Doing right by dessert
Amidst sofas, tall tables and a tidy kids’ corner downstairs at Kurt, the “pure” frozen yogurt shop first to serve “froyo” in Austria and now market leader, it’s clear that co-founder and owner Ronald Jacobs understands hospitality.
With a background in luxury hotel food service, the half-Austrian, half-Dutch Ronald studied at MODUL, Vienna’s tourism university, followed by management studies in San Diego, working as an assistant hotel manager. He went on to Germany as assistant director of banquets with Ritz-Carlton. Then Milan, doing the same job at the Four Seasons. The hotel chain returned him to California, as food and beverage manager in Carlsbad. It was his last job.
With his wife, Shelley Jacobs, also a Four Seasons veteran, and friendYong-Beom Kang, a biotechnician, Kurt was founded in 2011. With this first entrepreneurial endeavour, they wanted to achieve higher output for their own work, make positive environmental impact, and gain control over business decisions, no more “feeling like little corporate wheels.”
Photo credit: Kurt Frozen Yogurt, http://bit.ly/1eKfFvy“Before we even knew it would be a frozen yogurt shop, we said whatever we end up doing, we want to do it better than the status quo,” says Ronald. Initially, they weren’t sure what they’d sell – most important was providing environmentally conscious products, high quality ingredients, and gracious customer service honed through luxury hospitality work. Frozen yogurt was chosen thanks to a European market gap. The basic dessert was inspiration, “but that’s also where it ends.” Underwhelmed, Ronald decided, “let’s try to take that basic idea and soup it up a little. Make a version 2.0 of the whole thing.” After developing a business plan, incorporating their commitment to biodynamic products and guest service, “we saw that it was going to be big if we did it right, which is the only way we do things.”
Personal conviction was key – private standards were applied to business, regulating ingredients and plastic-free, fully biodegradable packaging. Plus a biodynamic twist: Beyond organic, the approach is sustainable, ethical and ecological – crucial to Kurt’s business model. Specifications comprise conditions for cows, non-homogenised milk and entirely organic ingredients, including seasonal and regional specialties: homemade waffles, apricot sauce in Vienna, raspberry and blackberry sauces from regional farmers in Innsbruck, and toppings like Lebkuchen, traditional Christmas gingerbread.
Using an over-the-counter service model, visitor experience is highlighted. Ronald’s background in formal dinner service comes in handy. “I tell our staff: No matter how long the line is, you only have one guest in front of you. It doesn’t matter if there are 30 people behind them, or that they stood in line for 20 minutes.” It extends to their licensees – they seek owner-operators, not just financing. “We need the host character. The shop needs a face. That’s big for us.”
“Everything you want is on the other side of fear”
Startup challenges were numerous. “It started early on, with raising the necessary capital,” says Ronald. Aiming for 180.000 euros, inevitably they needed more. They struggled with angel investor options, ultimately financing via bank loan. That required securities; as a young startup, there wasn’t much to work with. Luckily, Raiffeisen bank believed in them. But they still had to apply for a Förderung. Here, they were “very quickly shut down”, conservative numbers deemed unrealistic and their idea labeled “a new thing” without a clear outcome. It was disenchanting, but it wasn’t the end. The required securities were raised from friends and family, something unpleasant but necessary. They’d already invested much of themselves in the venture. “There was just no turning around at that point,” says Ronald.
Next was securing a location, a Catch-22. “You can’t sign a rental contract without having the money to build the shop, but you don’t get the money without being able to show the shop. At that point, you have to leap,” Ronald remembers. They signed, hoping money would come through. “That’s where I think entrepreneurship is not for the faint-hearted.”
Other risks werepsychological. Job stability became a thing of the past, as did the freedom to quit unsatisfactory work. Entrepreneurship brings “less security, more responsibility,” says Ronald. “If that doesn’t sound appealing, then stay away from being an entrepreneur.” The risks paid off. Ronald recalls once being told, “everything you want is on the other side of fear.” That’s posted on his desk, reminding that fear isn’t real, only a mental concept. “It’s just your brain producing possible scenarios to freak you out. Focus on what you can do and what you can control.”
The individual stores are profitable, says Ronald. Factoring startup debts into the equation, however, they haven’t broken even yet. Ronald estimates reaching profitability could take up to five years. But from the first location’s cash flow, further development was funded. In 2012, licensing franchisees began. He reflects they may have overextended themselves, but it was an opportunity they had to seize. The price was high, in labour intensiveness and financially, but they’ve claimed the spot of market leader in Austria.
Revenue is 300.00-400.000 euros with 15-20% profit annually. Summer brings around 700 customers daily in Schultergasse. That’s the only shop owned and operated by the founders, with licensed franchises in Vienna’s Krugerstrasse, Innsbruck in Tyrol, and Nijmegen, Netherlands. Between them all, 40 metric tons of yogurt are consumed every year.
Surely so much yogurt means they’re tasting success. “When I started, I thought success meant huge recognition, financial return, all that stuff. But the more we got into it, the more we said, ‘I just want to be happy.’ As bland or cliche as that sounds, it’s true,” says Ronald. “We had hard times, some sleepless nights when you don’t know if it’s going to last until next month, and money is tight. Then you think, I just want to be happy. Now, we try to base our decisions on that. When we take a step, we ask, ‘Does it increase our quality of life? Does it make us happier?’ If it’s ‘probably not’, we won’t do it, even if it looks great on the balance sheet.”
Next on the menu
Photo credit: Kurt Frozen Yogurt, http://bit.ly/1gVGjhEThe goal is opening ten more shops in five years. “We’re focusing first on Austria to maximise the economies of scale in our home market, then we’re open to venturing out.” Scandinavian markets are appealing, as Kurt’s brand and design fits the local style: clean, but not cold. And, surprisingly, chilly Sweden is the EU’s highest per capita ice cream consumer.
Their most recent project, with crowdinvesting platform Conda, is a shop in Shopping City Süd in Vösendorf near Vienna, opening late spring 2014. Ronald prefers choosing partners based on skill, personality, customer service experience and the ability to provide a face for the shop, instead of financial backing.
Ronald considers failure a big fear, often culturally ingrained. An Austrian friend in American entrepreneurial industries understood business difficulties, valuably reassuring him: they were normal. “‘Don’t worry, everyone goes through this, it’s part of the game.’ That confirmation is sometimes all you need.”
Friendships sometimes also suffer. “Many things in the entrepreneurial field must be felt in your own skin to understand, or else it’s just an abstract concept.” He advises positivity. “People that care about you who have not been entrepreneurs have hesitations. A very important thing in that phase is surrounding yourself with positive people who believe in you. Distance yourself from anyone that has only concerns to offer. Your mind tries to trick you plenty. You don’t need other people reinforcing that.”
Ronald admits that ethics and the “right” business decisions can collide. “I decide more from a heart standpoint than from a brain standpoint. Most of my life, I’ve followed my brain. That was one of my biggest changes: switching more from brain to heart.”