In 2011, Dippin' Dots, aka the "ice cream of the future", went bankrupt.
After being swooped up for relative pennies at just $12M, they were acquired last year for $222,000,000.
The crazy part? Most of the company's value wasn't from selling ice cream.
Here's the wild story:
In 1987, Curt Jones was working as a microbiologist in Kentucky.
After inventing a flash-freezing process that prolonged the nutritional value of cattle feed (yup - food for cows), Curt used the same tech on ice cream.
The result? Cold pellets of ice cream aka Dippin' Dots
Initially, Jones struggled to turn his invention into a real business.
While the 1st store wasn't a big hit, he'd find success by distributing Dippin' Dots to:
• Malls
• Theme parks
• Sports stadiums
This led to 350 outlets and $20 million in annual revenue by 2000.
Then things started going downhill -
Back in 1996, Jones had sued competitor “Mini Melts” for infringing on his patent for the Dippin' Dots creation process.
(Valid patents give you exclusive rights for 20 years to make+sell your product)
But Jones made a crucial mistake..
When you invent a product and start selling it, you have 1 year to file a patent.
Jones opened the 1st Dippin' Dots in July 1987, but didn’t file his patent until March 1989.
This mistake cost him the lawsuit, and in 2007, he had to pay Mini Melts $10M via a counter-lawsuit 😵
A year later, the Great Recession hit, and all of a sudden far less people were going to venues where you could find Dippin’ Dots.
Sales dropped from $46M in 2007, to $30M in 2010.
The recession X lawsuit led to Dippin’ Dots being $11M in debt, forcing them into bankruptcy.
Enter - Scott Fischer:
Dippin' Dots was auctioned in a "363 Sale", a proceeding that lets acquirers cherry-pick what they want to buy.
Fischer saw opportunity:
“I was able to pick the diamonds from the rough, free & clear of any liability.”
The next era of Dippin’ Dots began
Fischer, whose father founded a billion dollar oil investment firm in Oklahoma, revitalized Dippin' Dots in 3 key areas:
🍦 Product Expansion
🍦 Acquisition & franchising
🍦 Licensing Dippin' Dots tech**
**This area proved to be more lucrative than anyone imagined...
Fischer began licensing the flash-freezing tech in 2018.
Early customers were pharmaceutical co's using it to increase the shelf life of pill products.
But a "rising tide lifts all boats" scenario was at play, and Dippin' Dots was about to catch the wave of a lifetime
Plant based meat companies were taking off.
Beyond Meat and Impossible Foods nabbed multi-billion $$ valuations, and had expanded into grocery stores + restaurants nationwide.
These companies needed their laboratory meat to taste like real meat.
Dippin' Dots had a solution...
The plant based meat giants feed their ingredients through Dippin Dots’ flash freezing process -
And out comes small pellets that simulate the consistency of natural fat.
If you've had a plant based burger, bacon, or sausage, it probably had Dippin' Dots in them
The impact it had on the business is undoubted.
Between April 2019 - April 2020 alone, revenue grew by 348%, while ice cream declined by 85%.
“With that one we’ve been doing really well. It’s increased our net substantially and is surpassing Dippin’ Dots ice cream right now”
Licensing continued to outpace ice cream sales, as well as sales from Dippin' Dots franchised locations.
Then, in May 2022, J&J Snack Foods announced they acquired Dippin' Dots for $222 million.
An 18.5x return for Scott Fischer.
So as it turns out, Dippin' Dots was never the ice cream of the future.
It was the meat of the future.
🎤 💧
If you enjoyed that thread, I write about franchises and the entrepreneurs behind them.
Give me @franchisewolf a follow to catch them in your feed.
And feel free to like & retweet to share this story with others!
I also write a 2x/week newsletter for 39,000+ franchise owners, operators, and investors:
wolfoffranchises.com/?utm_source=tw…
TLDR - Dippin Dots:
🍦 Found success via distribution
🍦 Went bankrupt due to recession and a patent mistake
🍦 Makes more money by licensing their flash freezing process
🍦 Was acquired by J&J Snack Foods for $222M in May of 2022
P.S.
The original founder, Curt Jones, is still involved with Dippin' Dots as a franchisee.
He also started a new company, "40 Below Joe", that flash freezes coffee and cream, providing a new way to get caffeinated.
Hopefully he has a patent on this one!
Share this Scrolly Tale with your friends.
A Scrolly Tale is a new way to read Twitter threads with a more visually immersive experience.
Discover more beautiful Scrolly Tales like this.