Dave's Ice Cream has designs on Mainland

By Dan Nakaso
Advertiser Staff Writer

The memories live on in Dave Leong's mind of his father, Jack, sitting down each night in front of the television in the family's Diamond Head home with a big bowl of ice cream.

Dave's Ice Cream president Dave Leong, center, displays various flavors of his ice cream at Costco. Leong, who started with a single ice cream parlor in Wai'anae, celebrates 20 years in the business this month. Deborah Booker • The Honolulu Advertiser

That first Dave's Ice Cream quickly switched from selling cones of Meadow Gold ice cream to producing its own Dave's gourmet brands in the back of the shop. There are now 11 franchises and a busy factory in Pearl City Industrial Park that can pump out 100 different flavors poured into 600,000 pints a year.

Dave's is now sold at Times Super Market, Star Market, Daiei, Long's and military commissaries. And in the past year, Leong has spent hundreds of thousands of dollars stretching his reach into 30 Southern California Costco's. In March the brand will be available in 15 more Costco's in San Diego and Las Vegas.

It's an investment that Leong hopes will spread Dave's Hawaiian Gourmet Ice Cream to Southern California supermarkets and push his Pearl City company onto the national stage to perhaps one day compete with the Haagen-Dazses and Ben & Jerry's of the gourmet ice cream world.

Leong can feel himself standing on the verge of a new era for his company, just as the franchises celebrate his 20th anniversary in business and prepare to give away free ice cream Oct. 22 to mark the opening of Leong's first store.

But Leong, 48, sees problems ahead that could come with new success.

The pint-sized containers that bear the Dave's Hawaiian Gourmet Ice Cream label are, ironically, made in Illinois then shipped across the ocean to Hawai'i. Each of the Dave's flavors come from the Mainland, too.

"Nobody makes these things here," Leong said. "Hawai'i is just too small."

Just to bring the raw materials to his factory cost Leong $27,000 in freight costs last year. Then he had to put it all together and ship it back to his Mainland customers.

"We're trying to compete with Ben & Jerry's and Haagen-Dazs and they don't have to make those two ocean crossings," Leong said. "We're from Hawai'i. What a mousetrap that is."

Cost of business in Hawai'i

Leong has not made any plans to move his operation to the Mainland to cut down on costs. But he thinks about it whenever he looks at his freight bills.

"It's a huge dream of mine to take this nationally," Leong said. "I want to stay here. It would hurt me personally to leave. But at what cost? How do I compete?"

And so as Leong simultaneously looked back on 20 years of business and ahead to the future, he stopped recently to think about the biggest lesson he has learned so far.

"Yeah, I know what it is," he said finally, laughing only slightly. "Don't get into the ice cream business."

In 1998, the U.S. ice cream and frozen dessert industry saw four consecutive years of declining production. In 2001, per capita production dropped to 23 quarts per person, according to the Washington, D.C.-based International Ice Cream Association.

When times are hard, Leong said, buying ice cream can become a casualty for some families.

"This is not Spam and rice and toilet paper," he said. "Ice cream is a luxury."

But it's still huge. In 2000, total U.S. sales of ice cream and frozen desserts reached $20 billion.

And Leong just got more competition. Cold Stone Creamery, which mixes sweet condiments into fresh-made ice cream on a frozen granite slab, opened three Hawai'i locations in the past 18 months. By the end of the year, Stone Cold plans to open four more franchises and nine more are being planned.

Starting from scratch

Leong had no formal training in running a business. And he certainly had no expertise in ice cream.

He was just a 29-year-old warehouseman working for his father's hardware distribution business, Mutual Distributors. At night, Leong tended bar at the Hilton Hawaiian Village.

But Jack Leong saw an opportunity for his son to take over an ice cream parlor in Wai'anae. They invested $20,000 for the nearly 2,000-square-foot store, renamed it Dave's Ice Cream and Leong began learning as he went.

"I didn't know nothing," he said. "Everything broke all of the time. And I had no plan. That's what's so funny."

He continued selling Meadow Gold ice cream but within a few months decided the future was in making his own brand.

"If you're selling generic ice cream, what edge do you have?" Leong said. "There's no reason to come to Wai'anae to buy generic ice cream."

First he took Meadow Gold's base formula and began mixing in his own flavors, starting with vanilla. A neighbor of his parents, Ellen Farmer, offered her expertise in food science and within a month Leong was up to 35 flavors.

He made lychee sherbet for his mother, Edith; gooseberry — or poha — from the Big Island for his father. A special order for black licorice was less successful. "That one didn't come out too good," Leong said.

Leong didn't advertise, but word spread anyway. Within a few months, more and more customers were coming into his shop wanting to get a taste of what they had heard about.

Within the first year, business took off.

Dave's Ice Cream brought in $25,000 a month in sales. The store had 10 employees — four of whom worked in the back churning out ice cream and making new flavors. Two other people wanted to open franchises in 'Aiea and Kapahulu.

Leong then took out a $50,000 bank loan and moved his factory to Kalihi, but outgrew that within a year. Two years after he got into the business, Leong moved to his current 12,000-square-foot, $1 million factory at Pearl City Industrial Park.

At one point, Dave's Ice Cream had 15 franchises throughout the Islands. Those that died tended to suffer from bad locations, such as the one in Kona that was two stories up. "Bad idea," Leong said. "That was stupid."

"I used to think, 'Just make good ice cream and you'll be fine,' " Leong said. "Nah. Ice cream is an impulse item and if it's a hassle to buy it, people will just drive by."

Success in S. California

Three years ago, Leong hooked up with the five Hawai'i Costco stores and now Dave's is the only gourmet brand that Costco carries here. Costco normally sells a four-pack of Leong's two most popular flavors — green tea and lychee. But every so often, Leong and his staff bring in pints of eight different flavors and pass out free samples.

Last summer Leong and his operations and marketing manager, Daniel Bulatao, were scheduled to offer samples in six Costco's in Southern California and shipped more than 28,000 pints. It was supposed to be enough to last seven weeks.

They sold out before they even got to the sixth store.

Leong now has a Mainland staff of eight people who offer samples and sell ice cream in three different Costco's every week, eventually rotating through all 30 Costco's.

The fact that Dave's has become part of what Costco's calls its "road show" rotation is a testament to the brand's popularity with customers, said Darrell Evans, Costco's Hawai'i regional buyer.

"Not everybody comes back more than once," Evans said. "If you're asked to come back, then you're successful."

Costco benefits by ringing up sales and giving customers something different, Evans said. It's part of the Costco formula to offer special items that may not be there next week, Evans said.

Leong figures he breaks even with the sales. But it's the exposure he wants.

His sales have now more than doubled since moving into Costco on the Mainland. Just this year, he'll ship 360,000 pints.

Next year, he hopes to move into the biggest Southern California supermarkets and maybe double his sales again.

For now, Leong spends much of his work day in a rather industrial, spartan office with a window that looks onto the production floor. It's here that he dreams of a bigger future.

But his thoughts are never far from his past. In one of the few personal touches on his desk, tiny framed photos of his mother and father, who is now deceased, are just an arm's reach away.

"I do what I do to honor my family," Leong said. "It all started with my father. He really loved his ice cream."

Reach Dan Nakaso at dnakaso@honoluluadvertiser.com or 525-8085.