Sep 17, 2019 Last Updated 6:31 AM, Nov 9, 2017
 
 

The Hole Story

Category: Pastry & Baking

Doughnuts are drawing crowds, from chains to upscale shops to the composed plates in fine-dining restaurants. But day-to-day sales are unpredictable. How to manage costs?

 

Stephen Collucci likes to say that his target audience is the inner child. Collucci has been with the Craft Hospitality Group for eight years, and is now its executive pastry chef, providing desserts for Colicchio & Sons, Craft and other restaurants in the group. But doughnuts are a passion. He is the author of Glazed, Filled, Sugared & Dipped (Clarkson Potter, 2013).

White Rabbit
Tiffany MacIsaac's White Rabbit. Click image above or link below for recipe.

“Doughnuts bring to life what I love about what I do,” he says. “A doughnut is comforting, it’s fun, it’s familiar, it kind of   hits on all those things that make me feel good.”

“Pastry chefs like to make people happy, and there’s no better way to do that than to fry something,” says Tiffany MacIsaac. Formerly of GBD in Washington D.C., MacIsaac is the owner and pastry chef of Buttercream Bakeshop, scheduled to open in 2015 in D.C.

Doughnuts are wildly popular, at the chain stores, at small artisan shops and as the star on plated desserts in fine dining restaurants. But for those dreaming of a shop, there are bottom-line-busting considerations of waste, labor and other costs, location and the unpredictable roller coaster of sales.

Food Costs and Prices at Retail

“The food cost on doughnuts is low,” says Mariah Swan, “but the one challenge you do have is perceived value, and what people expect a doughnut to cost. Even if it is new wave with five components, there’s a point that people are going to be alienated by what you’re charging.”

Among the doughnut shop participants in this article, doughnuts generally sell for $2.25 to $3. Some filled doughnuts and those with bacon can sell for as much as $4. At Donut Bar in San Diego, two doughnuts priced at $1 appear on the menu every day.

Food costs vary widely, from 10% (30 cents cost for a $3 doughnut sale) to 32% ($1 food cost for a doughnut selling for $3). Average among our participants is 22%.

 

New Wave Creativity

First, the good news. There is no shortage of creativity in the new wave of doughnuts, and customers are responding.

“The major trend of the past 5 to 10 years has been the sweet and savory combination,” says Mary Boehne, corporate chef for Strange Donuts of St. Louis, Missouri. She’s proud that customers in St. Louis are willing to try new things. “We’ve done everything from a rice pudding-filled doughnut to a wasabi-glazed doughnut to a sloppy joe doughnut with tater tots. One we can’t take off our menu is our maple bacon: maple icing with crispy bacon on top of a yeast doughnut.”

Maple-flavored doughnuts, with and without bacon, are popular coast to coast, it seems. Several of the chefs we interviewed do a version.

Vegan Donuts with Tempeh Coconut Curry Filling
Mary Boehne's Vegan Donuts with Tempeh Coconut Curry Filling. Click image above or link below for recipe.

MacIsaac offers a bacon-topped doughnut with bourbon maple glaze, and sometimes a yeast variation with a maple cream filling. Throughout her line, she strives to balance the inherent sweetness of cake doughnut glazes. “When you make a glaze you just have to use a ton of sugar. That’s how you get the texture, the crisp sugar shell that locks in the moisture. I’m constantly trying to find things that are bitter or tart to mix into the sugar so that it’s not sickeningly sweet,” she says. She will use lemon, lime, passion fruit, yuzu or an alcohol like bourbon, rum or Campari.

At Colicchio & Sons, Collucci creates three doughnuts a day. They rotate seasonally. They are plated in the dining room and served more informally in the tap room, priced at $13 and $9 respectively. “We set the stage with different textures of crumb and sauces; we create a habitat and the doughnut sits on top of it.” Elements might include crunch elements like a tuile or a lemon poppy seed crumb, a sauce or jelly and a quenelle of ice cream.

“It’s a self-contained thing, one size, so you challenge yourself to see what you can do with it,” says Mariah Swan, pastry chef at bld (breakfast lunch and dinner) in Los Angeles. Bld is an upscale neighborhood café. Doughnuts are a special, served only once a week, though a take-out shop is in the planning stages. “It’s almost using the doughnut as the plate of a dessert. I’ve done fillings and glazes and garnishes. I’ve done them like a slider, like a sandwich. I’ve done an ice cream sandwich.

“As far as the limitations,” adds Swan, “that’s up to the chef, and I think it’s the chef’s vision in knowing when to stop.”

Yeast vs. Cake

Which type of doughnut rises to the top? Most shops we talked to carry roughly 70% yeast to 30% cake. Some other points of comparison:

 

YEAST

CAKE

SALES
More popular; most shops sell 8 to 12 yeast doughnuts to 4 cake. But…
“People seem to prefer yeast overall but people who like cake doughnuts are fanatic about it. It’s like a cult following for cake doughnuts.” (MacIsaac)
COSTS, PORFITS
Oil is expensive; fillings and toppings can add up. Limit to perceived value, how much customers will be willing to pay.
The dough is richer, more expensive and takes more labor to produce, but no fillings. Profit about equal.
PRODUCTION
Must make fresh dough every day. “One of the main challenges to the yeast-risen doughnut, there’s no room for error. You have to have quality yeast, liquids not too high, employees that don’t overproof the dough. Shelf life, staffing…many challenges with yeast-risen doughnuts” (Collucci)
Can make dough for several days and freeze; quicker turnaround if a batch is needed quickly. Which is great because “if someone orders a couple dozen and wipes you out, which does happen, you can pull out what you need.” (MacIsaac) “Cake doughnuts are easier to prepare. Don’t need to be proofed and rolled.” (Campa)
WASTE
Can utilize scrap to some extent…for fritter dough, for doughnut holes.
If glaze is properly handled, generally less waste. “We don’t need to store the cake doughnut dough overnight. We use what we make. In this business, the food waste can be close to zero if you’re doing it right. We might have to throw away a glaze if we got overzealous.” (Campa)
VARIETY, CREATIVITY
More variety in shaping and flavoring. “Yeast is so much more diverse. You can fill them, change the shape or size, make a fritter or a long john.” (Boehne)
 

 

Menu Writing & Sales Strategies

Knowing when to stop: how receptive is your customer base to your experiments…and how much storage can your shop handle? “You can’t have 500 ingredients lying around the shop when you can only charge so much,” says MacIsaac. “You need to keep your menu shorter, to keep your costs in line.”

Most of the shops we profiled had 9 to 12 items on their daily menu. Limiting the available items not only limits waste, it’s often a better way to focus customers’ attention and boost sales.

Donut Bar in San Diego is the exception, with 15 to 20 doughnuts daily, rotating constantly. But Donut Bar’s story is different in several respects.

Donut Bar has two locations, one in Orange County and the original in San Diego—located, counter-intuitively, downtown in the financial district. “Traditionally doughnut shops are in residential areas,” admits Santiago Campa, co-owner (with Wendy Bartels) as well as cook and operations and marketing manager. Rather than opening a shop where locals pick up doughnuts and bring them to work, “we decided to take it downtown. That way they can pick it up right at work, on the way, or send somebody down to pick them up.” It works. Campa sells 2,200 (weekdays) to 3,000 doughnuts (weekends) in four hours, just about every day. “Whenever we sell out, we’re only open for another half hour,” he says. His goal is to sell out by 10:30 a.m.

Cardamom-Spiced Doughnuts
Stephen Collucci's Cardamom-Spiced Doughnuts. Click image above or link below for recipe.

Campa is a big believer in social media. Every day at 3 p.m., the next day’s menu is posted on Instagram, Twitter and Facebook. But large as his menu is, he limits his experiments. “We don’t go too far from the center of the tried and true doughnut,” he says. “If we had gone completely gourmet, putting figs and olives and so forth on the doughnuts, people wouldn’t buy them by the dozen. I’ve seen it happen time and time again in small gourmet doughnut shops. They go too far from what the traditional doughnut is.”

But other chefs have every reason to go untraditional. Co-owner Corey Smale of Strange Donuts has tinkered with the hours to maximize sales. The shop, which is in a high-traffic mixed residential and commercial area, is open every day from 6 a.m. to 2 p.m. But Thursday through Saturday it is open again from 9 p.m. to 12 a.m. “At night we get a whole other crowd,” says Boehne. “Younger people looking for something different to do. High schoolers come and hang out. Get a couple doughnuts, go back get a couple more. These people are more open to different flavors. We’ll try funkier flavors.”

Or, familiar components but in an unfamiliar presentation. “Start people with a type of doughnut that they might not have thought of before,” Boehne says. “Like a black forest cake doughnut with cherry compote and buttercream frosting. A honey-glazed yeast doughnut with candy on top. Flavors that people are familiar with but would never think to like – turn a doughnut into that. Starting people off with that will build their confidence and trust. So next time they will try something more innovative.”

Most chefs we spoke to believe in anchoring a menu with the familiar while providing more creative choices. “As far as marketing and selling, there’s nothing that people find more welcoming than to find a very simple cinnamon sugar or buttermilk doughnut,” says Swan. “If you do that really well, they’ll pretty much trust you with anything else.”

MacIsaac reinforced the familiar theme in recalling her pride-and-joy doughnut: “We called it the Campari Cocktail doughnut when we first started, then we added ‘grapefruit’ to put another word people knew. Grapefruit Campari Cocktail sold a lot better. It’s funny how just changing the name of something helps it sell.”

Doughnuts vs. Cupcakes

The growth of the gourmet cupcake has been obvious, but its enduring place in the retail arena is still unclear. Most experts agree there has been a saturation in some markets, and uneven quality. “A lot of entrepreneurs got into it because it’s relatively easy,” says Campa. “A lot of people jumping into it without the passion.”

Most statistics measure the trends in the large chains. The numbers bear out the cupcake’s staggering growth in relation to doughnuts, but remember: doughnuts are a mainstay. Here are numbers from the category of “quick-service” cupcake chains vs. doughnut chains is any indicator.

According to Technomic’s Digital Resource Library, growth for cupckaes from 2011 to 2013 grew 52.4% vs. 13.2% for doughnuts, though doughnuts are so firmly entrenched.

Yet total sales in dollars for doughnuts was six times that of cupcakes.

In terms of production? Here are some points of comparison, assuming a cupcake-only vs. doughnut-only shop; of course many factors (such as the types of fillings and ingredients used in doughnuts) can alter the picture:

 

CUPCAKES

DOUGHNUTS

COMMENTS

GENERATES SALES
afternoon, evening
all day
Also worth noting: "I love cupcakes, I do. But here’s the problem. Young people tend to order cupcakes, but all ages love doughnuts." (Campa)
PACKAGING
individual slots for secure transport
pack and stack
"Doughnuts are easier to box and transport. It’s cheaper for us, and there's less labor involved." (Boehne)
LABOR
night baker needed
 
Difficult to generalize; labor costs vary widely, depending on the market and the overall product offerings of the shop. In general, due to night staff and quality piping skills needed for distinctive cupcakes…labor is more for cupcakes.
EQUIPMENT, SHOP SPACE
ovens and mixers needed in addition to dough workstation
fryer
"There is more area needed for cupcakes. With doughnuts there is less equipment and startup costs." (Boehne)
INGREDIENTS
buttercream
as many as are feasible
"As far as profit margin goes, I think doughnuts are a little better because the buttercream frosting is so expensive." (MacIsaac)
SHELF LIFE
can be frozen or sold next day
best fresh; waste can be re-used in restaurant settings
Cupcakes can (arguably) be sold the day after. "That’s one of the problems with cupcakes. One day it’s moist, you go in the next day it’s not. Because it’s a day old cupcake. The customer may not know that, but…they just won’t come back to that shop." (Campa)
PROFITABILITY
waste marginally less of a problem
quick turnaround of new batches
Doughnuts sales are unpredictable, but batches can be created on high-sales day relatively quickly. Issue is whether a shop is willing to sell frozen or day-old cupcakes, and risk a poor customer experience.

 

Trim that Waste

No matter how targeted the menu, how well the shop is located or the quality of product, “the biggest challenge of doughnuts altogether,” says Boehne, “is calculating for waste.”

“That’s the biggest issue to overcome, in terms of bottom line,” agrees Tiffany MacIsaac.

Rocky Road Doughnuts
Mariah Swan's Rocky Road Doughnuts. Click image above or link below for recipe.

Boehne strives to stay organized, to prepare her menus well ahead of time, to utilize the ingredients she has in the shop for cost efficiency. There’s relatively less waste with cake doughnuts, she’s found, though they take more labor to produce. “With the yeast doughnuts you can utilize the scraps. You can use it for each dough in your next batch. For fritter dough.”

“When you start glazing things, that’s when the costs mount up,” says MacIsaac. She will use 12 quarts of glaze for 30 doughnuts, “which sounds like a ton of glaze but you need that much to fully coat them. And when you’re done, it all runs off the sides.” She makes sure that her employees scrape the containers and store it well. “Make sure your people understand waste and proper storage and rotation. That’s key.”

Oil is another issue. MacIsaac believes in filtering her oil multiple times throughout the day. “It’s a huge difference in quality. And it helps it last longer,” she says. “The more shortening you need to melt, it eats up your cost.” Admittedly, it is time-consuming to filter, but MacIsaac uses small fryers (24 capacity) to offset the reduction in production.

But ultimately, as the sales day goes on, decisions have to be made. And not the fun, creative ones. “You have to decide, do you run out when you run out and close the store so you don’t have waste?” says MacIsaac “Do you use social media, to put the word out…half price cupcakes until they sell out? As much as you try to speculate and look at last year’s sales and compare, you just never know what’s going to happen. Someone can come in and buy a couple dozen and wipe you out, and another day no one will. You have to have product.”

 


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