Retail Intel

Ep 50: Vampire Penguin

• Phillips Edison and Company • Season 1 • Episode 50

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We're celebrating the 50th Retail Intel Episode! Ready for some shaved snow magic? Join Brian Sheehan as he sits with the Co-Founders of Vampire Penguin, Paolo & Leo San Luis! Discover the delicious story behind one of today's most unique and trending dessert brands. Listen now to get inspired by their incredible journey and see how they're redefining the dessert game.

Brian Sheehan:

Welcome to Retail Intel, the podcast where we dive deep into the dynamic world of commercial real estate. I'm your host, brian Sheehan, and I am thrilled to be your guide on this journey through the bustling streets of retail, the aisles of shopping centers and the world of commercial property investment. With me today are Paolo Angelo San Luis and Leo Alejandro San Luis, co-founders of Vampire Penguin. Vampire Penguin conjures shaved snow magic to bring family and friends together and is one of the most interesting and unique dessert brands expanding today. If you haven't heard of Shaved Snow Magic, you're in for a real treat and I'm excited to learn more. Paolo, leo, welcome.

Leo San Luis:

Hello, thanks for having us.

Paolo San Luis:

Yeah, thanks for having us.

Brian Sheehan:

Yeah, absolutely. Thanks for coming on. So I'd love to start with your background. What were you guys doing before you got into the dessert business?

Leo San Luis:

Well for me, hello, my name is Leo and before this business I was actually working as a dental manager, handling all the teeth. And it's kind of ironic because now I'm in the dessert business and before I would be handling the cavities and submitting the medical claims and all that. So that's what I did before.

Paolo San Luis:

And hi, my name is Paulo and I graduated as a biology major, was heading to follow in our parents' footsteps of becoming a dentist. But after I graduated it just wasn't making me fulfilled and I just thought maybe a business with my brother will be a better way to go. And so we started Vampire Penguin.

Brian Sheehan:

Yeah, so let's talk about that One. It's such a unique, interesting name, and then you guys have a really innovative spin, I think, on this whole category. But so how did the launch of Vampire Penguin come about?

Paolo San Luis:

Yeah. So about a few months after I graduated I spoke with my brother and we were like, hey, let's go start a business. And Leo asked me well, what kind of business do you want to start? Well, we both grew up in the Philippines and we always loved shaved ice. But when we moved here back in 2000, we were so amazed by how much interpretation of shaved ice is out here, including Hawaiian, taiwanese and, of course, the American snow cone. So we just kind of wanted to combine the elements that we like from the Hawaiian being so fluffy and light and the Taiwanese being creamy, and, of course, the American snow cone with its flavor profile and the appeal to the mass market. We just kind of wanted to combine the elements that we liked and created the recipe that we have now and, of course, penguin, so naming the company. Of course Penguin is associated with snow and ice, but Vampire, because the product that we came up with is something out of this world, like a vampire. Penguin shouldn't exist, just like our product shouldn't exist.

Brian Sheehan:

I love it. That's great. So you guys are sitting around thinking about different kinds of businesses that you might like to start, different kinds of businesses that you might like to start. How did you land on a dessert business?

Leo San Luis:

What is it that you love about desserts or a retail business? Well, one thing I did realize is that, in a dessert business, most people that come in are happy to eat it and they leave happy. It's a sweet and enjoyable dessert. Happy, you know, it's a sweet and enjoyable dessert. We also did notice that there are limited options in terms of desserts, in terms of dairy-free, sugar-free. So we decided, hey, we can probably come up with something different for the people to select from, and that's where Shave Snow came from.

Brian Sheehan:

You know, it's such a competitive space that you guys are operating in and there's just generally so much competition for space in our shopping centers and retail generally these days. What are some things that make for folks that aren't familiar? What are some things that make Vampire Penguin unique, like what's going to jump out at you immediately after you walk into one of your cafes after you walk into one of your cafes.

Paolo San Luis:

So of course the name has a lot to do with just the interest and just kind of piquing curiosity of what this business is Like. Shakespeare itself is not a mainstream dessert. There is a lot of kind of education going on. At the same time there's a lot of barriers that gets a first-time customer to actually try the product. Of course those are the challenges. But once a customer tries it, enjoys it, shares it with their family, then they become converted into becoming fans of shaved snow.

Leo San Luis:

Yeah, usually a lot of people would correlate our product with shaved ice and we just say you just have to try it. It's light, fluffy and it's not like the traditional snow cone that you're gonna be having. It's pretty fluffy and it's not like the traditional snow cone that you're going to be having. It's pretty much a combination of all the desserts that we love.

Brian Sheehan:

Yeah, I guess I didn't realize there's so much differentiation in this space. I grew up in the Midwest and I'm familiar with dairy whip snow cone, so shaved ice with different flavorings. It ends up being kind of like a slushy, you know, but your creation is, I don't know. It's just so much more robust and more offerings to it. I guess I wanted to just maybe talk a little bit more about that point of differentiation.

Paolo San Luis:

Like. What we always say is that our Sh snow magic is the final evolution of shaved ice. Just because there's no slushy at the end, the flavor is already mixed in the block before we shave it, so it's all consistent throughout. The texture is like eating a cloud. At the same time, it gives you the satisfaction of ice cream and definitely that is the biggest differentiation from Hawaiian Taiwanese and as well as the snow cone or shaved ice itself, and also when it's presented, it looks like it doesn't look like shaved ice, it looks like a cake.

Paolo San Luis:

It looks like you're eating a dessert from a fine dining restaurant. It does, which, of course, is best to share with your friends and family, and that's why we bring friends and families together with Shaved Snow Magic.

Brian Sheehan:

Yeah, it's a pretty massive serving. I felt like and it is so surprising because you think the texture does appear to be kind of like a cold cake. But once you dig into it you realize, wow, this is something completely different. I've never had anything like it before. It's so surprising and revealing. I wanted to talk a little more about the specifics. So the landlords that aren't familiar with you around the country, or maybe brokers big part of our audience. What is the sweet spot? Square footage wise, what size base are you looking for?

Leo San Luis:

The sweet spot for a vampire penguin will be 800 to 1200 square feet. That size perfectly fits the operations and equipments that we recommend, along with the supply space that they can hold on and turn out the product, along with ample seating of course, how many seats do you typically have in a typical?

Brian Sheehan:

Usually like 30 to 35 seats. Yeah, it's very efficient.

Paolo San Luis:

But usually for a dessert business like this the turnover is pretty fast. What's the typical cycle time? Usually it takes a family of, let's say, four. They would order the dessert comes out within five minutes stay there for another 10 minutes, so around 15 to 20. What's the average ticket price? The average ticket price is around $8 for a small and around 11 to 12 for a large.

Brian Sheehan:

Okay, and if you guys are comfortable sharing with it, what's typical AUV for one of your stores?

Paolo San Luis:

So an average income for a typical Vamper Penguin is around 25,000 gross monthly and of course it averages out throughout the year, where we're busier in the summer, and of course it slows down in the wintertime.

Brian Sheehan:

Yeah, gotcha. And how many locations are there open currently?

Leo San Luis:

Currently we have 35 locations open all over the United States Florida, california, south Carolina yeah.

Brian Sheehan:

And how many do you expect will be open by the end of the year?

Paolo San Luis:

By the end of the year, probably another five, and in 2025, we're expecting to open another five so far, that's great, nice, steady growth.

Brian Sheehan:

I think we talked about the business model. It's not a franchise model, it's not a corporate model, it's a licensing model. Is that right? And for anybody that's not familiar with it, how's that different?

Paolo San Luis:

Yeah, so it's the reason why we went through the licensing route as opposed to a franchise. There are a few similarities, Of course. You license out or franchise out the trade name and the business know-how to your licensee, but the biggest difference is that we don't control the business owner. Our mission statement is to license the brand name and the business somehow to licensees that can grow the business on their own. So a lot of the work and the resources come from the licensee. We don't control the marketing. We don't control the business operation, but we do guide them from the ground up, from designing the space to the build out support as well as supplies.

Leo San Luis:

And this strategy really maximizes them to be creative and also reduce their cost in the build-out and running the business. So that's really one of the biggest benefits of the licensing.

Brian Sheehan:

That's so key right now. You know every cost sensitivity is, if it's not at a peak, it's near an all-time high. So I think anything that you're doing to provide resources and also minimize their startup costs and operational costs has got to be a real key benefit.

Leo San Luis:

Yeah.

Paolo San Luis:

And I think that's the result of our organic and steady growth. We're not growing so fast where all of a sudden we realize that the concept is not working the way we're doing. It is very slow and steady and quite democratic.

Brian Sheehan:

Well, let's talk more about that. Where are you growing? Where are you looking to grow? There are specific target markets that people should be on lookout for in terms of future locations.

Paolo San Luis:

Yeah, so right now we are growing in Florida, south Carolina, georgia, mississippi, tennessee, new Jersey, hopefully in New York. Soon we have some in Texas, colorado, arizona, california and Seattle Washington. So what we typically look for is locations that target our target market, which are young families, but to be specific, it's women ages 25 to 45. And usually that relates to younger mothers. Younger families, yeah that makes sense.

Brian Sheehan:

What are some other, I guess, key factors that you're looking for, that you're looking for your licensees to consider when they're evaluating a potential property? What do you like to be near?

Paolo San Luis:

So, of course, near businesses that cater to our target market, the families, Businesses that host kids, like a Chuck E Cheese, for example, or a Dave Buster's it's like an arcade business Restaurants because it's very symbiotic with their like. Usually after they have dinner then they can go out and have dessert.

Brian Sheehan:

And what's the process look like for your licensees when they're selecting a site? Are you guys actively involved in that?

Paolo San Luis:

Yes, so we typically ask for pictures and of course, hopefully some marketing study by the landlord or the broker where we can just kind of go off and see all right, well, this is the size of the population, this is the, the median income, the businesses around it and what is the development within the next five years. And once they sign the lease, we usually help them design a draft floor plan with equipment placement and they can turn that into their architect draftsman if they have to do permits and stuff like that. But our biggest tip usually is especially for first-time business owners. Our licensing program attracts a lot of first-time business owners. We usually want them to kind of manage their risk and usually the biggest way to do that is, of course, location, location, location. At the same time, finding a location that used to be a previous food facility, just because it does save you a lot of money on construction, yeah, and we've seen licensees.

Brian Sheehan:

So second generation restaurants are key. Yeah, second generation.

Paolo San Luis:

Uh, just because we've seen licensees open their store, a fully operational from 25 000 to as high as 100 000, and that really just depends on what kind of space they find.

Brian Sheehan:

Is there anything unique in terms of the build-out that you might not otherwise expect from call it, like you know, a typical ice cream store restaurant that specializes in frozen desserts?

Leo San Luis:

I mean for us, whatever the location offers in terms of electricity and water supply, it's usually not a problem because it goes down to the temperature and the equipment that we provide and, along with the proprietary snow powder that we sell them. So there's usually no special equipment or special features required for this business.

Brian Sheehan:

Okay, and I assume you don't need a drive-through window.

Paolo San Luis:

We're open to that definitely yeah, we have a store in Fargo, North Dakota, that does have a drive-thru and it does help them throughout the wintertime. It's not necessary, but if the space has it, great.

Leo San Luis:

And the product itself looks pretty good with the to-go concept too.

Brian Sheehan:

Oh, I bet it does. I was just thinking that your ability to flex into different kinds of spaces as long as it's got the right infrastructure, you could go inline. You could take an end cap space, you can be inline with a grocery if it was one of our shopping centers. You just got a lot of flexibility, as long as you're seeing some of those other types of users that you want to be around.

Paolo San Luis:

Yes, and the concept itself can be applied to not just retail but, of course, mobile concept, as well as smaller footprints like kiosks and takeout windows only, or like even anchoring next to a grocery store, for example, like having a stall at a grocery store. The concept will work in any space.

Brian Sheehan:

Interesting.

Leo San Luis:

It's very easily condensable.

Brian Sheehan:

It's very condensable.

Leo San Luis:

Yes, we actually have a few trailers and food trucks already functioning in Arizona and South Carolina, so there's already a proof of concept of that.

Brian Sheehan:

What's the best way to present sites to either you or your licensees? Just send those direct to you.

Paolo San Luis:

So typically we have licensees that close the deal with us saying, hey, I want a territory. We signed the deal and their next step is usually looking for a location and they would usually go on LoopNetcom or CityFeedcom. But of course it would be great if we can connect them with a singular broker that can provide them. Hey, I'm looking at, for example, Allegheny County in Pennsylvania. This is the licensee looking for a location, this is their contact. It would be great if they can just get a list from a singular broker.

Brian Sheehan:

Paolo and Leo, where do you guys want to see this brand go, or grow, over the next five years?

Paolo San Luis:

So, yeah, so we want to dive more into the lore and the story of the Vampire Penguins. If you ever look us up on Instagram or on the website, he does have a short story book, we have kids books, we have plushies, and our goal for that is to basically create a brand or elevate him through media where he can be in kids movies, he can be his own animation show, a clothing brand and eventually create this whole world where it can be in the theme park and, of course, the Shades of Noir tying it all together, all together. And of course, he has friends. He has walter the walrus, he has paula bear. Eventually, what we do want is to have walter's burgers and grub, where it could be a burger spot, but it's the walter the walrus and paula bear drinkery yeah, and then paula bear can have her own drinkery where it's like cocktails for kids or like boba shops and stuff like that.

Paolo San Luis:

So that's our overarching goal for the brand. After we expand Vapor Penguin and it becomes a mainstream brand.

Brian Sheehan:

That's really interesting and I don't see a lot of that approach where you're creating this immersive environment and brand identity that helps connect with the key foundational character, the name and inspiration behind the product. Well, Paulo and Leo, it was great speaking with you today. Thank you for joining me on Retail Intel.

Leo San Luis:

Thanks for having us. Thanks for having us.

Brian Sheehan:

Be on the lookout for new Vampire Penguin locations opening near you and be sure to check them out on Instagram at Vampire Penguin Snow. Whether you're an aspiring real estate mogul, a seasoned pro or simply curious about the places where we shop, dine, play and work, this podcast is your all access pass to the world of commercial real estate and if you're interested in being a part of the Retail Intel podcast, connect with me on LinkedIn or send a message to nationalaccounts at phillipsedisoncom. If you want to hear more about new and expanding brands, keep tuning in to Retail Intel and please subscribe, follow, like and repost. Talk to you next time.