They come in different flavors, and the company’s Paducah plant can produce 1.5 million gallons of them each year. They also offer a surprisingly creamy taste for what looks like colored BB gun ammunition.
Those simple facts most west Kentuckians have memorized haven’t changed since microbiologist Curt Jones first flash-froze ice cream into exotic little beads in his parents’ garage in Grand Chain, Ill., almost 25 years ago.
“That’s been the amazing thing really all through my career at Dippin’ Dots,” Jones said at the company’s headquarters in Paducah. “Just that intrigue that people have with the product and the brand. I think it’s stayed pretty strong all the way through everything.”
It’s even remained strong through a bankruptcy proceeding earlier this year that threatened the company and its 165 local employees.
Investors from Oklahoma City purchased the company in May for $12.7 million, a move that lifted Dippin’ Dots out of bankruptcy and away from years of struggling to make it month to month.
The charming, exotic brand was what saved the company, said Scott Fischer, the man who lead the investor group and who is Dippin’ Dots LLC president.
“That was one of the things that attracted us to Dippin’ Dots, the extreme value in the brand equity,” Fischer said from a chair beside Jones. “The generational love of the brand. It was probably the brand that was the life vest for the company.”
A confluence of factors over the years led to Dippin’ Dots filing for Chapter 11 bankruptcy in November 2011.
The company spent more than $10 million over a decade in litigation with Frosty Bites and Dallas-based Mini Melts over the Dippin’ Dots patent, only to lose it in 2003. Jones hadn’t supplied all the necessary information originally for the patent, according to a judge.
As the company grew, so did headaches surrounding its franchising model and inconsistencies among franchisees in marketing and location displays. Jones took over more control of the company in February 2009 as the Great Recession hit in earnest.
Fuel and raw materials expenses rose in 2007, the year of the company’s first loss. Fuel and shipping costs continued to rise through 2008 and 2009, and layoffs hit the plant on Charter Oak Drive. A merger with an undisclosed firm didn’t pan out, and Jones’ strategy of simplifying franchise practices and pricing structures didn’t stave off a messy situation with the company’s largest creditor — Regions Bank — in November 2011.
Dippin’ Dots filed for federal bankruptcy protection Nov. 3, 2011, to avoid foreclosure on more than $11 million in loans. The Alabama-based bank asked a judge to appoint a third-party trustee to replace Jones.
Jones stepped down in March, which put him in a position to return to the company when Fischer wanted him there to re-energize the brand.
“When coming out of bankruptcy you start clean,” Fischer said. “Going forward we’re looking at realigning our focus and resources on the company’s core business.”
The leadership plan
The new Dippin Dots’ LLC announced its presence and intentions just three months after its creation with a bevy of new executives.
Its board of managers named Steve Heisner vice president of administration and human resources, Stan Jones as vice president of operations and Michael Milner was named vice president of finance. Michael Barrette remained at his post as Dippin’ Dots vice president of sales and marketing, his position since 2007.
This fall, the company named Mark Liebel as vice president of business development and new ventures, a position designed to increase the availability of the innovative ice cream nationwide.
Liebel brings more than 30 years of franchising experience, both as franchisee and franchisor. He spent more than 10 years as a Wendy’s franchisee and, at the age of 27, became Wendy’s youngest officer and vice president. Liebel also has served as director of operations for Tasti D-Lite, a frozen dessert concept based in New York City. Liebel also was responsible for business operations for I Can’t Believe It’s Yogurt Inc. and managed the largest Pizza Hut franchise in the U.S.
Liebel is tasked with identifying and developing promising distribution channels that complement the existing Dippin’ Dots distribution model, which focuses on franchises and entertainment venues.
The Wendy’s franchise connection is interesting given that Graydon Webb — who worked beside Dave Thomas in Columbus, Ohio, in that the early 1970s burger joint that grew into a national power — has been working in an advisory role for Dippin’ Dots.
Webb started with the company as a consultant and moved into the position of interim director of franchisee this past summer.
Dippin’ Dots hired Steve Rothenstein as director of franchisee, and Webb will remain on board at least through the transition, according to Billie Stuber, company spokeswoman.
The product plan
In addition to the new leadership approach, Fischer and Jones are focusing on key product areas for growth and sustainable profits.
Grocery stores are a new target, which have previously vexed a company with a product that has to be stored at 40 degrees below zero.
“A lot of our (research and development) efforts over the last few years have been toward high-temperature products based on the dots we all know,” Jones said.
Jones said they are tweaking a 2009 product called Dots ‘n Cream, an ice cream with six flavors of Dippin’ Dots mixes that can be stored in conventional freezers.
Within the next year or two, Jones hopes to unveil Poke-a-Dot, a variation of Dots ‘n Cream that mixes conventional ice cream with the dots, but these will be geared toward children ages 2 to 12. “The flavors and colors are going to be very vibrant,” he said. “One of the flavors is going to be cosmic fruity blast.”
Products aimed at kids will be a strong focus to create loyal customers like the adults today who already have fond memories of Dippin’ Dots at amusement parks and ball fields.
“That builds your future market,” Fischer said. “They’re going to grow up and you’re creating a generational brand loyalty.”
Jones is also relying on what started this entire venture back in 1988: innovation, this time toward challenges from having a large operation.
Shipping costs and complications with such a fragile product will need creative new solutions.
One example is rather than shipping dots to Toronto, why not make them there and make them an attraction?
Fischer said they’re considering an “entertainment facility” that will produce Dippin’ Dots, but also serve as a destination with perhaps a Willy Wonka-style attraction built in.
Fischer also hopes to push the brand across the U.S., raising its number of locations from about 1,600 to 2,000. And those locations include everything from standalone retail operations, such as the one inside Paducah’s Kentucky Oaks Mall, to a freezer placed near the check-out counter in Walgreens stores.
New dots with different textures and flavors have been suggestions from kids who have taken part in focus groups — another recent experiment to bring in more kid-friendly products. Jones said ice cream beads with different textures, such as a sherbet dot, are in development.
Just as important as innovation and renewed focus will be the ability to reflect and learn.
Jones has always compared his product and company to having a child. “You have a lot of ups and downs, but for me, I don’t think it was ever really a choice of ever wanting to get out of the business or wanting to stop trying,” Jones said.
“We were lucky to be contacted by some really good folks who were interested in the business, and I think it all came out the way we wanted it to.”
Fischer said he’s happy for employees who were able to stay with the company through tough times and can now, hopefully, be reinvigorated by new opportunity.
The Oklahoman — who is already becoming quite fond of local barbecue — is also glad to have gotten involved in a community staple, a company that southern Illinois and western Kentucky can take pride in for its homegrown ingenuity.
“I want people to know Curt is back in the saddle, re-energized and hungry for the business,” Fischer said.
Jones wants his employees, and everyone else, to know he leans even more heavily on the selective amnesia that every entrepreneur must have, as well as the humor.
“I learned a long time ago you don’t cry over spilt milk, and we’ve had a lot of spilt milk around here,” Jones said.
Contact Adam Shull, Business Journal editor, at 270-575-8653 or follow @adamshull on Twitter.