According to Technavio, the U.S. doughnut market is estimated to grow at a compound annual growth rate of 2.65% between 2022 and 2027. Popularized decades ago by Dunkin’, chains are growing by bringing excitement to this category, with sleek store designs, quality beverage programs, unusual product offerings and ambitious expansion plans.
Concepts like Top Pot Doughnuts & Coffee in Seattle and Saint Honoré Doughnuts & Beignets in Las Vegas — whose artisanal doughnuts in flavors like creme brulee retail for $6 each, are driving the ubiquity of these circular sugary delights across America. Here are three up-and-coming brands to watch.
In early spring 2023, Duck Donuts revealed a new shop of the future design prototype, intended to enhance the guest experience, better handle digital and catering orders, and reduce build-out costs for franchisees.
It’s all part of the chain’s goal of opening 40 to 50 stores per year. The company currently has 120 locations in 24 eastern states and 3 abroad. By the end of this year the company expects to have 150 to 155 stores. “Our goal is to be aggressive but not overly aggressive,” says Eric Lavinder, chief development officer.
Duck Donuts has three markets in its sights. Primary markets are the mid-Atlantic states to boost brand awareness in that region; secondary markets are just beyond those — Florida, Texas, and Tennessee — states where the brand expects to see high volumes and strong growth. And tertiary markets are where Duck already has some stores but wants to support them by opening more, such as Kansas City, Kansas. “We’re not back-filling because we haven’t filled a market,” says Lavinder, “we’ll just add brand awareness.”
The shop of the future rollout is underway, and locations will open in the second half of this year in Collierville, Tenn., and Wyomissing, Pa. All future stores will utilize the design.
The new stores will have a smaller footprint than earlier iterations, typically between 1,000 and 1,400 square feet, which will reduce build out costs by up to $75,000, according to Lavinder. Because all Duck Donuts stores are fairly small, they typically work well in inline locations, and the brand is highly focused on outdoor malls and strip centers. “Our brand is a frequency business and you’re not driving that inside a mall,” says Lavinder.
Duck Donuts is looking for both multi-unit operators and single-store franchisees to grow. “There are some single-store towns,” says Lavinder. “Because we have so much room to grow, we’re looking at both paths.”
Once franchisees are approved financially, Duck Donuts is mostly looking for the right personality. “We can teach financials and how to read a P&L, but I can’t teach you to like customers, to smile; it’s more about the social skills, about the right person who will fit the image,” Lavinder says.
Franchisees train for a week in Duck’s one corporate store in Mechanicsburg, Pa., then in another store for a second week. A week before a new store opens, the concept’s training team comes in and supports franchisees through the opening.
Duck Donuts is also looking to expand internationally. It has one location in Qatar and one in Ontario, Canada. “We hope to have a significant presence internationally,” Lavinder says. “You have to go where the demand is, so you find American brands being run by master operators. They know the market, the government, the real estate, and we work with them to grow our portfolio in that country.”
Nontraditional locations are also a great opportunity for Duck Donuts and the brand is pursuing colleges, airports, plazas, casinos, even ghost kitchens — “nontraditional avenues of all kinds,” says Lavinder. “We have a pretty simple menu, so it’s easy to pare that down to what the core consumer is looking for.”