Handel's checks if sale gains flavor



Handel's has started a push to become a national ice cream chain.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
HANDEL'S CUSTOMERS SOON may have a different choice: one share or two?
For $10 a share, area residents may be able to buy stock in Handel's Homemade Ice Cream & amp; Yogurt.
Leonard Fisher, company owner, is exploring the stock sale as part of his dream to build the 57-year-old local icon into a national brand.
Handel's had operated one store on Youngstown's South Side for decades, but Fisher envisions having 100 stores within five years and many more after that.
The expansion already has begun. Handel's has 18 company-owned stores and franchised locations, with definite plans for eight more.
The stock sale would pump between $25 million and $50 million into the plan to build more company-owned stores.
The minimum initial purchase would be 10 shares, Fisher said.
Testing the Valley
Before Fisher goes forward, however, he wants to know if area residents would want to buy the stock. He soon will place brochures in area stores asking if customers would be interested.
Without local interest, he said, he will cancel plans to sell stock and rely on bank financing for his expansion plans.
To foster local ownership of the stock, he intends to limit the sale to Ohio residents.
"We want people who buy the ice cream to own a piece of Handel's," Fisher said.
Once he decides to go forward with a stock sale, it will take six to 12 months to complete the registration process.
Fisher would limit the sale to 10 percent of company ownership. Some stock also would go to employees, but Fisher said he would retain at least 51 percent of the stock.
Controlling expansion
He wants control of the company so he can oversee the development of his plan to put the Handel's name at locations across the country.
He first tried franchising new stores but now thinks he would rather run the operations in house. Company-owned stores are more profitable in the long run, require less support from corporate staff and don't have potential legal issues that franchise locations do, he said.
Franchising has been popular, however, and he admitted that it's hard to turn down the people who are willing to pay the $30,000 franchise fee.
"We turn down people every day," he said.
Several franchisees already have bought rights to open three Handel's stores, but Fisher doesn't intend to accept any more franchises after that.
Franchisees also pay a royalty of 5 percent of sales. They also pay $120,000 to equip the store, plus pay for land and a building.
Fisher said it costs about $500,000 to open a company-owned store.
He wouldn't disclose revenue figures for his stores, but said the franchise locations that have opened outside the Mahoning Valley have been profitable, convincing him that the company can operate nationally.
He said the stores haven't advertised or done grand-opening celebrations in new areas, yet all of them have drawn large crowds right away. He said any food-related establishment draws crowds initially, so the key is maintaining Handel's consistent quality.
Maintaining quality
As Handel's expands, each store will continue to make all of its ice cream each day.
Fisher said he will slow his expansion plans if he finds any signs that the quality of the ice cream is suffering.
For now, Fisher, 51, is focusing the expansion on Northeast Ohio. The company, which has a corporate office in Canfield, has market research that has identified 89 areas in the Youngstown, Akron, Canton and Cleveland that would support a Handel's. Fisher said he intends to stay in Northeast Ohio for now because it will be easier to support those stores.
Stores are opening in other areas, such as near Indianapolis and Philadelphia, but that was because he signed franchise agreements with former area residents living in those areas.
He said the difficult part of his plan will be taking the chain to the 100-store level and maintaining the quality of the product. Once the company gets that big, it should be able to replicate its formula easily, he said.
On his to-do list is to call Starbucks Coffee, the Seattle-based international retailer, about opening joint stores that would sell coffee and ice cream.
In the beginning
Even without such a corporate link, Handel's has come a long way from the ice cream stand Alice Handel started at her husband's gas station in 1945. All she wanted then was something to do with the strawberries she grew.
As the reputation of her strawberry ice cream grew, so did her menu.
None of it was written down when Fisher bought the business in 1984. Mrs. Handel, who continued to make ice cream until she died in 1987, put a little bit of this and little bit of that into her ice cream mix until it looked right.
After buying the business, Fisher followed her around with measuring cups to get the recipes just right.
In 1984, he was an entrepreneur from Brooklyn, N.Y., who had come to Youngstown to join a friend in opening a sandwich shop. He also had sold jewelry and diet drinks.
His proposal to Mrs. Handel was to make the ice cream for sale in grocery stores. Mrs. Handel, who insisted on making ice cream fresh each day, instead offered to sell him the company.

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