Young and Hungry

WaPo Explains the Chilly Business Deal Behind Gifford’s Ice Cream

Stop whatever you're doing right now and read Michael S. Rosenwald's Sunday A-1 story about the nightmarish business deal that has marred the public face of Gifford's Ice Cream, a local company that can trace its roots back to 1938. The Post nailed this investigation into the small Silver Spring ice cream chain, whose wholesale business owner, Neal Lieberman, sold the retail operations to the wrong guy.

What Rosenwald's reporting clearly shows, however, is that Gifford's brand was in decline even before the transaction apparently dealt a death blow. Here are the pertinent grafs in the story:

The problem is that ice cream isn't just dessert, but an economic entree, a $10 billion business that in Gifford's case has grown notably messy. High-end ice cream has not weathered the recession well. Sales in the high-end segment grew only 1 percent in 2008, according to Mintel Research, and sales actually declined by more than 10 percent at some notable high-end chains such as Cold Stone Creamery.

Lieberman, in interviews, acknowledged that some Gifford's stores were behind on rent even before he sold the shops. The company closed two unsuccessful stores before the sale. Asked whether the retail side of the business had been profitable, Andrew Quartner, one of Lieberman's partners, said, "Depends what you mean by profitable."

At the same time, Gifford's faced increasing pressure from a trademark battle with an unrelated Maine ice cream chain also named Gifford's, which has asserted in a federal lawsuit that it won rights to the Gifford's name after the Washington-area Gifford's went into bankruptcy. Ice cream can be a rocky road.

It only gets worst for the retail stores once Baltimore investor Luke Cooper gets involved. But don't let me spoil it. Read the narrative yourself as it spills one sad detail after another.

Now, here's what I don't understand: People are only too happy to shell out $3 for a gourmet cupcake, $10 or more for an upscale burger, and $12 and up for a custom-made pizza. So why is the fussy ice cream market taking such a hit? I thought people were seeking (relatively) cheap comforts during this ongoing recession, as if a temporary return to childhood could ease the pain of our country's unemployment woes and our non-existent savings.

Is ice cream just too seasonal? Is it too fattening? Is it too expensive? Or is it, as I suspect, that cold foods too closely reflect America's environment right now? The economy is stalled. Congress can't reach a compromise (and it's only going to get worse next year). Everyone's shouting at each other on TV, and the comedians have taken over the political discourse. Who wants to put something cold in our mouths to remind us of America's chilly mood?

Photo by dcJohn via Flickr Creative Commons, Attribution License

  • http://www.districtplates.com Scott Reitz

    What about Pitango in DC? They do a brisk business every time I walk by. Or the Dairy Godmother? That place is a constant shit show of addicts. Or maybe that shows the problem. Maybe the masses moved on and prefer the superior mouth-feel of custard and gelato?

  • http://www.tobysicecream.com Toby

    I feel sorry for Gifford's, who at one point seemed could do no wrong. But bad decisions, one after another, led up to where they are now. And apparently for a while they were selling "Hood's" ice cream (a non-premium brand) and charging unsuspecting customers premium prices for it! They've lost the confidence, loyalty, and trust of their customers. What's more, they've lost their dollars. Can this ship be righted? We'll see.
    I don't think the super-premium ice cream market is shrinking. At Toby's Homemade Ice Cream, my small ice cream shop in Arlington, our sales have increased year over year even through the recession. We were also just nominated for an ABBIE award for "Arlington's Best Dessert." Other, mismanaged frozen dessert shops, like Gifford's and Cold Stone Creamery, in the same time have seen a decrease in sales. Unkempt stores, inattentive staff, and high prices will do it every time. The good shops will persevere through this recession and come out stronger. At Toby's we focus on keeping a clean shop, training staff properly, and giving the customer a good value for their hard earned money. Mom & pop independent ice cream shops will survive if they focus on the basics and treat their customers well. After all, on a clear, sunny weekend there's nothing like bringing the kids out for ice cream!

  • Dag Lakerda

    This is the perfect storm; stupid owners, toxic product, and smarter consumers. What a fascinating train wreck!

    Bad economy? Competitive industry? BS! Pitango Gelato opened a year a go in my building on P Street and it has a line out of the door every night.

  • Elsie

    I do not believe there is a downturn in frozen desserts. Giffords lost credibility in the ice cream business with the advent of the arrogant,ambitious yongsters who bought it 10 yrs ago or so.Folks have moved on from Cold Stone's gimmick.Two failing companies do not a trend make.

  • Anonymous Investor

    This is a well written article. As noted by the writer's research, many aspects of this company's failure are clearly absent from the Wash Post article. If the Washington Post writer Michael Rosenwald did his homework he would have realized that Gifford's Wholesale was the subject of multiple landlord-tenant lawsuits prior to the sale of the retail outlets and that they themselves bought the company after a bankruptcy in the early 2000's.

    In fact, I don't think they have never made money in the business and given the recent trademark lawsuit that they are defending (http://dockets.justia.com/docket/maryland/mddce/1:2010cv01294/178722/) they will likely be officially off the market soon. Moreover, why would they sell the stores to a guy who bankrupted another ice chain just months before Gifford's? And if they were doing so well before the recent closing why is the company's owner Andy Quartner defending all of the lawsuits himself? He's a full time lawyer at Friedman Kaplan and they are not representing Gifford's, just him. Maybe they couldn't afford it, maybe he doesn't want his firm to find out he's got an interest in a highly litigious enterprise, who knows. All I know is something doesn't smell right. What do you guys think?

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