In 2016, Museum of Ice Cream launched its first pop-up location in New York, followed by Los Angeles, Miami, and a permanent location in San Francisco. The idea was to create a physical experience that was an Instagram-magnet: Draw people in with the explicit purpose of taking photos and then using social media to amplify the brand and experience to a wider audience. Rinse and repeat. 

Soon enough the company expanded beyond physical experiences. In Spring 2018 it launched its first brand extension with an apparel, accessories and ice cream collection in Target, and in Fall 2018 it launched a makeup collection with Sephora. In the last three years, more than 1.5 million people have visited the concept, the company has earned over $10 million in revenue (the split between experiences and brand extensions is unknown) and is profitable. 

Last month, Museum of Ice Cream raised $40 million at a $200 million valuation, with very lofty plans “to create the next generation of Walt Disney.” Its will expand more into branded food (its ice cream line will launch at Albertsons this fall), a rumored theme park, in addition to developing other themes outside of ice cream. The company said it will use the money to pursue more partnerships, make more ice cream and open more permanent locations, especially in Asia. 

Can Museum of Ice Cream build a sustainable business? The answer hinges on overcoming three key hurdles: shifting from a one-time business to a repeat business; understanding the limitations of being another Disney; and the challenges of moving beyond ice cream as the core theme.  

Shifting from a one-time to a repeat business 

Museum of Ice Cream has done an amazing job getting people to visit its experiences across major U.S. cities, but there is one red flag: people often only visit once, whether they are locals or tourists. There are problems on both fronts. While tourists outnumber locals in most major cities, locals are more consistent customers while tourists are fleeting. Most restaurants live and die by their regular customers, not by tourists. 

New York, for example, brought in 66 million visitors in 2018 compared to 8.3 million tourists, a tourist:local ratio of about 8:1. In San Francisco, the city had over 26 million visitors and 880,000 residents in 2018, a ratio of 29:1. There are only a handful of cities in the U.S. that have such high tourist traffic, which limits how many permanent stores Museum of Ice Cream could open. Sure, the company could do more pop-ups in mid-tier cities, but doing so brings high operational costs that can wear down a company and its balance sheet. 

The other issue with catering to tourists is that while they bring a lot of buying power to the cities they visit, they are only in town for a short period of time—a very short economic opportunity window. Once they leave, it’s especially hard to stay in touch with them. While the internet and Instagram should make this easier, Museum of Ice Cream has less than 400,000 followers on Instagram, meaning that almost four times as many people have visited one of its physical experiences than those who follow the company on Instagram. This is proof that it’s hard to keep the attention of people who go to fleeting experiences. Museum of Ice Cream’s lead investor implicitly confirmed this to the Wall Street Journal by saying that growth will come from focusing on tourists and new cities, rather than expanding in existing ones. 

Beyond the physical locations, high customer churn is also a problem when it comes to brand extensions. The premise of selling ice cream in Target, for example, is that everyone who visits a Museum of Ice Cream location will go home and want to continue buying from the brand across a range of product categories. This sounds good, but it means that Museum of Ice Cream products need to be available everywhere, especially if they are perishable. It’s highly likely that Museum of Ice Cream visitors come from 50 states and dozens if not hundreds of countries around the world, which is great, but these product extensions need to be available in all of those places. This is a huge operational feat to overcome and requires tons of capital to build inventory. It’s telling that the company needs some of the $40 million it raised to “make more ice cream,” according to its announcement, even though it will need more to produce inventory consistently if demand keeps up. 

Additionally, when it comes to communicating with customers, this model requires Museum of Ice Cream to constantly communicate with its audience. But the company’s limited social reach makes this hard. While there are likely tens if not hundreds of thousands of posts on individual Instagrams about Museum of Ice Cream, the brand needs to grow its own marketing channels, especially as it moves into other product categories, and continues staying top of mind. 

Becoming a “next-generation” Disney  

Museum of Ice Cream’s ambitious plan “to create the next generation of Walt Disney” is worth unpacking. But first it’s important to understand what Disney actually is: an entertainment ecosystem bringing together physical products and experiences (merch, theme parks, cruises), visual and audio content (TV, movies, video games, books) and generation-agnostic intellectual property that can manifest in the physical and digital world. Disney +, the company’s forthcoming streaming service, will tie this entire ecosystem together like never before. 

Many people have tried to recreate or build a “next generation” Disney and the company remains in a league of its own. This is because the whole is vastly greater than the sum of the parts. For Museum of Ice Cream, the potential introduction of a theme park or an expansion into more branded products could help it build a diversified business, but this is far from an entertainment ecosystem like Disney. 

Another important difference is that Disney owns all of its IP (Marvel, Pixar, Star Wars), while the Museum of Ice Cream does not own the IP behind ice cream. Ice cream as a food group is a vastly more limited proposition than Disney’s creative universes with characters, plotlines and unique environments. This limits Museum of Ice Cream’s potential to build an entertainment empire. Would people watch an animated show about ice cream flavors? Maybe. But the path to building an entertainment universe around ice cream seems challenging and limiting at the same time. Even trying would be a very expensive value proposition that requires billions of dollars to correctly develop content and experiences—Museum of Ice Cream’s $40 million will barely move the needle. Finally, Museum of Ice Cream’s retention challenges run counter to Disney’s ecosystem, which has various touchpoints that keep it top of mind for customers as long as possible during many different stages of their lives.   

Moving beyond ice cream   

While ice cream is universal, some are saying that Museum of Ice Cream has started to lose its appeal. While the company will soon launch an undisclosed new theme, it will be challenging to find another vertical with the same potential as ice cream—a category that no brand controls. 

It could create Museum of Candy, but it would be forced to work with major brands to make it happen, which could require expensive licenses or complex collaboration. Museum of Chocolate could be doable, but the color palette would be quite terrible. Museum of Avocados/Kale/Chia/Oat Milk could work but all of those foods are less universal than ice cream. It could do Museum of Alcohol, but that would vastly limit its potential customer base since kids and teenagers would not be allowed. This is not an exhaustive list, but it’s hard to find something within the same general purview that is more universal than ice cream, which means that the company might have picked the best product first. One-upping itself is going to be a challenge. 

Going Forward

Putting all of the above together, there are serious hurdles for Museum of Ice Cream to manifest all of its ambitions, especially given its valuation. The better approach might have been continuing its IRL experiences and scaling them step-by-step, showcasing the profitability of the model and using it as a cash flow machine. The company could be taking on too much and setting expectations too high, which could put the entire proposition at risk. Time will tell if Museum of Ice Cream will continue riding its sugar high or end up with a brain freeze.