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Candy Land

A national craving for Gummy Bears and lemon drops bulks up candy store sales.
May 1, 1998
URL: http://www.entrepreneur.com/article/15632

You know the feeling--that irrepressible craving that hits around 3 o'clock in the afternoon. Or maybe it's a trip to the movies that triggers the uncontrollable urge. Perhaps you never think about it until you come face to face with a sweet treat at the mall--and then you absolutely have to have it. No matter when it strikes, America's sweet tooth needs to be sated.

Sure, Americans are spending billions on diets and lo-cal and fat-free foods. But if everyone is so hell-bent on eating right, why did we gobble up an average of more than 24 pounds of candy in 1996 compared to 17.9 pounds in 1983?

We don't know the answer to that question, but we do know this: The nation's bulk candy purveyors are grateful our sweet tooth isn't decaying. This confection affection is part of the reason bulk candy stores are popping up in malls, strip centers and food courts around the country and why grocery stores, movie theaters, airports, university student unions and other prime locations are adding bulk candy bins to the mix of goodies they already carry.

Says Pete Podolski, marketing communications director for National Bulk Food Distributors Inc., a Taylor, Michigan-based bulk candy distributor, "Candy is here to stay."

Sweet Deals

A sweet tooth is what lured Moustafa Badawi into the bulk candy business. "I love candy myself, and as a father, we could never pass by a candy store without my children stopping in," he says. "When I looked at how much we were spending, I thought, `This is a great business.' "

That's when Badawi, 42, started researching distributors and manufacturers and scouting out locations for a retail shop. He landed a plum spot on a trendy Long Beach, California, shopping street that has heavy foot traffic.

Although his store is still too new to predict annual sales figures, Badawi says that since he opened Candy Land's doors last November, hordes of customers have been plunking down an average of $1.50 to $3 per sale for bags of the more than 175 different kinds of candy the store carries.

In the land of candy stores, 175 kinds of candy is on the low side: Many retailers stock more than 700 varieties of sweets. Dave Ervin, owner of two Candy Express locations--one in Columbia, South Carolina, and the other in the Charlotte-Douglas International Airport in Charlotte, North Carolina--claims there are 10,000 different kinds of candy on the market.

Sounds like a lot of product to manage, but retailers freely admit that operating a candy store isn't brain surgery. Badawi, who also owns an art store, says, "Paintings and art . . . you really have to sell that, but candy? Candy sells itself."

The ease of operation is what led Joel Rosenberg to franchise the Candy Express concept in the first place. The former owner of a clothing store chain was considering opening a new location next to a bulk candy store and thought to himself, "This looks a lot easier than what we're doing." After testing the concept in a local shopping center--with rave reviews--in 1990, Rosenberg created the Columbia, Maryland-based Candy Express Inc. franchise operation that boasts 40 U.S. locations and licensing agreements in 20 countries.

Bite-sized Business

Opening a bulk candy store isn't the only way to get a taste of the candy market. Many existing retailers--those who own greeting card shops, grocery stores, flower shops and more--are adding bulk candy sections. A study by the National Confectioners Association shows that bulk candy sales in supermarkets totalled an estimated $387 million in 1996, which translates to about 187 pounds of bulk candy sold per week, per store.

"Bulk candy can be a real profit center when it's sold in other retail environments," says David Sill, owner of Candicopia Inc., a multimillion-dollar national candy and snack foods marketer and distributor based in
Blue Bell, Pennsylvania.

He should know. The 35-year-old distributor has seen firsthand how his account list has expanded over the past few years to include nonbulk-candy venues. "There were very few people selling bulk candy when I started as a distributor in 1991, but now there are hundreds of accounts out there, including institutional snack bars and college cafeterias," Sill says.

Sill started his distributorship after a two-year stint as a bulk candy retailer left him frustrated with problems finding good bulk candy distributors. "We would run out of stock on the most popular items and would have to wait several days until the scheduled weekly delivery date rolled around," Sill recalls. "In the meantime, there was nothing I could do but lose sales."

Running out of your customers' favorites can be devastating for a candy retailer, so finding a reliable distributor, one with adequate inventory and quick turnaround, is critical. But above all else, the key is to operate in a high-traffic location. "Location is the most important factor in creating a successful candy business," says Ervin, 47.

Location has played a big part in the quick success of Ervin's two Candy Express stores--one in a mall, the other in an airport. Nontraditional locations, such as airports, are appealing to consumers and thus to retailers.

While malls may provide another ideal location, you'll have to use some creativity to get in without paying their exorbitant rents. For instance, Sill, while still in the retail end of the business, managed to find a way to avoid sky-high mall rents by squeezing a freestanding bulk candy store into an unused space near the staircase. "[The mall management] had never even thought about renting out that space, so I got a really good deal on the rent," he says. Lower rent and great foot traffic meant lower overhead and increased profit margins for this candy entrepreneur.

While the candy crowd touts the ease of operation and good margins, they admit there are some drawbacks to being a candypreneur. For instance, increased competition is beginning to cut into sales for existing business owners. Retailers also note that no matter how many tasty treats your store carries, customers will inevitably request something you don't stock.

And then, of course, there's the other danger that's unique to the candy biz. "You have to watch out because it's easy to get addicted to your product," warns Badawi. You mean there's something wrong with having licorice for breakfast, Runts for lunch and Gummy Worms for dinner?

For More Information

Sugar, Sugar

Compiled by Liza Potter

The following franchise companies can help you get started:

Bourbon Street Candy Co. Inc.
266 Elmwood Ave., #287
Buffalo, NY 14222
(905) 894-4819

Candy Express
10480 Little Patuxent Pkwy., #320
Columbia, MD 21044
(410) 964-5500

Sweets From Heaven/Candy Hqtrs.
1830 Forbes Ave.
Pittsburgh, PA 15219
(412) 434-6711

Tropik Sun Fruit & Nut
37 Sherwood Terrace, #101
Lake Bluff, IL 60044
(847) 234-3407

Frances Huffman, a freelance writer in Pacific Palisades, California, is a former senior editor for Entrepreneur.

Contact Sources

Candicopia Inc., 653 Skippack Pike, #222, Blue Bell, PA 19422, http://www.candicopia.com

Candy Express Inc., (704) 492-2307, fax: (704) 492-2307

Candy Land, 5217 E. Second St., Long Beach, CA 90803, (562) 590-8982

National Bulk Food Distributors Inc., (800) 421-NBFD, fax: (888) FAX-NBFD