Carvel Corporation

The Carvel Corporation is an American success story. Through hard work and timely luck, its founder and president, Tom Carvel, turned an ice cream trailer with a flat tire into an international chain of ice cream supermarkets with over 800 outlets in 17 states and six countries.

Thomas Andreas Carvelas was born July 14, 1906, in Athanassos, Greece. He was one of seven children of Andreas and Christina Karvelas. The family emigrated from Greece to Danbury, Connecticut, in 1910, and finally settled in New York City in 1920. His father was a chemist and wine specialist who helped support his family during prohibition by restoring fermented wine for Greek restaurant owners.

Tom's father sparked Tom's interest in how things worked. Tom tried his hand as a salesman of radios and automobiles, a test driver for Studebaker, and an auto mechanic. At the age of twenty-six, he was diagnosed with tuberculosis, and his doctors advised him to move out of the city. Consequently, he borrowed $1,000 from relatives and built a frozen custard trailer. His first break came on Memorial Day, 1934, when he borrowed $20 from Agnes Stewart (his future wife), bought a trailer load of custard, and set out to sell it to vacationers in Westchester County, New York. Tom Carvel suffered a minor setback when his trailer had a flat tire in Hartsdale, New York. But luck was on his side: there was a pottery shop across the street and Pop Quinlan, the potter, allowed him to use his electricity so the custard would not melt.

Tom Carvel kept his trailer on the pottery shop's lot and in his first year grossed $3,500. The following year, realizing that a permanent location could be profitable, he leased the shop for $100. In 1937, he borrowed more money and converted the trailer into a frozen custard stand, complete with a second-hand freezer which enabled him to make his own custard. By 1939, he was grossing $6,000 a year and was well on his way toward becoming the "Ice Cream King of the East."

In the early 1940s Agnes, his wife, operated the Hartsdale store while Carvel traveled the carnival circuits selling his frozen custard from a mobile vending vehicle. Next, he managed the ice cream cone stands at the post exchange at Fort Bragg, North Carolina.

Tom Carvel soon developed his own freezer model, known as a batch freezer, (the first of his sixteen U.S. Patent Registrations). In 1947, he sold 71 freezers at $2,900 each under the trade name "Custard King." When some owners defaulted on their payments Carvel discovered that many of the freezer owners were careless in their selection of locations, disregarded cleanliness, and worked sporadically, while others were selling additional, non-ice cream food items. Determined to make the venture succeed, he decided to oversee the operations of the freezer owners directly. He claimed to have developed the franchise concept in 1949 as a result of this strategy.

Franchise business opportunities allow investors to enter retailing without prior business experience and to own their own business. In the case of the Carvel Corporation, potential franchise owners bought equipment and supplies from the Corporation and used the Carvel name. In return, Carvel helped them select a location, taught them how to run an ice cream business, and organized resources for advertising and promotions. Franchise owners were taught the retail ice cream business at the Carvel College, an 18-day series of courses for potential store owners. There they learned about public relations, mechanics of the ice cream machines, local advertising, and making and freezing all kinds of ice cream cakes. They also received The Shopper's Road, an in-house magazine advising them on topics ranging from travel tips, to cooking, to marketing their products to the community.

From the beginning, the Carvel Dairy Freeze Chain stressed cleanliness, hard work, and a quality, all-natural product. Tom Carvel aimed to create a family-type environment for his franchise owners. He wanted people who would work hard and were eager to learn about the retail ice cream business in order to make their individual rags to riches stories come true. A unique and important element to the Carvel story was Tom Carvel's personal involvement --from an early date--in creating commercials for the stores. His was one of the first instances in which a Chief Executive Officer of a major corporation was featured in his company's commercials. In 1955, Carvel began making his own radio commercials. As the story goes, one day while driving in New York City he heard a commercial for a new Carvel store, but the announcer did not state its exact location. Convinced he could do a better job, he drove to the radio station and re-did the commercial himself. After this incident he started doing his own commercials on a full-time basis. Tom Carvel created a distinct style with his garbled delivery and "say it once" philosophy, with the idea that you have to grab people's attention and then let the product speak for itself. Carvel eventually set up an in-house production studio and advertising agency at the Carvel Inn, where most of his television and radio commercials were made.

The use of premiums was an essential marketing component for Carvel. In 1936, he introduced the "Buy One Get One Free" offer. He also used comic books, ice cream eating contests, and a beauty pageant for young girls, called the "Little Miss Half Pint Contest," to attract children. The Carvel Corporation also participated as a corporate sponsor for events like Walt Disney's "Great Ice Odyssey," "Carvel Night at the Rodeo," and numerous promotional tie-ins with the New York Yankees baseball team. Of all the sales promotions, it was the specialty products which brought the greatest notoriety to the Carvel name. From the "Flying Saucer" ice cream sandwich and the "Papapalooza" to the holiday and character ice cream cakes, customers could always count on a quality product. There were ice cream cakes for every holiday, including a "Flower Basket" for Mother's Day, "Fudgie the Whale" for Father's Day, "Tom the Turkey" for Thanksgiving, and a "Snow Man" for Christmas. Eventually, a customer could special order an ice cream cake for any occasion, using a toll-free phone number.

The Carvel Corporation enjoyed continued success and consistent expansion marked by Tom Carvel's innovative concepts in marketing. For example, in 1956, the Hartsdale location was converted into the first ice cream supermarket. Each store remained a full-service ice cream parlor, but now had the added convenience of self-serve freezers where customers could select ice cream specialty products such as Flying Saucers, Carvelogs, Brown Bonnets, and ice cream cakes.

In 1962, the Corporation experienced a crisis. Many franchise owners had begun buying cheaper ingredients and the chain was reduced to 175 stores. This potentially meant financial catastrophe for Tom Carvel and the company because it derived its profits from selling equipment and special mixes to store owners. Carvel insisted the franchise owners had obligations to the company and its customers to provide a uniform, quality product. Furthermore, the franchise owners had agreed to purchase raw ingredients from Carvel. When the Corporation tried to enforce this agreement, the Federal Trade Commission charged Carvel with allegations of coercion and restraint of trade. In 1964, after presenting his side before the full Federal Trade Commission and the Supreme Court, he won his case.

In 1967, Carvel purchased the Westchester Town House Motel, in Yonkers, New York, and changed the name to the Carvel Inn. It was both a full-service motel and the Executive Offices of the Carvel Corporation. It was here that store owners gathered for the annual educational seminars which reinforced the ideas taught by the Carvel College.

In the 1950s Tom Carvel had also developed the franchise concept for a hamburger chain called Hubie Burger. It served hamburgers, french fries, chicken, and waffles. It is ironic that Carvel began the Hubie Burger chain because at a dairy convention in 1956, Ray Kroc asked him if he was interested in setting up the McDonald's chain. It is said that at this time Carvel felt ice cream and hamburgers did not compliment each other and declined the offer. However, Carvel claimed to have given McDonald's permission to use the basic text of his franchise contract and his building design as models. Later, Carvel acquired Dugan's Bakery. However, neither Dugan's nor Hubie Burger was very successful.

Through his strong work ethic, creativity, and perseverance, Tom Carvel built up his ice cream chain and turned his dreams into reality. His achievements were recognized in 1957 when he was awarded the Horatio Alger Award. Carvel credited his success to his father and his wife, Agnes. His father sparked his interest in chemistry and engineering and his wife worked in the first Carvel store, which allowed him time to develop the Carvel Corporation Franchise System. In 1989, he sold the Carvel Corporation to an international investment company, Investcorp, for more than 80 million dollars. Tom Carvel died in 1990. The Carvel name lives on through the Carvel Ice Cream Bakery Company, operated by Investcorp.