August 28, 2013

A Word With the Boss: Two guys looking for fun work make gelato, avoid fiasco

By Edward D. Murphy emurphy@pressherald.com
Staff Writer

Josh Davis and Bruno Tropeano started Gelato Fiasco in 2007, two years after they co-founded a real estate development venture but decided to end it because, as Davis said, "we were in the middle of the (housing) boom but we realized that was not going to last forever."

click image to enlarge

Co-founder Josh Davis spends time at Gelato Fiasco’s flagship shop on Maine Street in Brunswick. The company’s premium gelato is sold in about 1,000 retail locations.

John Ewing/Staff Photographer

Since starting out with little idea how to make gelato, let alone profitably, they have won accolades from Food Network Magazine (top frozen dessert in Maine) and Down East magazine (best ice cream in the state) and a trip to the White House for an event honoring young entrepreneurs.

Gelato Fiasco now has a flagship store in Brunswick, a store in Portland, and a wholesale business supplying supermarkets and other outlets. It recently bought two buildings in Brunswick to boost production and expand distribution nationally.

Gelato Fiasco has 33 full-time, year-round employees and adds about 20 in the summer. Its annual revenues are about $2 million. Davis declined to disclose its net profits or what he and Tropeano are paid to lead the company. Its gelato is sold in about 1,000 retail locations.

Q. For the uninitiated, what is gelato?

A. Gelato is simply Italian-style ice cream. It's made with milk instead of cream, and it's more dense than American-style ice cream. The flavor is much more intense than ice cream. The first time people taste it, they're amazed. We're not the cheapest frozen dessert out there (a 7-ounce serving costs $4.25), but I'd say we're very comparable with premium ice cream.

Q. Why did you turn to gelato after real estate development?

A. We wanted to do something fun, and Bruno is first-generation Italian-American, so we knew what gelato was. We'd had it before and were familiar with it, but we never thought of it from a business perspective. But we were attuned to the idea of doing one thing and doing it really well. At the time that we opened, there were some other gelato shops that had started, but there were very few.

Q. How did you go from knowing a little about gelato to creating Gelato Fiasco?

A. We wrote a business plan. We had met at a business school and both of us grew up in entrepreneurial families that had been in small businesses, but still, we didn't know what we didn't know. But I was 25 and Bruno was 24 and we both had nothing to lose. We were sure of ourselves and sure it would be a success, even though it very quickly became harder than we thought it would be. We went from bank to bank to get funding and we got repeatedly turned down, until the last one we were presenting the plan to said they would fund the project, with a guarantee from the (Small Business Administration). It took a lot of hard work and convincing to make it reality.

Q. Did you find success quickly?

A. We had a store and a name and a great brand and equipment, and still no idea of how to make gelato. We found the fledging gelato industry at the time was very supportive and very interested in the fact that we were committed to making it the right way. A lot of places use paste and powder and just add milk and add water to make gelato, and we were making things from scratch, using really time-consuming and labor-intensive methods.

Q. Did your customers appreciate that they were getting something different -- not just gelato versus ice cream, but gelato made from scratch versus the paste-and-powder versions?

A. We spent most of our time just talking about what good gelato was. A lot of people didn't know what they were getting into with gelato. They were asking, "Is it pudding? Is it Jello? Is it shoes?" In the very beginning, there were only a few gelato shops and we asked their advice. They knew that their competition wasn't other gelato shops, it was telling the average American customer what gelato was and to not buy average ice cream, but buy gelato. Even in a developed market like Italy, there's industrial gelato, superior gelato, outstanding gelato and everyday gelato. We've been recognized as one of the best gelato shops because we follow intense methods.

Q. How did you branch out from selling it in the store to selling it in supermarkets?

A. The wholesale part of the business really started because we had customers who asked for it in a retail package. In 2008, we launched selling in pints, and that's become a major vehicle for us. We were in wholesale before we even opened our second store, in Portland. (The stores and wholesale) work very much hand-in-hand.

Q. When you started out, the economy was good, but then it quickly went bad. What was the impact on a startup selling a premium, non-essential product?

A. Pretty much right away, we realized it wasn't going to be as easy as we thought it would be. It was pretty much day-to-day survival and making our own methods and getting efficient. ... We were undercapitalized and had no money to advertise or grow the business. But the good thing is that it forced us to be very frugal and forced us to get our message out on a shoestring budget. I don't think that we would have survived if we had opened a year earlier because we would have developed bad habits and would not have had the discipline. Even now, years later, the economy has improved, and our business has always grown, but those tactics remain our method.

Q. What kind of tactics?

A. We got really good at looking at every expense. We had to pool our resources and focus on what served the customer and cut back on everything that didn't. We also had an enthusiastic staff who were eager to work. If you talk to any of our customers, the one thing they consistently ask is, "How is your staff so nice and friendly?" We adopted the principle that we need to take care of those people so they take care of our customers. We made sure we were properly staffed, we had plenty of people and were very clear that we're in the business of giving people an experience and not just selling them a product. If people were only concerned about buying the actual physical product, they could buy it at Hannaford, and instead they came in every day because they were interested in getting the full experience.

Q. What kind of things go into making it an experience?

A. We did fun things, like in the first winter we took off one percent for every degree (the temperature was) below 32. People would say, "Last night we came by the store at 10:30 and we thought you were closed but there was a line out the door." The Bowdoin students would wait until the last possible moment to buy their gelato because it was nighttime and the temperature was going down.

Q. What's your favorite flavor?

A. My all-time favorite is molasses peppermint. I had it at some point as a kid at an ice cream stand in New Hampshire. That's one of the reasons we started the company -- to make that flavor. We don't make it a lot, but we try to make it around the holidays. We make small batches, so we can take risks for the flavors, and we like to tie it to events that are going on, like blue cheese, hot sauce and chocolate-covered potato chip flavors we did for the Super Bowl. Our biggest fail was a sweet vidalia onion sorbetto.

Edward D. Murphy can be contacted at 791-6465 or at:

emurphy@pressherald.com

 

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