Prof. Howard Weiss shares his interest in Italian ice with us today, March 20th, the first day of Spring.
Rita’s Ice represents an example of seasonal operations, illustrating both the challenges and opportunities due to demand variability. Founded in 1984 in a Philadelphia suburb, the company has expanded to nearly 600 franchises across 463 cities in 30 states, becoming the largest Italian ice franchise in the U.S. Despite this growth, Rita’s core product offerings—Italian ice and frozen custard—remain strongly associated with warm-weather consumption.
Most Rita’s locations operate as walk-up or drive-through outlets, opening by March 1 and closing no earlier than the third Sunday in September. This operational model results in an important inefficiency: franchisees incur fixed costs, particularly rent, for all 12 months while generating revenue for only about seven. Supplement 7 of your Heizer/Render/Munson textbook suggests developing complementary products with countercyclical demand– such as jet skis and snowmobiles– thereby using the same resources all year long.
However, Rita’s appears to be considering an alternative approach—extending operations year-round. This shift reflects evolving consumer behavior, as frozen desserts such as ice cream increasingly exhibit steady demand even in colder months, particularly in warmer climates or high-traffic retail environments like shopping malls. By remaining open throughout the year, Rita’s could better leverage its fixed assets and enhance brand visibility. But this strategy would require careful demand forecasting and possibly localized adaptation, as consumer preferences in colder regions may still exhibit too much seasonal sensitivity to make it worthwhile to open all year.
From a production standpoint, Rita’s must also manage perishability constraints. Cream, a primary ingredient in frozen custard, necessitates reliance on local distributors to ensure freshness. Additionally, custard is discarded after 36 hours, underscoring the importance of accurate short-term demand forecasting and inventory control. Rita’s maintains a consistent gelato formula across franchises, it offers over 60 flavors, rotating them based on popularity data. This approach balances operational consistency with responsiveness to consumer preferences.
Finally, beginning in 1984, Rita’s has marked the beginning of Spring by offering free Italian Ice. This longstanding tradition on the first day of spring—March 20 this year—serves as an effective promotional tool. The initiative not only marks the seasonal reopening of many locations but also reinforces brand loyalty and drives customer engagement.
Classroom Discussion Questions:
- Name two products or services with complementary seasonal demands.
- How would you determine if the demand for ice cream is high enough in the winter to warrant staying open all year?
Prof. Howard Weiss presents an interesting, real-world example of seasonality and forecasting.
The data are separated into pre-Covid and Covid time periods because it is obvious that the graph looks different before 2020 than at 2020 and beyond. If you look closely at the pre-Covid data, it is very easy to see the seasonality. Quarter 2 is higher than quarter 1, Quarter 3 is higher than Quarter 2 and Quarter 4 is higher than Quarter 3 in EVERY year from 2013 to 2019.