Feels Like Home

Dairy Foods, March, 2001 by David Phillips

Picturesque setting attracts customers and a business partner for Leiby's ice cream

What's the difference between working for a major oil company and helping to run a small family business? Well, for starters one comes with a steady salary. But then the other comes with a steady geography.

And when that geography is the wooded foliage of east central Pennsylvania, it's not hard to imagine why Bill Parks left the oil business to join his brother-in-law in the family ice cream business.

"I left a company I thoroughly enjoyed working with for ten years, " says Bill Parks, co-owner of Leiby's Premium Ice Cream in Tamqua, Pa. "I am an ex-Mobil Oil Company guy." An MBA, Parks worked in logistics and strategy for Mobil.

"But eventually my wife and I wanted to settle down a little. I had 14 assignments in 10 years. We once owned a house for six months."

Parks married into a family that has owned a dairy business for three generations. In 1991 Park's brother-in-law Keith Zimmerman was in the process of buying the business from his father and his uncles when he asked Parks to join him. Maybe the scenic area between Allentown and the Pocono Mountains sounded to Parks like a good place to settle down. Certainly it's a place that has kept Leiby's customers coming back year after year.

Landmark Brand name

Founded as a small dairy business during the days of metal cans and home delivery, Leiby's has gained local fame through a landmark family restaurant started in the early 1960s. A country setting, family fare and fresh-made ice cream have earned Leiby's restaurant a loyal following.

"It's been a local travel spot for people going to the Poconos," Parks says. "In the winter they go for the skiing and hunting and in the fall for the changing of the leaves. It's along the 309 corridor, which links Allentown to the Poconos. We actually have people who drive from as far away as Allentown just to gets some of the ice cream. It's a local, land mark, and it was the original flagship for the name Leiby's and for the ice cream brand."

Building on the Leiby's name, Parks and Zimmerman have grown the business geographically and diversified its products. They now sell private label ice cream and private label and Leiby's brand mixes in five states and Leiby's brand is sold throughout eastern Pennsylvania. Last year, they built a brand new $3 million plant that's fully temperature controlled and computer automated. While the restaurant previously served as the ice cream's chief marketing tool, Leiby's is now developing an in-house marketing team and has begun advertising on television. Leiby's premium ice cream is currently sold only in eastern Pennsylvania, but more marketing could lead to more geographic growth as well.

The restaurant sells a lot of ice cream - about $350,000 worth annually. And the dairy has for years produced a lot of ice cream mix which is sold to secondary manufacturers. Working from a 30,000 square foot plant that produces 1,200 gallons of ice cream and hour, Leiby's isn't giving the big guys any gray hairs. But what it has done is find a silver lining in the clouds of consolidation that have darkened so many small dairies like the one Zimmerman's grandfather started.

Balance in the Face of Consolidation

"In 1992 they were doing about 85% mix and 15% finished ice cream," Parks said. "There are only a few companies that do mix, and in 1994 Leiby's was the largest bulk shipper in Pennsylvania."

When Zimmerman and Parks took over they set out to sell more of everything Leiby's Ice Cream made. And what kind of ice cream was selling in the 90s?

"It's a superpremium product. It's about 14% butterfat and 85% over run," Parks says of Leiby's Premium. Like most ice cream makers, Leiby's found that fat was in.

By 1997 they realized there was room to grow the finished ice cream business if they had more production capacity. A small expansion a few years earlier had been quickly depleted.

"From about 1992 to last year we doubled the business, Parks says. "In January 2000 we built the new plant from the ground up. The intent (of the plant project) was that we had pent up demand for our own label. And we were also looking to get a better balance between the mix manufacturing activity and finished ice cream. It was done strategically to position us to compete in the environment given the merger mania out there."

But don't get the wrong idea. Parks and Zimmerman don't see today's dairy industry as a scary place for the little guys.

"With all the mergers going on out there we found that a lot of the small to middle manufacturers have been bought by bigger ones," Parks says. "And the people who were doing business with smaller ones might not have anyone to serve them anymore. It's actually created pockets of new opportunity."

While ice cream and oil are worlds apart, Parks says much of his experience with Mobil is applicable to Leiby's. Of course some business practices are even more basic than oil, ice cream or MBAs.

"When we started we were 100% leveraged and we retired that debt in five years," Parks says. "We were pretty proud of that. Now we've put ourselves back into debt with the ice cream plant."