A quick Yelp search reveals more than a dozen nitrogen-infused ice cream outlets across Orange County, from Laguna Niguel and Mission Viejo, through Irvine, and into Anaheim, Garden Grove, Fountain Valley and Tustin.
Cauldron Capital Holdings LLC in Costa Mesa wants to add a few more.
Co-founders and co-owners Terence Lioe and Desiree Le opened their first Cauldron Ice Cream in June 2015 at Bristol Street and MacArthur Boulevard a mile from South Coast Plaza. A second company store followed this month in Artesia, and the partners have sold 18 franchises—including three for OC in Irvine, Anaheim and either Fullerton or Brea.
Others are slated for Los Angeles, San Diego, Riverside and Torrance, plus five in Canada. A third corporate site will be in Chino Hills.
Cauldron enters a crowded market that includes fellow nitrogen-infused ice cream franchiser Creamistry Franchise Inc. in Yorba Linda. Creamistry started franchising in 2014 when it had one location. It had 33 by last year, and its website now shows 47 existing or in development as far afield as Saudi Arabia and India. It’s ranked No. 36 on the Business Journal’s list of OC-based restaurant chains, with $15 million in 2016 systemwide sales.
Cold Cash
It costs $269,000 to $534,000 to open a Cauldron shop, franchise filings show. The franchise fee for one location is $40,000. Royalty is 6% of gross sales, marketing is 2%, and franchisees commit to spending 1% on local ads.
Cauldron called franchise broker Fransmart, based in Alexandria, Va. and with an Irvine office, when Fransmart client, the New York-based gyro fast-casual chain Halal Guys, opened nearby.
“Our goal was always to franchise,” Lioe said, but Fransmart didn’t respond.
“We didn’t hear back for four or five months. They were scoping us out.”
Fransmart Vice President Al Rowe said it first observes potential clients, including as customers.
“It wasn’t an issue once we met them,” he said. “They’re genuinely nice people, they care, and that’s who we want to connect with. With our track record and experience, we thought we could grow them.”
The first franchised Cauldron opens next month in Glendale.
Just Desserts
Its franchise spurt includes an interesting topping: saying no. The 18 sales are to six different buyers.
“Groups are vetted,” Lioe said. “We meet multiple times, and we only sell to a few.”
He and Le have denied four or five prospects—so one in three that got to a decision got the high hat.
“They had the locations. We said no.”
A gimlet eye goes for retail space, too. Bella Terra in Huntington Beach got the brush-off, for instance.
“People have to be going for the food,” Lioe said.
Dairy Culture
For “afters,” as an English franchisee would say of dessert, Lioe wants an enterprise built on company culture.
“Why do people keep choosing In-N-Out?” he said. “Their burgers look a certain way, workers act a certain way. You know you’re there, and you feel different.”
He began to ask of such places, “Why do I feel this? How does it look? Can we do it?”
Lioe also cited OC-based tea and coffee chain 7 Leaves Cafe—“comfortable seating and communal tables.”
At Cauldron, bottled cold-brew coffee from Stumptown Coffee Roasters in Portland, Ore., gives customers in a group who don’t want ice cream a way to say, “I’ll get the drinks,” Lioe said.
The menu is streamlined.
“Too many options overwhelm,” Lioe said. “There’s always one thing you shouldn’t have done.”
Customers can customize toppings but not Cauldron’s all-natural flavors.
He said that also cuts food costs and waste.
Brain Freeze
“Nitrogen,” Lioe said, “makes better ice cream.”
He hopes the food trend and carnival trick—blowing air into milk and sugar—has legs, even if those gams are freezing.
Liquid nitrogen has no odor, color or taste and is really cold. It boils at minus 320 degrees Fahrenheit, for ice cream with a show.
It amps up antics at previously new frozen thing Coldstone Creamery, based in Tempe, Ariz., prepping creations on marble slabs and threatening to sing at you for tips.
Infusion in seconds keeps ice crystals away—no one pays eight bucks for ice milk.
Stress Eating
Lioe and Le are both 27. They grew up in OC, attending Fountain Valley High School, and met and began dating at the University of California-Irvine.
He has a film degree; hers is in psychology. He day-traded while she sold real estate.
Lioe thought a restaurant would be less stressful than day-trading.
“I was wrong,” he said.
They didn’t attend trade shows, and did half the South Coast Metro buildout work themselves. They early on had to rework customer flow and ordering—some of the long lines came from operational snafus, as well as popularity.
They put about $160,000 of their own money into it.
Lioe estimated they had “about $70” in the bank the day they opened.
“We had $47,” Le corrected.
“We said, ‘If we don’t make any money today, we’re done,’” Lioe said.
The location grossed $863,118 last year, with $306,580—35%—in gross profit, state filings show.
