In the past century, Velvet Ice Cream has gone from a basement business to a historic site, from three flavors to a full range of frozen desserts, and from a casual family business to one with an established structure that includes a family council and a board of directors.
The company, which celebrates its 100th anniversary this year, is completing a transition from the third generation to the fourth.
Joseph Dager, a Lebanese immigrant, started Velvet Ice Cream in 1914 in the basement of a confectionery in Utica, Ohio, delivering vanilla, chocolate and strawberry ice cream. The business later expanded into a nearby building.
Starting in 1935, Joseph’s sons Charlie and Ed ran the business, along with their sister Marie, who worked in the office. After Charlie’s death in 1958, Ed continued as the leader, eventually passing the business to his two nephews, Joe and Mike Dager. Joe and Mike ran the business together until Mike retired in 2004.
Joe has been gradually turning the business over to three of his four daughters. Joe, the chairman, provides a link to the company’s founder because he knew his grandfather. (Mike Dager, like several of his aunts and uncles, had no children. This has left the ownership of the business more consolidated than is often the case after four generations.)
A pivotal moment for the company came in 1960, when the family purchased a historic mill. They left downtown to find a location where they could make more flavors and expand the product line. The company moved to the mill property in 1965.
At first, the family wasn’t sure what to do with the mill, which was built in 1817, says fourth-generation member André Dager, Velvet’s vice president of guest relations. “Some people said to tear it down; others said it’s a landmark,” she says. Her father and uncle, who were running the company at the time, decided to renovate the mill while preserving the historic artifacts in it. In 1970 they turned it into an ice cream parlor.
“My uncle said, ‘We can use this mill as income for our company,’ ” André relates. ” ‘Old-fashioned things mean quality. Let’s renovate it, make it an ice cream parlor, and invite people to our plant.’ ”
Today, Ye Olde Mill is part of a 25-acre property that includes two ponds and a park. “It’s a real Ohio tourist attraction,” says André. It’s also a company icon: Velvet Ice Cream’s packaging features a picture of the mill.
Velvet Ice Cream is owned primarily by Joe Dager, 73, and his wife, Tatla, and they are gifting stock to the three daughters who work in the business. (The family has a rule that only family members who work at the company can own stock.) The company, which is 58% women-owned, employs 125 year-round associates, plus about 50 part-time workers in the summer. It does not disclose its revenues but reports that it produces 5 million gallons of ice cream per year. The company, which had only 12 employees when third-generation member Joe Dager began working there, has expanded beyond Ohio into West Virginia, Indiana, Kentucky and Michigan. An acquisition in the Cleveland market during the 2009 downturn helped expand the company’s customer list in that area.
Joe Dager’s oldest daughter, Luconda, 44, has worked at the company since 1994 and has been president since 2009. His second daughter, Suzanne, does not work in the family business. Joanne, 41, the third daughter, is vice president of food service. André, 40, is the youngest.
Community interaction
Customers come to Ye Olde Mill for events, tours and an experience, in addition to buying Velvet Ice Cream. More than 150,000 people visit each year, going on factory tours, touring the two museums on the property (one focusing on ice cream and one centered on the mill), and eating at the restaurant and ice cream parlor.
As the company gears up to celebrate its 100th anniversary, it is planning other ways to engage both the public and its employees. For example, the company is creating a book about its history, complete with recipes, which will be sold in the gift shop.
A major event will be the company’s birthday party on May 1, with customers, vendors and local leaders invited. Other promotions are planned throughout the year, as well.
While the historic mill gives the company visibility to individual consumers, Velvet Ice Cream also has a large business selling to the food-service industry. This area is Joanne Dager’s specialty. She has experience working in the restaurant industry as well as selling products to restaurants, hospitals and other food-service customers.
“I always knew I wanted to work in the family business, but I didn’t know that my restaurant experience would take me into an area where Velvet was growing fast,” Joanne says. In 2006 she moved to Columbus, closer to the corporate office, and felt the time was right to join the family business. Today she oversees the company’s sales to hospitals, schools and food-service providers. She makes sure, for example, that the food-service companies, which sell many brands to their customers, know how to best present Velvet’s products.
Managing change
The family has engaged outside advisers to help them manage the company’s growth and transition smoothly from the third generation to the fourth. Velvet has both a family council and a board of directors.
The family council, which generally meets quarterly, consists of Joe and Tatla and their three daughters who are active in the business. The meetings, according to Luconda, allow time to discuss “heavy topics that we don’t talk about over dinner,” like succession planning, community involvement and any issues involving family members. Plans for the company’s growth are also discussed at family council meetings.
The board of directors includes those five family members plus the company’s chief financial officer and two accountants. There is also an opening for a family attorney; the family’s longtime attorney recently died. This group meets semi-annually and has more of a financial focus.
Norman Shub, a consultant whose firm is called The Business of People, has helped the Dagers navigate a number of situations in which family relationships make managing the company more complicated. How does someone who has been running a business for decades cede control to his child? What do the in-laws need to understand about running a family business?
“We’re family, but we still want to work together,” Luconda says. “I constantly hear from people, ‘I don’t know how you work with your sisters.’ We are a functional family at home. I’ve always said that because we get along at home, we bring those same characteristics to work.”
Still, disagreements inevitably arise.
“Where I think an outside consultant has helped us is to talk about some of the tough things that are hard to talk about,” Luconda says.
Discussing how the ownership and leadership will move from the third generation to the fourth can be tricky, she says. “We’re trying to put this Rubik’s cube together, balancing the family and the ownership,” she says.
And since her father is still active in the business, it may not always be easy for him to see the next generation change what he built.
“We have all these ideas,” Luconda says. The fourth generation is bringing in new technology; in addition, the regulatory environment has changed. “It’s not just hard on us-it’s also hard on Dad,” she notes. “Maybe we go too fast, make too many changes too quickly. This is where the counselor can help bridge the gap. They act as great mediators.”
“It’s hard to see your child sometimes as a leader when they’re your child,” Shub says, adding that Joe and Luconda Dager have managed the shift well. “That transition in a family business is really difficult because you have family issues as well as organizational issues.”
“We’ve had our highs and lows, but it’s always family first,” says Luconda.
Luconda says that having an outside adviser has helped family members develop leadership skills. “Sometimes in a family business we have a little more of an informal management style and are maybe not as structured as these big corporations,” Luconda explains. Outside advice has helped them understand what their employees want from them, she says.
Luconda says the company has looked for an independent outsider to join the board but has not yet found the right person. The ice cream business has intricacies such as transporting a frozen product that an outside board member would need to understand, in addition to bringing broader experience to the board, she notes.
The family also belongs to the Conway Center for Family Business at Ohio Dominican University, which provides a forum for exchanging ideas with others in the family business field.
Velvet’s leaders “are very open-minded: They see that getting that perspective from someone who is not in the operations every day can bring in that outside view,” observes Richard D. Crabtree, CPA and partner at Whalen & Company CPAs, who serves on Velvet’s board of directors.
Crabtree views the family’s strong culture as one of the reasons for the company’s lasting success. “Glitches in the family dynamics can cause the downfall of a business,” Crabtree says. “On the flip side, when there is an emphasis on harmony and good, strong family dynamics, I believe it leads to the success they’ve enjoyed, that has helped drive them for 100 years.”
Planning for transition
The three Dager daughters grew up surrounded by ice cream, as did their father before them.
Joe recalls that “It was part of the conversation” at the dinner table when he was young. “Those were our board meetings at one time—just around the kitchen table.”
His own children worked for the business during summers.
“Our friends used to joke that ‘We didn’t see you all summer long,’ ” Joanne says. “We were working.” The daughters bused tables and worked in the kitchen at the ice cream parlor. In college, Joanne demonstrated products at grocery stores in Cincinnati. “I always loved it; I was always proud of it,” she says.
The family also ate a lot of ice cream.
“We had a freezer full of ice cream,” says André. “Dad didn’t just bring out one flavor: He’d get a tray out with six to eight flavors, or he’d make us milkshakes. Every birthday and holiday always had tons of ice cream. We would go places and try other people’s ice cream: ‘Do we like this flavor? How’s the texture? How’s the body?’ ”
Today the three daughters have settled into their roles and are helping to lead the company into its second century.
“Mom and Dad always said to follow your dreams, do what you love,” says André. “There was never any pressure” to join the family business. All three daughters did other work first, then returned.
The succession plan is still being fine-tuned, especially when it comes to the transfer of ownership to the next generation. “It’s not a turnkey solution—it’s a process,” says Luconda.
Joe is still transferring his knowledge to his daughters, as well.
“It takes several years for you to pass it on—it’s the knowledge of how to run the business,” he says.
This planning has helped make the transition smooth, Crabtree says. “Joe Dager has worked very hard with his daughters to hand over the reins.”
The oldest members of the fifth generation are in college. The older next-generation members work at the company during school breaks, and many are involved in taste panels that assess potential new flavors.
“Kids tell you straight up, ‘I don’t like this flavor,’ ” Luconda says.
Shub says the Dager family is passionate about their business but also “generous, community-minded and caring.” Both the company and some of its employees—including Luconda—participate in Pelotonia, a three-day cycling event that raises money for cancer research. The company also donates to a wide variety of scholarship funds and community groups.
Crabtree says he sometimes sees business families who focus on increasing profits for the family’s benefit. But for the Dagers, Crabtree says, the goal is “how can we give back, and how can we invest back into the company so we can continue doing this for years to come?”
For the family, that is the goal: to keep selling the ice cream that first came to market 100 years ago.
“It’s a fun business,” says Joe Dager. “Most everybody you run into likes ice cream.”
Margaret Steen is a freelance writer based in Los Altos, Calif.
Copyright 2014 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permission from the publisher. For reprint information, contact bwenger@familybusinessmagazine.com.