The Donut Business

The Doughnut Business Formula Book And Advanced Doughnut Training Course

There is no sugar coating profits found in the donut business. It’s a Saturday afternoon and there are 50 individuals standing outside in the cold rain waiting to get inside the Voodoo donut shop, which sells unique creations like a glazed donut with bacon bits and a peanut butter and jelly behemoth. As a culture, we are still willing to get our donut “fix” regardless of healthiness or a floundering economy. Why is this?

Cultures worldwide enjoy “comfort foods” which remind us of memorable events, smells, taste, or a favorite meal. What exactly is a comfort food? A visit to Wikipedia shows a definition as being a flavor or type of food that invokes an emotional response of well—being or satisfaction. In essence, it’s a conscious reminder of simpler times such as a childhood favorite like Mac & cheese or mashed potatoes & gravy.

Traditionally, comfort food came from a restaurant experience, but our fast—paced society now prefers fast food menus or prepared foods—in particular, items like ice cream, burgers, pizza, and yes, donuts. There are many thoughts as to what a comfort food is; the main point is that the food is usually easily prepared and makes us feel good, calories notwithstanding. But comfort is only one aspect as to why donuts continue to be economically viable.  

No one will ever mistake the sugary, softness of a donut with; say a carrot stick and donuts will never make a cardiologist happy. But new recipes, designer donuts, ingredients, packaging, and cooking oils help the consumer feel better about their choice of snack. According to the American Heart Association, one way to make donuts healthier is the choice of cooking oil. Be careful, some oils have different smoke points and leave an aftertaste to the product. No one wants their donut to taste different than what they are accustomed to! 

Donut Business Statistics  

According to the Bureau of Labor and Statistics, the overall number of bakeries and retail shops producing donuts has increased by 2.1% since 2009. Now, that may not seem like much, but consider what our economy has gone through the last three or four years. Also, keep in mind that several national chains and small businesses have closed their stores. Dunkin’ Donuts, a U.S. national chain, continues to grow with its successful venture into coffee products and national advertising campaigns touting new menu items and an elimination of Trans fats from these items. Further, national names like Krispy Kreme, Daylight Donuts,

Winchell's Donut House, and Southern Maid have increased the amount of donuts sold. Time magazine reported in Sept. 2010 that 10,000 additional stores have begun selling donuts since 2009. The national research firm NPD states that over 1.8 billion donuts have been consumed in 2010 (that’s up 6.1% from 2009). I know I have done my part in contributing to the amount of donuts consumed! 

NPD also states that the breakfast meal outgrew all other meals in the fast—food, quick service restaurant segments in sales at 21%, up from 18.8% in 2005. The fascinating fact is that donut sales defy logic with sales for donuts occurring from early morning to late at night. It seems everyone is willing to visit their decadent side! 

AnythingResearch.com reports that bakery and baked goods stores rank eighth in the ‘fastest growing industries that are hospitable to small businesses’. Also, SageWorks, a marketing research company, states that sales for baked good have increased 3.79% since 2009. So statistically there is stability within the bakery and donut industry, but what trends help contribute to this? 

Healthier consumer attitudes 

Let’s face it, sometimes you just want to go off the diet or healthy lifestyle and indulge a little. Just make sure that you consume donuts in moderation because possible health considerations include an increase in blood sugar and diabetes. 

Our health conscious society has focused on ways to keep thin from exercise to fad diets promoting easy fat reduction results. Consumers justify eating donuts by eating smaller portions and healthier ingredients. And the fact is that many of us will buy a healthy menu item yet buy a donut product at the same time. Who can resist seeing that donut in the display case?  Unique and inventive product packaging has helped to create an environment of healthier eating habits. If you are eating smaller portions, you have to be more responsible, right? 

Families and health conscious individuals have found the “mini donut” to be very appealing. This product is great for families with small children; you can regulate how much sugar they actually get. Not only that, but mini donuts are easy to produce and are cost effective. A small donut eatery in southern California packages blueberry, raspberry, banana, and whole wheat mini donuts with flavored ‘organic’ sauces in small recyclable boxes numbering six or twelve.  

New recipes which include natural flavors, and flour alternatives have been introduced to replace/add to existing yeast—based dough (which have about 25% oil by weight) and cake donuts (at about 20% oil by weight). Cake donuts add extra fat before frying. There are several links and resources that can assist you with recipes. The easiest, tried and true method is to ask your customers what they would like in a healthy donut. 

A change in the type of cooking or frying oil can enhance the healthiness of a donut creation. Types of oils used for frying donuts are those with a high smoke point. Oil examples include refined safflower, sunflower, peanut, and soy oils. Canola oil’s health virtues are well documented. Don’t use oils like olive oil because of the high cost, smoke point, and aftertaste. All of these oils are monosaturated fats that are healthier for us. 

Classically, donut making has used saturated fats which raise blood cholesterol. The AHA promotes oils like canola and soy to fry donuts. Essentially, the small business owner has to use oil that is cost effective. I’m just telling you how “healthy” donuts are being touted by health organizations and those that health conscious consumers look for. 

Donut shops, small kiosks to upscale eateries, have begun to use local, seasonal ingredients such as fresh berries and fruits to create healthier donut products. A popular fare at farmers markets is to have whole wheat donuts with seasonally flavored dipping sauces (blueberries, strawberries, raspberries, and of course, honey). 

Themed Donuts 

The last few years have seen cupcakes become the “it” item to have at dinner, birthday, and wedding events or socials. National chains and small businesses have saturated the cupcake market to the point where interest is beginning to level off. People are beginning to go back to an old standby, donuts. 

One reason consumers like their donuts is because they have their own ‘personal’ donut haunt this is a non—chain. You go in; the owner knows your name and what you crave. There is a sense of familiarity. Younger patrons and those with disposable incomes in large cities like new, trendy settings where they can enjoy the latest donut craze and be seen.  

The Miami NewTimes newspaper reported on March 25, 2010 about the abundance of non—chain donut haunts that continue to sell provocative donut creations. Fresh farm eggs and local fruits make the Mandarin Gourmet Donut Shoppe a hit with native Miamians. Their small shop stands out because they will deliver their products from small orders to large meetings or events. Imagine biting into a donut covered with crushed hazelnuts, white chocolate drizzle and custom dark chocolate espresso. I’m there!  

This is another example why donuts offer stability even in economic uncertainties; people are willing to spend money on a comfort food presented in a unique way with superior customer service. The Sweet Action Ice Cream Shop produces custom donuts with ice cream on top and all the sundae sauces you could wish for. 

But it isn’t just trendy spots that make people love their donuts. Try the iconic Randy’s Donuts in Los Angeles with buttermilk and crumb raised donuts. This sounds terrific! 

Designer Donuts 

Looking for a glazed or jelly donut? Not so fast. Caryn Rousseau of the Associated Press in Chicago writes that some of the new, trendy flavors hitting the donut scene include pomegranate thyme and Bing cherry balsamic. Sound unusual? How about crème custard with tea in it? Home bakers, national chains, and small donut shops around the country and world aren’t re—inventing the wheel; they are making a whole new wheel by creating new custom recipes, ways to present designer donuts, and new exciting flavors that you wouldn’t expect to see. 

Imagine seeing Cocoa Puffs or Captain Crunch on a whole wheat donut with strawberry jam! Talk about crazy and unusual, but very intriguing. A donut shop called Glazed Donuts in Chicago sells iced mint mojito donuts with fresh mint sprigs jumping out of the donut hole or improving the peanut butter and jelly favorite with grape jelly. 

Many bakers think they are taking a cheap comfort food, putting unusual, exciting flavors and ingredients into them and creating a luxury menu item. 

Also, the vegan consumer can buy squash—themed donuts and blueberry chocolate donuts for the chocolate lovers. The possibilities for designer donuts are endless and can be produced to target a particular audience.

 

Home—made Donuts 

Cooking donuts from home has also become a fun activity as well as a cheap way to enjoy donuts with many blogs and links available to help in the baking process. The problem with home—made donuts has always been the mess, recipe, and dough problems. Tutorials, new baking techniques, and better ingredients have helped the home baker create fun, custom donuts with exciting flavors and unorthodox toppings once the recipe has been mastered. Go wild with your combinations and consider creamy fillings. What could be better than eating a donut straight from the fryer, well, maybe after it cools. 

Bakeries and donut shops are responding to the USA’s rising interest in ethnic cuisines and flavors by incorporating these tastes into their products. Bakeries and donut shops are focusing on diverse and authentic baking products in order to tap into these growing markets. Coffee and coffee drinks remain a natural companion to donut products so a number of retail franchises are introducing coffee as part of their product range.  

Donuts as a Cheap Treat 

Let’s face it with double digit unemployment in some regions of the USA and families trying to stretch the value of every dollar, donuts are a family sweet indulgence that won’t kill the monthly budget, as opposed to say a cup of coffee at Starbucks or a trip to a favorite restaurant.  

Regardless of your social, ethnic, or economic status, donuts are a comfort food for Americans like Swedish meatballs or potato pancakes are to Swedish individuals. Cultures worldwide have their own versions of donuts. No one will tell you to eat several donut products a week because that would be hazardous to your health by increasing your chances of weight gain and diabetes. But the occasional splurge won’t hurt a healthy lifestyle. Our current recession hasn’t diminished our craving for sweet creations because it makes us feel like we are getting away with something; if only for a moment in time and are a cheap way to have fun.  

In addition, by our very nature we will try a new, unusual donut flavor or type to see what it tastes like. New donut recipes, flavors, ingredients, packaging, and cooking oils help to create healthier donuts. New designer donuts make a festive occasion more memorable and create an advertising buzz and customized donuts give individuals the chance to be creative. Home—made donuts allow the baker to use their creativeness while at the same time there are new resources, blogs, Internet links, and new recipes that assist you in making terrific donut creations. All in all, donuts are here to stay and will remain a stable business opportunity no matter how good or bad the economy is. 

It is a fact, donuts are the second most profitable food item in the nation, behind only to the potato according to Daylight donuts http://www.franchiseopportunities.com/Zor_138133/Daylight_Donuts.htm.  

There is an estimated 15 million donuts sold annually with an average cost of only $.12 each, to make and finish a donut. In times of economic downturn, (such as we are being met with today) donuts sales increase due to low cost and being that donuts is a comfort food, " who doesn't like a fresh warm donut". 

Donuts are Americana at its best! From the Salvation Army serving donuts to our soldiers through World War I and World War II and currently in Iraq. I believe donuts are a recipe for success and a taste of home that gives the soldier comfort, (at least I would like to believe so). Also, donuts have been successfully promoted for fundraising almost since the time they were derived by cutting a hole in the center of the donut dough, so... the donut would properly cook and not be raw in the center, "that is what I believe how the traditional donut was derived". 

I personally have an inherent passion for the local donut shop. From a very early age I remember at the age of nine watching my uncle "Charles"  making donuts in his donut shop. When I was a youngster I can remember looking at the donut display case and my attention was always drawn to the donut holes "with donut holes being almost as big as my eyes" and my psyche attempting to make a rational decision for what donut hole, I wanted to eat. Hey, when you are 9 years of age-that's a tough decision. 

I believe we all at some point in time are caught in a trance induced decision at the local bakery serving a wide assortment of baked products and then, reflecting and then being caught in our youth, staring at the rows donuts, breads, pastries and of course cakes. And now that we are grown and mature and wise, we find ourselves wondering exactly how those donut were made. In fact, to this day-I am still testing and perfecting my donut making art. 

Honesty, the low-cost of donuts may contribute to why most donut shops are located in areas of poor descending communities. I never really wanted to admit the fact' that donuts sell well to the poor. On a side note: there is no differentiating between the haves and have-nots because the rich and poor alike have a common denominator, we all take pleasure in comfort foods.   

It can be said and has been stated by the author of  "Glazed America by Paul Mullins - " from an interview by (University Press of Florida) 

"Well, the conventional logic is that donuts are sort of an inverse mirror of the economy. So for instance, during times of recession, folks in the industry argue that donut sales generally will increase because we're pinching pennies. You can eat a very filling snack or meal, you know, at a donut shop for very little money.  

I agree for I have personally seen donut sales increase during economic downturns and/or from the unfortunate natural disasters such as Katrina and the 1989 earthquake in San Francisco "The Loma Prieta earthquake" where we literally sold every donut in the showcase within one half hour. Why? Donuts were readily available, low-cost and in volume. In fact, to keep up with the frantic sales? It required 4 full time bakers on a rotating 24-hour shift, that lasted over a three-day period. I would never wish for a natural disaster to happen, only to sell donuts, but it can pay to be prepared when a catastrophic or economic situations arises.  

What I like about a donut business is that you control product consistency and quality. And you do not have to worry about the counter person selling the donut, (Donuts sell themselves). Therefore you do not have to hire numerous employees to operate a donut shop. 

Donut shops have the potential to be very profitable. Unlike restaurants, where it’s difficult to sell in bulk, wholesale, or to diversify product, most all donut shops sell coffee, espresso, and other baked goods for bigger profits. Products that go together, grow together—donut shop owners can implement a deli line, soups, sweet rolls, croissants, muffins and acquire donut wholesale accounts relatively easy.   

Once a donut shop is up and running, shop owners can economically open a satellite location, commonly known as a “cold spot,” where you or a driver delivers the finished donuts, sweet rolls, etc. A cold spot can be operating within a few weeks, carry all the products of your primary shop, and be operated by one employee. Should your primary location lack a drive-through for customer convenience, a cold spot is a great option for improved "immediate" profits with increase resale value as well! The lone employee just has to sell the finished product, similar to the increasingly popular drive-through coffee kiosks. 

But with donuts, you have the competitive edge. Donuts sell themselves, and coffee is always associated with donuts. However, a professionally trained coffee “barista” should be sought to help define your donut and coffee shop as the authentic, local donut authority. Consider selling proof and bake “yeast” donuts to restaurant supply companies for additional profits. Also selling donut holes in different varieties and packages can generate easy revenues as kids love them. 

Consider building a coffee hut with a drive-thru and implement your donuts while building your own franchise with a niche concept (I thought you would like that idea) or add a lil-orbits machine to your shop or concession van to entice sells, also use your digital camera too take pictures of specialty donuts like the mocha donut next to a mocha espresso.  

 The possibilities for growth are truly endless. For instance, with today’s affordable technology, the possibility of turning your donut shop into an Internet café is very appealing to repeat customers, especially business people and the self-employed who can work for a little while each day from a table in your shop. Filling this niche is yet another example of how products (and services) that go together, grow together. Only implement new products or services that are based on what is best for you and meets the particular needs of your community.