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Scaling Donut Business

Vlavoie

Contributor
Jan 8, 2013
21
21
14
Hello everyone !

My name is Vincent, I am 23 years old and I live in Montreal, Canada.

I started my 1st business 4 years ago. I was selling residential paint contracts door to door. Then I hired painters and planned the production. I hated production and the process of it, but was really good in sales. I did this for 2 years.

After closing my business, I wanted to gain more experience in sales and I did a couple door to door sales job for different product (HVAC, merchant processing and cable). I became pretty solid and one the best in the companies I worked for.

Last year, I had an opportunity to start my own home security / home automation business. Now, I have around 10 reps going door to door. I want to grow this business as much as I can and automate it with a sales manager and reinvest my profits in another venture or real estate.

My girlfriend is passionate about restaurants / pastries. She dropped out of school last year and currently works with me. Last year, she was searching for a business idea / opportunity in the food market. It's a really hard market so she wanted to find a niche that is less risky.

When I was working in merchant processing, a colleague talked to me about a business of a guy he know that makes a special sort of greek donuts. The recipe is super simple, has no perishable ingredients (no milk, no eggs) and is super good. His business exploded and opened 16 locations in a year.

We did a little market research to know more about the donut market in our area. We discovered that there are not a lot of places that offer freshly made donuts, but when they do, they are very popular. We also have Tim Hortons, which are very low quality donuts and are still very popular.

So, she started making donuts and tried different recipes and found a very good one that has no perishable ingredients, low sugar and vegan. The cost of 1 donut is between 0,07-0,10$ depending on the icing. So a box of 12 donuts would cost about 0,84$ - 1,20$. If we add the box, it would still end up less than 2$ / box which is really low. We could sell a box for about 18$ (or 1,50$ / donut). This is Canadian dollars so about 25% less than USD. Usually freshly made donuts in shops are sold around 2$-3$ / unit here.

She looked to open a shop and searched for different spots in the city. The cost of opening a location is very expensive and pretty risky so she never pursued this venture.

Recently, I was listening to a podcast about a guy that was selling meat door-to-door and was making very good money. He says it was very easy because of the low cost and high volume. There is no monthly fees, no contracts, installation, etc. You just sell and deliver.

I found this pretty interesting, because I only sold expensive things door to door. Then it made me realise, why not just sell donuts door to door? Its low cost, high margin and who doesn't like fresh donuts? It would pretty easy to convince people to just buy a box or 2 with a beautiful story of young women making her dream come true.

Then I brainstormed and did some calculations and I think it could be pretty profitable. Tell me what you think about this plan :

- Hire a couple of young guys / girl to do door to door (like 16-17 years old)
- Train them
- Make a couple box of fresh donuts samples to make people taste
- Send them door to door in the same area (easy to deliver afterwards)
- Offer something like 1 box for 18$ or 2 box for 30$ or offer like 1 box / month for a year with a rebate
- Pay them like minimum wage + a little bonus / tips
- Take info of customers (email, rebate for likes on social medias, phone number)
- Deliver on the freshly made donuts Saturday or Sunday
- Retarget the customers with ads / email / social media to create recurring revenue
- Expand product line with coffee or other pastries
- After a certain time, we could just open a store in a location where we did a lot of canvassing and people would know / like our brand
- Repeat in another area

The goal here is to gain traction and develop a base of customers before opening a shop. She would also take order for catering, sell to different coffee shops and even UberEats.

So here is a little calculation :

Price = 18$ / box
1 rep sells 2 box / hour * 20 hours / week = 40 boxes
Revenue = 720$

Cost to make = 2$ / box * 40 boxes = 80$
Salary (10$ / hour + 1$ / box) = 12$ / hour * 20 hours = 240$ / week
Gross profit / rep = 720$ - 80$ - 240$ = 400$ / week

10 reps = 4000$ / week

Only weekends
Salary 4 cooks = 4 * 15$ / hour * 6 hours / day * 2 days = 720$ / week
Salary 2 delivery guys = 2 * 15$ / hour * 8 hours / day * 2 days = 480$ / week

Profit = 4000$ - 720$ - 480$ = 2800$ / week = 11 200$ / month

Less commercial kitchen and other expenses = 3 000$ / month = 8 200$ / month

What do you guys think about this process ? Do you guys think it's feasible? Are my calculation realistic?

Thank you
 

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Last edited:

Action Mike

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Just my opinion but I don't think people will buy much from someone coming to their door to sell a dozen donuts other than on the weekends. Most families are in a rush to get dressed, get kids off to school etc.

Maybe door to door office sales where they may welcome delivered donuts through the week?
 

AnAverageJoe

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Maybe door to door office sales where they may welcome delivered donuts through the week?
I think this is a great idea. Hit as many businesses early in the morning as you can. I think a lot of offices would love a dozen donuts first thing in the morning. Gives them another reason to put off work and hang out in the break room.
 

GoGetter24

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Open a donut shop next to a gym. Better yet, buy the gym.

On the way out of the gym, there will be "you've earned it" ads for your donut shop.

On the way out from the donut shop, there will be "need to work it off?" ads for your gym.

It will snowball into a runaway chain reaction of cash.
 
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Vlavoie

Contributor
Jan 8, 2013
21
21
14
Just my opinion but I don't think people will buy much from someone coming to their door to sell a dozen donuts other than on the weekends. Most families are in a rush to get dressed, get kids off to school etc.

Maybe door to door office sales where they may welcome delivered donuts through the week?
I have always sold all kinds of items door to door on the week days. It's not a long and difficult sale, just a little commitment. Then we deliver only the weekends.

On the weekends, we could make a little more donuts and sell them on the spot.
 

minivanman

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Make them square to be different. Then once you get going a little.... take some to all of the news outlets and the morning talk shows in your area.

You spoke of one business that opened 16 locations in 1 year. It's not about how many locations you have, it's about the profit at the end of the day. For example, 15 of those locations might actually be losing money or breaking even and 1 is making a heck of a profit.... so if he would just have that 1 location, he would be making way more profit at the end of the day.
 

Late Bloomer

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Hi Vincent.

I hate to have to say it but... there's a hole in your donut business plan. :playful:

I love it that someone who's been personally successful at door to door sales, is the sales manager for a door to door sales crew. That gives you a super realistic perspective on the personality qualities and action steps that make people successful at the work!

Why aren't you looking to be a donut VENDOR to grocery stores, restaurants, gas stations, food carts, coffee shops, and other businesses that could very easily sell donuts to people who show up in a donut-buying mood? Seems like dropping off a box for them to try, then setting them up on some kind of consignment order process until you've proven you have a hot seller, could be possible? Talking with these business owners, you might find there is some other item your girlfriend would make that could be an even better seller. You could make these sales calls yourself without needing to set up the whole door to door crew.
 

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ay47

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Would a food truck work for this?

Small to mid size offices would be a good target market. The gate keepers are usually the admin staff / PA of the boss who stock the pantry and it comes out of petty cash so it’s money that is pre approved.

I think your girlfriend’s story would resonate well with them too.
 

minivanman

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To edit my post above for any confusion, the hosts of the news outlets and radio shows should be your targets, not the girl at the front desk or anyone in between. Make it a regular Monday morning 'thing' to personally take radio hosts a dozen doughnuts.
 

Cruze

Contributor
Sep 6, 2016
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Awesome idea...Unfortunately you can´t do this in Germany. I had a idea like this a few years ago...to sell drinks & co in the park in the summer (with students of course). But you need a license and have other 100 laws to be observed to sell food and drinks... :/
 
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Vlavoie

Contributor
Jan 8, 2013
21
21
14
Would a food truck work for this?

Small to mid size offices would be a good target market. The gate keepers are usually the admin staff / PA of the boss who stock the pantry and it comes out of petty cash so it’s money that is pre approved.

I think your girlfriend’s story would resonate well with them too.
Unfortunately, in Canada food trucks are prohibited so it cannot be an option.

Awesome idea...Unfortunately you can´t do this in Germany. I had a idea like this a few years ago...to sell drinks & co in the park in the summer (with students of course). But you need a license and have other 100 laws to be observed to sell food and drinks... :/
Yea here too we need certain kind of license but because it's not made with perishable ingredients they are not complicated to have. We only need a commercial kitchen and address.
 

Action Mike

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Unfortunately, in Canada food trucks are prohibited so it cannot be an option.



Yea here too we need certain kind of license but because it's not made with perishable ingredients they are not complicated to have. We only need a commercial kitchen and address.
I just had a conversation with someone in my city that opened a ice cream store. He said they contracted with a local kitchen to develop recipes and make the ice cream, it was really good quality and tasty too. You might be able to work something out with a local contract kitchen like that to do a test run of donuts so you don't have to have your own kitchen setup initially. Might make it easier to validate the idea before spending a lot of money on equipment and leases.
 

minivanman

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Awesome idea...Unfortunately you can´t do this in Germany. I had a idea like this a few years ago...to sell drinks & co in the park in the summer (with students of course). But you need a license and have other 100 laws to be observed to sell food and drinks... :/
You tried in a city park..... that is almost impossible in any country I think. City/county/state/any type of government = pain in the a$$. Not worth the few dollars you would make selling drinks in a park.
 

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Cruze

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Sep 6, 2016
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Not worth the few dollars you would make selling drinks in a park.
Here are in the park in the summer a few 1.000 people without a opportunity to buy drinks or something like that...only in a store far away. I think you could make more as only a few dollars. But as you said: its not allowed.
 

Tammyanne

Contributor
Jun 18, 2017
56
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25
San Diego, CA
Hello everyone !

My name is Vincent, I am 23 years old and I live in Montreal, Canada.

I started my 1st business 4 years ago. I was selling residential paint contracts door to door. Then I hired painters and planned the production. I hated production and the process of it, but was really good in sales. I did this for 2 years.

Good idea, sound's like girl scout cookies, hey so did you say Canada? Do you have some type of food safety something..before selling a food product just curious?

After closing my business, I wanted to gain more experience in sales and I did a couple door to door sales job for different product (HVAC, merchant processing and cable). I became pretty solid and one the best in the companies I worked for.

Last year, I had an opportunity to start my own home security / home automation business. Now, I have around 10 reps going door to door. I want to grow this business as much as I can and automate it with a sales manager and reinvest my profits in another venture or real estate.

My girlfriend is passionate about restaurants / pastries. She dropped out of school last year and currently works with me. Last year, she was searching for a business idea / opportunity in the food market. It's a really hard market so she wanted to find a niche that is less risky.

When I was working in merchant processing, a colleague talked to me about a business of a guy he know that makes a special sort of greek donuts. The recipe is super simple, has no perishable ingredients (no milk, no eggs) and is super good. His business exploded and opened 16 locations in a year.

We did a little market research to know more about the donut market in our area. We discovered that there are not a lot of places that offer freshly made donuts, but when they do, they are very popular. We also have Tim Hortons, which are very low quality donuts and are still very popular.

So, she started making donuts and tried different recipes and found a very good one that has no perishable ingredients, low sugar and vegan. The cost of 1 donut is between 0,07-0,10$ depending on the icing. So a box of 12 donuts would cost about 0,84$ - 1,20$. If we add the box, it would still end up less than 2$ / box which is really low. We could sell a box for about 18$ (or 1,50$ / donut). This is Canadian dollars so about 25% less than USD. Usually freshly made donuts in shops are sold around 2$-3$ / unit here.

She looked to open a shop and searched for different spots in the city. The cost of opening a location is very expensive and pretty risky so she never pursued this venture.

Recently, I was listening to a podcast about a guy that was selling meat door-to-door and was making very good money. He says it was very easy because of the low cost and high volume. There is no monthly fees, no contracts, installation, etc. You just sell and deliver.

I found this pretty interesting, because I only sold expensive things door to door. Then it made me realise, why not just sell donuts door to door? Its low cost, high margin and who doesn't like fresh donuts? It would pretty easy to convince people to just buy a box or 2 with a beautiful story of young women making her dream come true.

Then I brainstormed and did some calculations and I think it could be pretty profitable. Tell me what you think about this plan :

- Hire a couple of young guys / girl to do door to door (like 16-17 years old)
- Train them
- Make a couple box of fresh donuts samples to make people taste
- Send them door to door in the same area (easy to deliver afterwards)
- Offer something like 1 box for 18$ or 2 box for 30$ or offer like 1 box / month for a year with a rebate
- Pay them like minimum wage + a little bonus / tips
- Take info of customers (email, rebate for likes on social medias, phone number)
- Deliver on the freshly made donuts Saturday or Sunday
- Retarget the customers with ads / email / social media to create recurring revenue
- Expand product line with coffee or other pastries
- After a certain time, we could just open a store in a location where we did a lot of canvassing and people would know / like our brand
- Repeat in another area

The goal here is to gain traction and develop a base of customers before opening a shop. She would also take order for catering, sell to different coffee shops and even UberEats.

So here is a little calculation :

Price = 18$ / box
1 rep sells 2 box / hour * 20 hours / week = 40 boxes
Revenue = 720$

Cost to make = 2$ / box * 40 boxes = 80$
Salary (10$ / hour + 1$ / box) = 12$ / hour * 20 hours = 240$ / week
Gross profit / rep = 720$ - 80$ - 240$ = 400$ / week

10 reps = 4000$ / week

Only weekends
Salary 4 cooks = 4 * 15$ / hour * 6 hours / day * 2 days = 720$ / week
Salary 2 delivery guys = 2 * 15$ / hour * 8 hours / day * 2 days = 480$ / week

Profit = 4000$ - 720$ - 480$ = 2800$ / week = 11 200$ / month

Less commercial kitchen and other expenses = 3 000$ / month = 8 200$ / month

What do you guys think about this process ? Do you guys think it's feasible? Are my calculation realistic?

Thank you
 

Late Bloomer

Gold Contributor
Read Millionaire Fastlane
Speedway Pass
Apr 17, 2018
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Go sell them at the finish line of a race. 5k, 10k, half marathon.
I saw that at a marathon, but all the sugary food and drinks were given away to the runners by the businesses... it was a promotional & goodwill activity for them.
 

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