David Leonardo is the CEO at Chill-N, a custom-order nitrogen ice cream shop. David’s extensive experience in leadership positions working for multinational brands like Arby’s, Wild Wing Cafe, Pet Supplies Plus, and Burger King solidified his expert portfolio in the franchising world. With a proven track record of successful scaling strategies, David is now set on expanding Chill-N’s franchise to a national level.
David graduated from Boston University with a Bachelor of Science in Business Administration.
Here’s a Glimpse of What You’ll Hear:
- David Leonardo shares how Chill-N nitrogen ice cream works
- The importance of sourcing good-quality raw materials
- A glance at different brand franchise sale processes
- David’s thoughts on implementing strategic decisions for small businesses
- The strategy behind Chill-N’s multi-state expansion plans
- David’s best advice for current franchisors and franchisees
In this episode…
In this episode of the SpotOn Series, Chad Franzen is joined by David Leonardo, CEO at Chill-N. They discuss the science behind Chill-N’s star ingredient, the importance of developing a good sourcing strategy for raw materials, the different aspects of the franchise sale process, and a breakdown of Chill-N’s multistate expansion strategy. David shares his tips on implementing strategic decisions on a small scale and his best advice for current franchisors and franchisees.
Resources mentioned in this episode:
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Episode Transcript
Intro 0:04
Welcome to the Top Business Leaders Show, powered by Rise25 Media. We featured top founders, executives and business leaders from all over the world.
Chad Franzen 0:20
Chad Franzen here co-host for the show where we feature top restaurant tours investors and business leaders. This is part of our spot on series. Spot on has the best in class payment platform for retail and they have a flagship solution called spot on restaurant, where they combine marketing software and payments all in one. They’ve served everyone from larger chains like Dairy Queen and subway to small mom-and-pop restaurants. To learn more, go to spot on.com This episode is brought to you by Rise25. We help b2b businesses to get ROI clients referrals and strategic partnerships through done for you podcast. If you have a b2b business and want to build great relationships with clients, referral partners and thought leaders in your space. There’s no better way to do it than through podcasts and content marketing. To learn more, go to Rise25.com or email us at support@rise25.com David Leonardo is the CEO of Chill-N nitrogen ice cream out of Miami, Florida. As a 20-year veteran in franchising for large multinational brands. David embarked on a journey in 2019, to partner with the founders of this small local chain to grow it into a national player in the custom ready to order ice cream segment. In 2022, Chill-N started opening their first set of franchise stores door twist to double their openings in 2023. David, thanks so much for joining me today. How are you?
David Leonardo 1:36
Pretty good. Pretty good, Chad. Thanks for having me. And I’m looking forward to sharing some stories with you.
Chad Franzen 1:39
Yeah, great. Great to have you. Hey, Chill-N nitrogen ice cream sounds both interesting and unique. Tell me kind of how it works. And about the customer experience.
David Leonardo 1:50
Yeah, so what we’ve done is we’ve taken basically a 100-year-old process of serving ice cream and kind of really tilted it on its head by by bringing the factory the ice cream factory into the store. And so historically, what you’ve seen over the last couple 100 years is, ice cream is made in a factory, put in the back of a refrigerated truck and then shipped out to hundreds and thousands of locations across the country. What we do here is we basically use liquid nitrogen to allow us to freeze whatever base we use to make ice cream right there on the spot. And to make your ice cream custom to whatever flavor whatever base, whatever mixins you like. And so we’re actually making every single cup of ice cream right there on the spot for you in under four minutes. And so that’s a little bit of what we’re doing. So there’s a little bit of a science, mad scientists kind of feel to it, you’re actually seeing smoke coming out of the bowls, because the liquid nitrogen is there, basically freezing the base and turning it into ice cream right there on the spot. You’re seeing some piping that’s coming from our liquid nitrogen tank into our mixers. And you’re seeing quite a bit of technology because you can make your ice cream out of multiple bases. We’ve now automated the dispensing of those bases into the bowl. So it took out the human element. So it’s really cool. And as you can imagine, the taste of an ice cream just freshly made right there on the spot. versus one that’s been sitting in a freezer for a week or two weeks, or maybe up to a month is a huge difference. So we’re getting a lot of people that really love the creaminess and the finish of our ice cream. And that’s allowed us to grow quite a bit.
Chad Franzen 3:33
Wow, that sounds amazing. So when a customer comes in, you know, when you walk into a typical ice cream shop like Baskin-Robbins or whatever you see, you know, the buckets of ice cream. So yeah, what does the customer see?
David Leonardo 3:47
Yeah, you don’t see any of that you actually look up on the wall and there’s a menu there. It’s designed like the periodic table, and you can pick the size of your cup. And then after that you pick the base. And we can make your ice cream either out of regular cream, we can make it out of yogurt, tart almond milk, oat milk, coconut milk, and soon we’re going to be introducing sugar-free base. And then we’re after that you pick your flavor and then your mix-ins and so you’re picking all these things in front of you, you’ll see an entire section of mixes, so your Oreos, your your your Reese’s Peanut Butter Cups, all of these mixes. And then next to that you’ll see four mixers. These mixers are connected directly to the piping that brings in the nitrogen. So after the employee pours in your base into the bowl, adds the flavor. He’ll go over to the mixer and the mixer automatically dispenses that liquid nitrogen and starts mixing the bowl and then we throw in the mixes. So it’s really this experience where you’re not seeing any — no freezers are in there. You’re not seeing anything yet. You’re literally watching your ice cream being manufactured in front of you as you go through the process.
Chad Franzen 4:56
And I’m guessing that kind of adds to the experience the view You want to get the ice cream being made?
David Leonardo 5:02
Kids are definitely into that. And they absolutely love it. I like to tell people that it’s definitely a nice experience for people who’ve never seen it. But ultimately, people keep coming back for the quality and the value, right? So I think the novelty of it wears off on our regular customers. But if you’ve never seen anything like it, it is a very, very cool process to watch.
Chad Franzen 5:27
So you joined after this was already kind of in place, this whole this whole process? Is that right? Where you came on board? Or were you part of
David Leonardo 5:33
that’s right, that’s right. So I came on board around seven years after they opened their first location. And so it’s really been a mom-and-pop business since then. And they’ve gotten so much interest from investors that have visited Miami, Florida and visit any one of their five, six locations, that they started questioning whether they should look at franchising as a vehicle for growth. And that’s where I got partnered with the owners, I fell in love with the brand as soon as I saw it. And one of the things that I really liked about it was the technology aspects. So Danny, who’s the founder and my partner, what he’s been able to do is invest a lot of time and effort and trying to streamline the process to increase the throughput. So what happens when you make something custom is that you know, you’re getting great quality, but sometimes people have to sacrifice a little bit on the time. So that person in the regular Baskin-Robbins is scooping it up. And then in a minute or two, they have you have your cone and you have your ice cream. In a regular nitrogen shop, you can probably wait up to five, seven, ten minutes, because we’ve introduced technology into the dispensing of the cream and the mixing of the bowls and on the dispensing of the liquid nitrogen. All of that can be done in under four or five minutes. And so that, to me is really one of the things we’ve been working on since I joined the company to increase the throughput. And so we’ve been introducing, we’ve been changing quite a bit since I joined the company just to make it more franchise friendly and to allow us to scale. But but it’s been a wonderful journey. And yeah, Danny is really a lot of the brains behind me. He’s currently the CEO of the company and my partner.
Chad Franzen 7:10
So four minutes, a four-minute Wait, isn’t that a huge amount of time? I mean, I guess it’s it’s more than it would take to scoop up the ice cream out of the out of the bucket or whatever. Is that would you say that the taste is worth it or and your regular customers have found that to be the case?
David Leonardo 7:26
Absolutely. I mean, that’s the reason they come back. Right. So again, the experience will get you in there. And it’s a wow factor for a little kid and the mom and stuff but the creaminess and so the right combination of liquid nitrogen in the bowl, combined with the base. And there’s algorithms that kind of determine how much of should be in depending on the base, depending on the fat content. But all of that finishes with what you end up as with something between a gelato and an ice cream. So it’s not as creamy as a gelato, in terms of the softness of it. And it’s not as hard as an ice cream. And so you have a really nice finish to it that that people absolutely love. And then the other thing that we’ve that all of this has allowed us to do is really focus on the quality. So we have, we have better quality cream. So we have our dairy farms right here in Florida. And so we go from cow to cup in about 10 days. And so even sourcing of our raw materials is something we spend a lot of time on. Our vanilla bean comes in from Madagascar. So we do spend quite a bit of time making sure that the quality is something that you come away feeling that it’s worth the repeat visit.
Chad Franzen 8:37
This sounds like quite an idea. We have nothing like as far as I know, we have nothing like this where I am in Colorado. Do you know I know you weren’t there when they started. Do you know like how this whole thing came about? What what made them decide to go this route?
David Leonardo 8:51
Yeah, so like, like a lot of great companies. A lot of it started with watching someone else do some moderation of it and saying I could do it better. Right. So my partner Danny was graduating from the University of Florida and was taking a gap year to study for his MCAT he was considering going to med school comes from a very, very entrepreneurial family had started his own company as a child with his father. And so he’s got a buddy of his that tells him “Hey, Danny, you have to come up to Jacksonville with me. There is an ice cream shop where someone is pouring liquid nitrogen into a bowl whisking it by hand and turning it into ice cream right there on the spot. And there’s a line right outside the door.” And so he goes up there on a drive. Remember he’s taken his gap year so he has a little bit of time on his hands. He goes up there falls in love with the brand and comes back home and and pitches this idea to his parents and his parents, you know, literally made him put together a pitch deck made him you know, promise that if they fund this venture and it doesn’t go well. That he’ll promise to go back to med school promise to go to med school and so the first one was a home run in Pine Crest, Florida we just, we just celebrated 10 years and that store. And we’re now just opened our 11 store this year. And so we have five more that are scheduled to open by the end of this year. And we’re actually just starting to open stores outside of South Florida as well. So we got stores opening up in Orlando in Nashville in we have stores in Texas that are currently open and New Jersey and Hilton Head. So we’re growing.
Chad Franzen 10:28
Okay, yeah. Awesome. Hey, you had a lot of experience in franchising before joining Chill-N you were with? I was looking at your LinkedIn page. Arby’s, Wild Wind Cafe pet supplies, plus, probably some other ones. Can you tell me kind of about your franchising journey and your journey prior to joining Chill-N?
David Leonardo 10:44
Yeah, so, you know, I’ve been in franchising for 20 years. And, um, but prior to that, I was in investment banking, and then kind of got learned to South Florida during the.com craze of the late 90s. And some of my friends were starting to calm down here and, and I got involved in a startup company down here, that for about a year and a half before, before, like most dot coms that went belly up, and I found myself looking, really falling in love with South Florida and looking for an opportunity. And at the time, Burton’s world headquarters is here, they’re still here. But at the time, they were looking for someone with deep M&A background and finance, background and business development to help them buy and sell restaurants. And so that’s how I got introduced to the franchising world, initially on the business development strategy side. And soon enough, shortly after that, I got introduced to franchise development, and I’ve been kind of a franchise development strategy. Experts since then are developing that expertise over the long term. And so what I’ve gone from there to Arby’s and done some international work, and then Wendy’s, and really, really kind of grown within the franchising world. But what I really felt that I was drawn to is smaller brands or brands that need some work and restructuring and putting systems in place. And so I’ve been able to go into some brands and build the franchise development department from scratch. I’ve been able to go into brands and kind of restructure some things. And so I really thought that when I saw this opportunity here, taking a company that has never done franchising, and really putting all the pieces that that a company needs to have in place in order to start selling franchises. I jumped at that opportunity, it was really a way for me to get back into a startup phase and really, really play more of an impact than being part of a large conglomerate.
Chad Franzen 12:40
How does your approach differ from you know, like Arby’s? Everybody knows what Arby’s is compared to a relatively unknown place? Like Chill-N?
David Leonardo 12:50
Yeah, well, very different. I mean, my, the sales process is very different. Because, you know, I remember selling franchises with Burger King and, and Arby’s and the brand is carries so much weight, that there’s not as much validation that you need, right? People can, can drive within a couple miles and see many locations. And so really, you know, it differs in sense that, you know, I’m working with a lot less capital to grow a business, I’m much more resource starved as we, we wear multiple hats in this organization. And, and so that, but that’s the nature of a startup, right? That’s the nature of a startup. I like to say we’re the oldest startup right, we’ve been around for 10 years, but there’s the franchising side of this is fairly new. And, and it’s been an interesting journey, right? I joined the company in 2019 started really putting this infrastructure together, and then 2020 came and we all know what happened then. So it’s been it’s been an interesting journey, but, but I’d love to say that all that is paid off in 2021 We had an amazing year with selling 14 deals, and and 2022 we started opening up 2023 We’re continuing to open them and sell more deals. And so little by little, we’re gonna get get up there, right?
Chad Franzen 14:05
Did you you came on board and 2019-2020 was a terrible year for a lot of restaurants. How did it affect you guys?
David Leonardo 14:13
It actually ended up being a good year for us financially. And I’ll tell you that hit ice cream historically been an anti recessionary business, right. So you may not have money to go out to an expensive restaurant, you may not go out on vacation or buy that extra car, but you know, you’re gonna always have some money for either the movies or an ice cream. Maybe not the movies during the last pandemic, but but an ice cream. It’s amazing how much business we did. One of the most interesting things that that happened to our business during the pandemic is our delivery business went from doing about 9% pre-pandemic, to almost as high as 65-70%. During the peak of the pandemic. We’re still somewhere around 25% of all of our business is being executed by delivery. And the reason that works to our advantage, many of your listeners may say, how do you deliver ice cream and I even thought to myself, is because we controlled the liquid nitrogen in our store, we make your ice cream like anybody else. And then we dip your entire cup in a canister of liquid nitrogen and it comes out rock solid. And it’s good for about a 15 minute drive time. 15-20 minute drive time. So it’s by the time it gets to your house, it should be as if we’re handing it over to you on the counter. And so there’s no special packaging, there’s nothing and that that I hate to say but the pandemic actually allowed us to introduce that option to many people who would have never considered delivery as an option.
Chad Franzen 15:41
It sounds like this per a mom-and-pop shop, this is a company that’s really kind of forward-thinking, you know, always kind of solving problems, even if they aren’t aware that they exist.
David Leonardo 15:50
Yeah, well, look, Chad, I think that’s one of the advantages of working for a smaller company as well, right. So we got, we got presented with the pandemic. And we immediately had to change so much of our business, right, we had to, we have to close indoor dining, we had to move the register to the front, within within less than a week, we had entire website set up to purchase online pick up in store, or we brought on three or four more delivery partners. All of this happened literally within a matter of a couple of weeks of this happening. And you can imagine what happens when you’re a part of a large, large company. It’s kind of like, you know, hitting, you know, turning around the Titanic in a bathtub, it’s just it’s a lot harder to kind of implement strategic decisions. And so that’s one of the things that I love about working for a small company like this. And, and it’s, it’s really nice to see franchisees that we brought on really enjoy that and really like that, because, you know, they want to be part of a company that’s forward-thinking that’s thinking ahead. And obviously, with the sugar-free stuff with, you know, thinking and listening to our customers, what is that you want? Because at the end of the day, we can make any ice cream in our store. And so one of the things that’s happened in the ice cream space over the last, I don’t know how many years is that there’s a fad to the ice cream, right? Oh, we have this kind of ice cream. And that’s a fad, right, we have this kind of ice cream. And the truth is, is that we can make any kind of ice cream in our store. So if there’s for some reason, a flavor that becomes extremely popular popular out there, we can bring it in if there’s we can make gelato in our store in the future. If we want to make gelato, we can make any type of ice cream because all that nitrogen is allowing you to do is really freeze the base and turn it into ice cream. And then we can show the texture that we want it to end up in.
Chad Franzen 17:36
What do you what do you look for in a franchisee?
David Leonardo 17:40
Yes, it’s great question. Well, first and foremost, I think we want to make sure that they have the financial capabilities to open a store. Our stores right now are averaging somewhere between 450 to $550,000. To open of that amount, you’re probably looking at around 200 $200,000 of that $240,000 of that is construction. So and I’m talking to you about construction down here in South Florida, I’m sure in other parts of the country, the construction can be a little bit more attractive. But so we’re looking for someone who could come to the table with enough equity to qualify for a loan, or could potentially look at you know, saying, hey, look, I want to open two to three stores. And this is a really good equity investment for me, because the returns are attractive. To give you a sense of our financials to your customers to give you a sense, we are averaging somewhere around $670,000 a year in sales, which for the ice cream space and the dessert space is pretty, pretty attractive. And we call our our EBIT DOT number our cashflow at the end of paying off everything roughly ranges between 16 and 20%. So those are those are the numbers that we’re at right now. And we feel that as we grow, we have more leverage with our vendors. We can hit that above 20% Mark, as we start scaling the business.
Chad Franzen 19:03
What’s the best thing about the actual act of being a franchisee for Chill-N?
David Leonardo 19:11
You know, I think the best part is the fact that our hours aren’t your typical restaurant hours, right? So we open our stores at two o’clock. We close at 10 You know Monday to Thursday on Fridays we do close at 11. And on Saturdays we open a little bit earlier we open at either 12 or one and we close at 11 o’clock. And then we close back at we would start closing at 10 o’clock again on Sundays. So you can imagine someone who’s looking for a business but doesn’t want to be married to the location and because they have a family to have kids. You can imagine having breakfast with your kids. You know taking them to school coming into the store probably around 1212 30 you know helping with the opening. You know the store opens you have one or two employees when it opens and then you leave You go pick up your kids, you have dinner you come in before he closes. So that’s the kind of, I think that’s one of the joys that our franchisees are really liking. That it does provide a lot more flexibility than your standard restaurant that’s, you know, open and the hours of opening are kind of prohibitive for you to have a nice balance with your work life.
Chad Franzen 20:21
You kind of mentioned that you you have some pretty ambitious expansion plans. Most of your I’m looking at your website here. Most of your locations are in Florida. You have a couple in Texas, is that right? That’s right.
David Leonardo 20:33
That’s right. We have a couple in Texas. We’re getting ready to open up a store in a neighborhood called Brentwood in Nashville, Tennessee, which we’re very excited about. We have another store that we’re looking at in Bluffton, which is right outside of Hilton Head with the franchisee he also owns the rights to Charleston. So we’re really looking forward to having more stores with that franchisee our Orlando franchisee is opening up two stores this year. So and we’re talking to some people up in New Jersey, we have a franchisee out there. Hopefully, we’ll be opening up some stores there. So I, you know, ideally, there’s still some growth to be done in South Florida. So I think strategically, we would want to fill in the gaps go to the western part of the state, then go to fill out the rest of Orlando fill out the rest of the South Tri County area between Palm Beach, Broward and Miami-Dade County, and then we start working our way up the coast. But when you meet great franchisees that are well capitalized have good experience. Going back to your earlier question about what we look for outside of the financial side, we want someone who’s okay managing younger, younger employees, most of our employees are high school and college kids, you know, they want to work a couple of shifts, everybody remembers that ice cream job or that, you know, grocery store job that’s that’s the type of job that we’re looking for it right, that’s the kind of employee we’re looking for. People that really don’t want to work full time, they want to work two or three shifts, or in high school, they’re going to give you the best. But um, and that’s totally fine with us. So that’s, that’s a little bit of our growth plans. You know, if we opened three stores last year, we’re going to open six stores this year. If I If all goes well, we’ll we’ll grow that number in the following years. And who knows where we’ll be by 2025. Maybe we’ll be closer to 40-50 stores?
Chad Franzen 22:21
You know, I’m not that familiar with franchising just does it put a short term strain on the company when you open up a new store.
David Leonardo 22:30
A short term strain. No, not really, if you have the if you have the processes in place to support a store, where did what it does is for right before a store opens that week, we’re visiting the store. So my team and I are out there supporting the franchisee helping train some of the employees really supporting them with their opening. And we do kind of have to dedicate some resources to that to that travel. So there is a little bit of travel. But that shouldn’t impact any of the other franchisees involved, we do operate our own store. So remember, the the founders who started the business, you know, they have seven stores that we consider company stores. And so we continue to operate those stores and everything we have tested everything we roll out to the franchise system, we first tested our company source. So that’s actually a good practice that we have. And obviously anything that a franchisee is paying for we’re paying for all of the fees, you know that they’re paying for royalties, marketing, all of that stuff the company stores are paying for
Chad Franzen 23:37
what do you most enjoy about what you’re doing now?
David Leonardo 23:43
I know kind of a controlled chaos, right? I think I think the most frustrating part and the most exciting part is, is really going into the office and and not knowing what’s going to present itself. But knowing that I have an amazing team at the office that’s going to do their best to resolve the problems. It really brings a lot of happiness to me that we’ve done a good job at bringing in some really good franchisees that understand the vision. And I try to tell my franchisees Look, I am going to make mistakes, we’re going to make mistakes, you’re going to make mistakes, I want to make sure that we’re working together to help resolve them. You know, we’re a young franchisor and we’d like to think that we’re at that we’re at that early stage before the tipping point. And so if you remember when five guys got big and crumbled now is going through a big burst age. I really feel like we’re at that early stage right before it starts really taking off. And so I’m really enjoying I’m really enjoying this smallness of us, right? We’re really small office, we have six employees. We’re running a million miles an hour and putting out fires and then spending time to figure out how to strategize long term.
Chad Franzen 24:55
You’ve been in you’ve been in franchising for a while now, as I mentioned, is there some advice that you Received maybe from a mentor or somebody along the way that you have found particularly valuable that you kind of that kind of stuck with you.
David Leonardo 25:09
Yeah, so, advice on the on a franchisor. So anybody who’s looking to maybe sell their business in and kind of grow it as a franchise, one of the bestest, best piece of advice I ever got, or received was the best deal sometimes it’s the one you don’t do. And so, your franchisees are, are a huge part of what you are as a company. And so don’t get enamored by the big check the big experience and even that person who has multiple brands under their belt, you want to really make sure that the person is a good fit for you. And, and that can really understand the vision and and as someone who’s not afraid of rolling up their sleeves, and so I think that’s something that I’ve really tried to kind of hold on to as a really good piece of advice from a franchisor standpoint, from a franchisee standpoint, I will tell you that a really good piece of advice is try to let go when appropriate. And so if you’re someone who is extremely extremely micromanager and and you you really can’t let go then chances are you’re probably end up with only one location, or very few locations. Those who are those who have you ever read articles about people who have 20, 30, 40, 50, hundreds of locations. Usually it’s because they’ve been able to develop a really good team that they can leverage and trust. And and you have to kind of look within to see if you’re that type of person.
Chad Franzen 26:45
I have one more question for you. But first, tell me how people can find out more information about Chill-N from both a customer and a potential franchisee standpoint.
David Leonardo 26:53
Sure, well, our website is chilln.com c-h-i-l-l-n.com. You could get information on our locations, franchising, and you can contact me as well. I’m at DavidLeonardo@chilln.com. And that’s l-e-o-n-a-r-do, so first name, last name at Chill-N. And yeah, we’d love to chat with anyone who’s interested in either being a customer coming down and we give away free ice cream for people who join our loyalty program. So you can even try it out for free. Or if by any chance you want to be that person who brings an amazing ice cream brand to your local community.
Chad Franzen 27:28
I’d love to chat to you about it. Last question for you when you go to Chill-N and you look at the at the big board there of ingredients and things like that. What, what’s kind of your combo of choice, man,
David Leonardo 27:40
I’m in love with an oat milk base with biscotti and some Reese’s peanut butter mix. Very nice. That’s my mix. That’s my go to.
Chad Franzen 27:50
Nice, very nice. Hey, David. It’s been great talking to you. Chill-N sounds very interesting. And I wish you the best of luck. Thank you so much for your time.
David Leonardo 27:56
Thanks a lot for your time chat. Absolutely. Thank you.
Chad Franzen 27:59
So long, everybody.
Outro 27:59
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