Starting a national service-driven company is no easy feat, but that’s what Easy Ice, LLC accomplished while becoming the largest full-service leasing ice machine company. Founded in 2009 by Mark Hangen, Easy Ice (now headquartered in Arizona) is a national ice machine subscription company with 25,000 ice makers deployed in various industries across 47 states.
Building a national company is particularly challenging as it needs people, infrastructure and product to generate revenue. This was a key reason why no national players existed in this space prior to Easy Ice. The most common refrain Hangen heard while researching the idea was that it was not possible. Specifically, 1) sales required a direct sales force, 2) reliance on third-party service providers would be an economic disaster as they would overcharge and underperform, 3) collections had to be done in person if you wanted to get paid, and 4) inventory management would be a nightmare.
The prevailing thinking was that not having hundreds of employees and associated infrastructure nationwide in advance of sales and revenue would spell doom. Yet, deploying those resources pre-revenue would be financially unviable.
“It was a classic case of the old cliché, ‘You can’t get there from where you are,’” says Hangen. “People were convinced this dilemma was unsolvable.”
The Easy Ice team felt sales could be generated through the internet but existing players in the industry did not know how to do it.
“No one was doing ice machine rentals at the national level and the majority of our competition were small mom-and-pop shops that had no idea what it took to scale their company outside the local area,” says Hangen. “Businesses don’t care about the ice machine until it breaks, and the minute it does, many search Google. Through our effective digital marketing and search engine optimization, Easy Ice comes up at the top of the page.”
Easy Ice also drove traffic to its website through a partnership with Robert Irvine, the host of “Restaurant Impossible” on The Food Network.
Installation and service of new machines was initially accomplished through a home-grown network of existing service contractors. To control costs and quality issues that others in the industry predicted, Easy Ice paid the service provider a percentage of the fixed monthly fee from each machine they serviced. This approach aligned the interest of the service provider and Easy Ice such that they both wanted to minimize the amount of cost to support the machine.
“Our elevator pitch was, ‘When you own an ice machine, every supplier in your supply chain only makes money when you have a problem. With a subscription, Easy Ice and its service partners maximize the money they make when you do not have problems,’” says Hangen.
To address the challenges of receivable collections that industry veterans predicted, Easy Ice required a nonrefundable setup fee equal to twice the monthly rent. This reduced the number of financially unviable firms from signing up for services. Additionally, Easy Ice required all customers to pay electronically.
“Electronic payments are increasingly the norm in today’s world, but it takes infrastructure to do it,” says Hangen. “Our industry was late to see this as they had been doing it more traditionally for 50 years.”
To overcome the predicted inventory management issues, Easy Ice formed a close partnership with the largest ice machine manufacturer in the world, Hoshizaki.
“We convinced a couple of key players in the Hoshizaki America organization that our approach had the potential to change how businesses procured ice machines forever,” says Hangen. “They were savvy enough to realize the benefits of a first mover advantage and gave us terms and access to inventory around the country that solved potential inventory management issues.”
Hangen and his leadership team had many successes building businesses in other industries before starting the company. “Compared to everyone else in the industry, we started ‘top-down,’ meaning we didn’t start as ice machine salespeople and service techs,” says Hangen. “We identified a market space that was popular but where no national provider existed.”
Most companies in the ice machine industry spent 50 years building a base of 3,000 to 5,000 machines, while Easy Ice built a base of 25,000 machines in just 10 years and plans to triple that in just the next five years.
For budding entrepreneurs, Hangen says it is important to note that Easy Ice did not invent a whole new industry. “This is not space exploration, crypto currency or internet search,” says Hangen. “We found a way to do something that incumbents in an established, old-school industry did not think was possible. That spells success no matter the industry.”
Growing …
“We were able to raise large amounts of capital on increasingly better terms that allowed us to expand our footprint through both organic growth and acquisitions,” says Hangen, relating that Easy Ice has spent $100 million over the last 12 years buying companies in this space. “We learned how to value these smaller companies and integrate them into our national network quickly and efficiently,” said Hangen. “We love the experience and local knowledge that the employees bring to our business.”
… and Changing
During the pandemic, Easy Ice added a variety of touchless ice dispensers to its national leasing program inventory. The new machines are fully automated and dispense ice and water without the user having to touch the surface of the machine, thereby reducing the risk of accidental contamination to the ice supply. Hands-free ice machines eliminate the possibility of transferring pathogens to a surface, where they can make their way onto drinkware.
Speak Your Mind
You must be logged in to post a comment.