Devon ice cream maker Salcombe Dairy is seeking to raise £250k from the crowd to expand its profitable bricks & mortar footprint.
Offering 5.26% of the £4.5m-valued company’s equity, the campaign on Republic is closing in on the target, with more than £230k committed by almost 70 backers so far.
Salcombe Dairy will use the capital to expand its network of six self-branded stores in the south of England, identified as a high-profit growth area for the business, as well as a growing DTC trade started in the pandemic.
Should it reach its £250k goal, it will aim to open two stores a year for at least the next three years, with those numbers potentially increasing as growth accelerates. Each store takes between one and two years to reach profitability.
“The [increased] cost of living has led to a plateauing of our trade into pubs and restaurants: those segments aren’t growing as quickly, because people aren’t eating out as much, or possibly aren’t having that second or third course,” Dan Bly, MD of Salcombe Dairy, told The Grocer.
“But on the other side, our shops have done incredibly well. That’s where consumers are happy to spend, because the spend isn’t huge [each time]. And we know the shop model is very profitable.”
Since the beginning of the pandemic, Salcombe Dairy has grown revenues by about 90% – with its vertically integrated retail segment growing at double the rate at 180% over the five-year period.
Forecast to turn over £3m this year, the 46-year-old creamery now employs 35 staff year round, with numbers swelling to around 70 during the summer.
In a highly seasonal trade, Salcombe has taken steps to strengthen its year-round revenue: it has branched into chocolate, which now makes up the entirety of manufacturing at one of its two factories, and its physical stores in all-season tourist hotspots Bath and Oxford are intended to keep underlying cashflow steady, Bly said.
He added there was no plan to build major distribution in the supermarkets, but a potential listing with Ocado was currently under discussion.
“Hopefully, we’ll get a number of SKUs to them in the next few months,” Bly said.
“We’re looking for the best model for our business. We’re not a huge factory”, he added, explaining that it was a higher priority to make effective use of its brand rather than “letting it out everywhere”.
“We know we can make a very profitable go of things, if we can get the seed money.”
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