketing that we're going to do will be mainly limited to the catering business and to attract local business, especially in the off-season. In the last two years Yahoo, Google and Snapchat all opened their main offices near our store. We’ll be marketing very strategically to them and any other companies in the area and through local magazines, like Yo Venice, and we’re going to market to the locals with special discounts and then explaining we can cater your kid's next birthday party. It's different from a normal restaurant where you're trying over the years to build a big clientele. You're really opening up a store smack bang in the middle of 16 million annual visitors. It's also a really great clientele. On the Boardwalk every single day you have tens of thousand new clients coming by the store. It's more like Las Vegas in that the town turns over and becomes a new town every three days, which makes it so highly profitable for restaurants and casinos.

Do you have any worries about traffic?

Even if something should happen that reduces traffic by 20% it is still the #2 tourist location, and it still would work extremely well. We're also planning to integrate fun things that will stop people from walking by. We're going to have a Ben and Jerry's cow on a surfboard. We're going to have people walking along the boardwalk dressed up as cows handing Ben and Jerry’s cards to the tourists to entice them to come to the store. We are going to do some local marketing and make sure that people that walk along the boardwalk come to our store.

Are there other ice cream shops in the area you would consider your competition?

There are small ice cream stores in the area, but no major franchises. There are, along the Boardwalk, probably six restaurants that sell pizza and some of them also sell ice cream and there are a couple of small markets where you can buy liquor, beach stuff and you can also buy ice cream there. So yes, there is competition, but it's limited to small outfits and not anything like what we're doing.

How much are you spending versus what you are making?

We expect to have a cost of goods sold of about 20%, so if we sell someone a scoop of ice cream in a cone for $5, our cost is just under $1. Our rent and payroll are our top two expenses. We anticipate we need $80,000 of sales each month to break even.

What is your overhead for staffing?

We anticipate our staffing costs to be approximately 20% of gross sales.

What is your largest cost for operation?

Our biggest single cost is rent. The market rents on the Boardwalk are between $10 and $13 a square foot and our initial rent is around $8 a square foot. The main reason for the lower rent is the landlord wants to make 100% sure that we're going to be highly successful and a stable tenant. The owners of the space are great landlords who've been in the area for over 20 years and know what works and what doesn't.

What is your relationship with the consultant in San Diego, given that you guys haven’t started an ice cream shop yourselves before?

He is an owner of one of the oldest franchises in the system. He goes back to when Ben and Jerry's first started franchising. In fact, he met with Jerry here about seven months ago when he was visiting California. About two and a half years ago we called him just to talk to him about the franchise and what he thought and he was very open and helpful on the phone. Since then, he hired Mike’s daughter and she has been working there every weekend. I think she's going on three years this summer and it's been fun to watch her learn and grow and for me to hear about it. We’ve developed friendship and relationship over the past several years and he's just been a great guide through this entire process. He’s a very knowledgeable, hands-on person, and just a really great guy. It's fun to sit down here and watch his store and the number of people lining up. It's actually an incredible experience to see. People line up 15, 20 deep, to the point where they have to go out and hand menus to the people before they get up to the window just to speed things up.His greatest comment was when he said, "Yeah, Klaus, the only really sad thing about me meeting you and Mike and us doing this is that my store will no longer be the number one store in the nation.”

Is your consultant a part owner, or do you pay him a fee?

He's getting a consultant fee equal to 4% of sales. In reality, he is not so much in it for the money. He loves this business. He really knows this business. He recently moved to Los Angeles so when we have meetings with him we both go there by bicycle.

1	Opening in October 2017
2	16 million annual visitors at Venice Beach Boardwalk
3	Working with consulting partner who managed the #1 performing Ben & Jerry's franchise for over 15 years
4	Store already designed by Ben & Jerry's headquarters
5	Ben & Jerry's Franchise Agreement signed after two year vetting/training process
6	Secured 5 year lease for a property centrally located on the Venice Boardwalk (plus option for 5 more)
7	Secured all necessary equipment including point of sale/accounting systems and merchandise

1	We may have difficulty in judging consumer taste preferences, which could result in reduced sales, excess inventory, spoilage and lower margins. Our sales may be adversely affected if we fail to respond to changes in consumer preferences in a timely manner.
2	Significant increases in the price of raw materials, transportation or labor, if not offset by declines in other input costs, or a reduction or interruption in the delivery of raw materials, supplies and finished products from our vendors could negatively impact our financial results.
3	We are located in Los Angeles County and Increases in the minimum wage rate for hourly employees are scheduled over the next five years. These increases, if not offset by increased prices, declines in other input costs or decreases in the number of hours scheduled may have a negative impact on our financial results.
4	Our business depends in large part on the success and reputation of the brand ‘Ben & Jerry’s’ as well as the reputation of, and decisions by, corporate management and other franchisees. Our reputation may be harmed by actions taken by third parties that are outside our control.
5	We compete for the discretionary income of consumers and are susceptible to changes in the overall economy of the United States and other markets where our products are sold. Many of our consumers are tourists and a reduction in travel budgets could result in decreased sales of our products, resulting in a negative impact to our overall profitability.
6	If Ben & Jerry’s is not able to adequately protect their proprietary intellectual property and information, our results of operations could be adversely affected.
7	Our fixed costs, primarily monthly lease payments on our location, are a significant expense and a reduction of our revenue could adversely impact our ability to maintain positive cash flow resulting in our inability to make timely payments to our vendors.
8	Our industry is highly competitive and competitive conditions may adversely affect our revenues and overall profitability.
9	Our failure to successfully market and advertise our products could have an adverse effect on our business, financial condition and results of operations.
10	Our financial results fluctuate from quarter to quarter, and sales are impacted by season.
11	The Company is subject to various laws and government regulations, violation of which could subject it to sanctions. In addition, changes in such laws and regulations may lead to increased costs, changes in our effective tax rate or the interruption of normal business operations that would negatively impact our financial condition and results of operations.
12	Product recalls, product liability claims, absence or cost of insurance and associated costs could increase governmental scrutiny, divert resources, reduce sales and increase costs and could have a significant adverse effect on our financial condition and adversely affect our business operations, decrease sales and increase costs. Recalls may also increase competitive pressure from our competitors.
13	We depend on key personnel and may not be able to hire, retain or integrate sufficient qualified personnel to maintain and expand our business.
14	Business interruptions could adversely affect our operations. Our operations are vulnerable to outages and interruptions due to fire, floods, power loss, telecommunications failures and similar events beyond our control. The location of our business is in California extremely close to the Pacific Ocean and weather conditions, earthquakes and tsunamis could adversely impact our ability to operate our business at the current location.

Director	Occupation	Joined
Klaus Moeller	Director, Founder @ Boardwalk Hospitality Inc.	2017
Mike Meader	Executive @ Boardwalk Hospitality Inc.	2017

Officer	Title	Joined
Mike Meader	President	2017
Jeanene Morgan	CFO Secretary Treasurer	2017

Name	Klaus Moeller
Amount Invested	$42,648
Transaction type	Loan
Issued	05/31/2017
Outstanding principal plus interest	$47,019 as of 04/2018
Interest	6.0 per annum
Maturity	05/31/2020
Outstanding	Yes
Current with payments	Yes
Relationship	Shareholder

Name	Sterling Hospitality Inc
Amount Invested	$74,245
Transaction type	Other
Issued	12/08/2017
Relationship	Owner
Intercompany transfers between parent company and subsidiary

Name	Michael Meader
Amount Invested	$50,000
Transaction type	Loan
Issued	05/31/2017
Outstanding principal plus interest	$55,002 as of 04/2018
Interest	6.0 per annum
Maturity	05/31/2020
Outstanding	Yes
Current with payments	Yes
Relationship	President

$100,000	We have acquired space on the world famous Venice boardwalk. The first $100K will pay Security Deposit & Rent prior to opening ($86,000) and training labor ($13,000).
$250,000	If we raise $250K, in addition to the above expenses, we would purchase equipment for the store of $130,000 and the initial inventory purchase of $20,000.
$500,000	In addition to the uses previously stated, an additional $250K would enable us to have additional working capital and increased marketing.

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The World's Best Ice Cream Meets the World's Busiest Beach

We're opening a new Ben & Jerry's location on the boardwalk of Venice Beach, CA

16 Million Annual Visitors

Our Goal: #1 Ben and Jerry's Franchise in the World

We're Opening in Early October to Millions of Customers

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We Need Your Scoop-port to Build the Most Popular Ben & Jerry's Location Ever

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