If a dark haired man is piling a mound of chocolate chips and coconut flakes atop your Chocolicious fro-yo at the 16 Handles in Times Square, he might just be the CEO of the entire chain.
His name is Neil Hershman, the newly appointed 27-year-old CEO of 16 Handles. And rolling up his sleeves to work the weekend shift at the brand’s flagship happens to be one of his favorite parts of the job. He tells Fortune that all 16 flavor options can be overwhelming for customers; the fun part, he says, is explaining that you can get all of them.
“They'll come back with this mound of fro-yo, and you didn't realize somebody could stack cookie dough that well on top of the cup before,” he says. “And yet, they've managed to do it. It always makes me really happy because then you'll watch them sit outside…and they'll take pictures with their fro-yo in Times Square.”
It’s a moment Hershman wants customers to enjoy not just in New York City, where 16 Handles is based, but across the country—and maybe, one day, internationally. Right now, he’s focused on expanding the franchise across the east coast with plans to add stores in Florida and Boston while also looking at markets in California.
It’s certainly ambitious to try to move 16 Handles across the country, but it's in line with Hershman’s style. In his teens, he became a master scuba diver and a trained pilot. And even though he’s only 27, he has decades of entrepreneurship under his belt, dating back to when he sold pieces of gum to family members as a child. He left his post-college hedge fund career after his Kickstarter campaign for refrigerated coasters raised $150,000 within 20 days. Hershman began investing in 16 Handles in 2019, becoming CEO of the company this past August.
Building out a fro-yo empire won’t be an easy task. The first 16 Handles opened in the East Village in 2008, with nine direct competitors within a three-block radius, Solomon Choi, founder and then CEO, told Refinery29. It was the onset of the 2010s fro-yo boom—“a time consumers were focused on better-for-you, yet tasty, ice cream alternatives,” Choi said, adding that the novelty of self-serve and personalization were also enticing factors.
The brand had 40 storefronts during peak fro-yo days, dropping to 30 by 2022, Refinery29 reported. It mirrored the rise and fall of fro-yo; the industry’s revenue climbed at an annual rate of 22.7% from 2009 to 2014, earning $1.8 billion, per an IBISWorld report. But the market size of fro-yo stores have been declining since 2014, hitting a low in 2020.
Hershman may have a few advantages to staging 16 Handles' comeback, though. For one, the fro-yo market is projected to grow from $1.69 billion in 2021 to $2.14 billion in 2021, thanks to the upswing in health-conscious consumers during the pandemic and new ranges of fro-yo flavors. And 16 Handles' top store already raked in $1,2 million in revenue last year. Hershman has also enlisted the help of minority investor and Youtube prankster Danny Duncan as Chief Creative Officer to help get fro-yo in the mouths of a larger audience: Gen Z. Considering their—and other generations’—desire for nostalgia during troubling economic times, Hershman just might be successful in reviving the fro-yo craze.
The rise of the dessert king
Having lived in New York City for a few years, Hershman says he was a regular at 16 Handles’ East Village location. It became his first thought when he looked to get involved in the food industry, which had always fascinated him.
It was obvious to him that, despite its loyal customers, no one was really investing in 16 Handles. "I just saw so much opportunity to clean it up and make it a better customer experience,” he says, adding that he wanted to be part of a growing brand. “It was just the wrong leadership at the time.”
He reached out to 16 Handles’ management three years ago, and together, they devised a plan for Hershman to take over some of the corporate-owned stores. He says he invested $125,000 to become a franchisor in his first location—Murray Hill. With a Small Business Administration loan to fund the rest of the expenses, he took the profits from one store to his next acquisition.
One store turned into three, and then Hershman built two stores. When the pandemic hit, sending NYC’s real estate market to record-low prices, he took advantage of cheaper rents to double down on the brand and open the Times Square flagship in early 2021. During this time, he began taking over the New York City dessert scene, opening two Captain Cookie stores and three Dippin’ Dots stores.
With nearly a dozen dessert shops altogether under his supervision, Hershman was ready to take over as 16 Handles CEO a year later.
He felt that not doing so would be a missed chance. “I could make all these changes, make this better, and, in the process, turn the company into a much more valuable company,” he says. “But otherwise, I'm going to be kind of sitting on this basket of eggs, and watching them never hatch.”
A facelift, social strategy, and partnerships galore
What Hershman first expected to be “some small simple thing” has turned into a larger passion project.
He’s not worried about a loyal customer base: “We have the secret sauce already,” he says, adding that he’s more focused on developing a strategy for expanding the brand’s customers and physical location. That begins with his partnership with Duncan, who is overseeing the overall brand vision to engage different demographics and test out marketing campaigns. With 6.8 million followers on his YouTube channel, Duncan can reel in a younger, male audience—a demographic that Hershman is looking to speak to.
Hershman says they’re working on the early phases of a new social strategy to appeal to Gen Z, declining to comment further on specifics but promising that it would help turn 16 Handles into “a really big brand.”
Even so, Hershman acknowledges that the brand’s ultimate success isn’t just about having a good social media presence. “It’s also really about building the right locations at the right time and having comfortable places for people that feel safe and open and welcoming and offer good product,” he says, adding that stores will be getting a facelift soon. Building more stores will “slowly build that hype train back up.” He’s also emphasizing new partnerships with brands like Oatly, an alternative dairy product, that appeal to the health-conscious.
But 16 Handles may even get a more organic boost thanks to the rise of nostalgia during the pandemic, which tugs at the heartstrings during times of uncertainty or economic instability, especially among younger generations. The fro-yo trend of the 2010s following the Great Recession harkened back to the fad from the 1980s. In a post-pandemic world with a looming recession, fro-yo could beckon back to simpler times.
Hershman recommends that young entrepreneurs at similar crossroads keep the faith. “It's cliche, but just take the jump, take the risk. And never really give up.” He points to his journey, explaining there were many points where it seemed impossible to close or get the funding and many sleepless nights.
“If you're not willing to die on your hill, sometimes you're not gonna get anything done,” he says.
