Inflation punched something of a hole in the donut market last year.
Consumers were still buying the sweet treats – and Duck Donuts opened a record 33 stores in 2023, according to Betsy Hamm, CEO of Duck Donuts, the growing franchisor based in Mechanicsburg, Cumberland County.
But, she said, “Where we’re seeing that decline is in frequency. As much as we would love to say that people should eat donuts on a regular basis, it is a treat. It’s something that is a little easier to cut out of your spending.”
Top goals for Duck Donuts this year include boosting traffic for its franchisees, in addition to adding new locations. The company recently signed a franchise agreement for up to 25 stores in the Philippines.
Hamm spoke recently to biznewsPA about the company’s plans and expectations for 2024.
biznewsPA: What steps are you taking to increase frequency of customer visits?
Hamm: It starts with our national marketing calendar, where we are increasing the number of limited time offers that we have. In the past, our windows were pretty lengthy. We might have an LTO for three months, for example. Now we’re shortening those windows to four or five weeks and bringing in some stuff that we haven’t done before from a product standpoint. We’re hoping that will give people another reason to visit more often. We’ll also continue to focus more on catering and special occasions. We know people are still going to celebrate birthdays, holidays, special occasions, weddings. So, we’ll continue to put efforts into marketing and packaging around giving people those special-occasions offers.
biznewsPA: Are there other tactics or strategies you’re using to bring people in more often?
Hamm: We launched a new text-messaging platform. That’ll be a new way to communicate with our customers in real time. And there’s some great opportunities with geofencing: They’re near one of their local duck donuts, we’ll be able to push offers. If somebody hasn’t visited for a while, we can push an offer to them. Having that one-to-one customized communication, we think, will help increase frequency.
biznewsPA: Duck Donuts introduced a new store design last year. What is the status of the roll-out?
Hamm: We’ll launch our first re-imagined store in the coming months. The biggest goal that we’re continuing to work on now is just getting the build-out cost down – savings on equipment, smaller square footage, just making sure we’re maximizing all of those opportunities.
biznewsPA: What’s been the level of franchisee interest over the last year or so?
Hamm: We had a record number of franchise sales last year, both domestic as well as international, which is great. Hopefully, we’ll see that positive momentum continue. But certainly, interest rates are always a concern.
biznewsPA: What do you see as the biggest opportunity for Duck Donuts in 2024?
Hamm: To increase sales. Of course, we want to continue to grow the brand. We want to open new locations. But we want our existing franchisees to be more successful, to make them more profitable. That means increasing sales but also focusing on cost. Inflation has certainly taken a toll on our franchisees. So, the more we can do to control costs and get that down for them, the better off they’ll be.
biznewsPA: What sorts of strategies will you try to help them improve margins?
Hamm: A lot of that’s really coming down on cost savings, evaluating every product and vendor that we work with. The nice thing about the fact that we continue to grow is it helped us from a pricing standpoint. A little over a year ago we only had 100 shops. By the end of 2024 we’ll be right around 200 shops.
biznewsPA. Duck Donuts opened its first college campus location at Old Dominion University in Virginia. What’s that like?
Hamm: The concept’s a little different there. They’re ordering at a kiosk and it’s just donuts and ice cream. So, it’s not the full experience of a regular shop. But we do love the idea of non-traditional and that’s something we’re continuing to focus on. We’ve also been in discussions with some airports and some casinos.
biznewsPA: Duck Donuts has been selling donuts for a while. How competitive has this market been over the last eight years?
Hamm: Definitely more competitive. I started with the company seven years ago and, sure, there were always the other donut concepts that we competed with, but there weren’t all these other treat concepts. Now, when you look at all the cookies and the bundt cakes and the sweet sticky buns and ice creams everywhere, there’s certainly more competition than there’s ever been in the past. So, we really need to focus on what has made us successful. And it’s the customized donut.
Note: This interview has been edited for length and clarity
