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Case study · Ben & Jerry’s

How Ben & Jerry’s grew from a $12,000 gas station scoop shop to a $326 million sale

TL;DR

Two childhood friends opened an ice cream parlor in a renovated Burlington, Vermont gas station in 1978 with a $12,000 investment. They won their town with community events and generous gestures like Free Cone Day, then moved into pints and franchises. The lesson: a loved local shop can be the proof of concept for a regional and then national brand.

How it started

Ben Cohen and Jerry Greenfield were friends who grew up in Merrick, New York. In 1977 they incorporated a business with the idea of opening a bagel shop, but the equipment turned out to be too expensive. Ice cream was a cheaper food business to start, so they completed a Penn State correspondence course on ice cream making instead.

They invested $12,000 and opened a scoop shop on May 5, 1978 in a renovated gas station in downtown Burlington, Vermont. Burlington was a college town, and the founders were looking for one without an existing ice cream shop. Cohen has a very weak sense of smell and taste, which is often cited as the reason the company became known for ice cream packed with large chunks of cookies, candy and fruit: texture was something he could enjoy.

The shop was small, local and personal. Early on, the founders showed movies on the wall next to the store and handed out free cones, building a reputation as a friendly neighborhood place before the brand meant anything outside Vermont.

How they got the first customers

The first customers were the people who walked past the converted gas station in Burlington. The founders did not buy advertising. They made the shop a place people wanted to be, with movie nights on the side wall, generous toppings and giveaways.

In 1979, one year after opening, they held the first Free Cone Day to thank customers. It became an annual event at every shop and ran for decades, a repeatable tradition that cost the company some ice cream in exchange for goodwill and word of mouth.

What drove growth

Growth came in steps. In 1980 the company began packing ice cream in pints at an old spool and bobbin mill in Burlington, which let it sell through grocery stores instead of only through one counter. In 1981 the first franchise opened in Shelburne, Vermont. In 1984 the company did a Vermont-only public stock offering that raised $750,000, which let local customers become shareholders.

By 1999 the company had sales of about $237 million. In April 2000 Ben & Jerry’s agreed to be acquired by Unilever for about $326 million, with a deal structure that kept an independent board focused on the company’s social mission.

The pattern for a small founder: prove the product with one loved location, then add a second way to sell it (pints), then let others carry the brand (franchises).

Lessons you can copy

  1. 1Pick a market where you are the first good optionThe founders chose a college town with no ice cream shop. Competing in an empty niche beat out-scooping an incumbent.
  2. 2Turn a product quirk into the brandChunks in the ice cream became the signature. Look for something your product does that a bigger competitor would not bother to do.
  3. 3Create a yearly event customers wait forFree Cone Day started as a one-year anniversary thank-you and became a tradition. A repeatable event gives you something to promote every year.
  4. 4Add a second sales channel once the first worksPints let the brand sell without opening more counters. Packaging a product that sells in your shop is often the cheapest way to reach more people.
  5. 5Change the plan when the numbers do not workBagels were too expensive to equip, so they switched to ice cream. Their flexibility about the product mattered more than their first idea.

Frequently asked questions

How much did Ben & Jerry’s cost to start?

The founders invested $12,000 to open their first scoop shop in a converted gas station in Burlington, Vermont in 1978.

When did Ben & Jerry’s start selling pints?

The company began packing ice cream into pints in 1980 at a former spool and bobbin mill in Burlington, two years after the first shop opened.

How much was Ben & Jerry’s sold for?

Unilever agreed to buy Ben & Jerry’s in April 2000 in a deal valued at about $326 million.

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