Starting a Donut Shop/Gelateria - Wisdom wanted!

[TheStarvingArtist]

Hello EGulleters!

I'm finally launching a brick-and-mortar after years as a private chef. This spring I'm opening a local-focused gourmet doughnut shop and gelateria-- small-med production, short list of constantly rotating, exquisitely made doughnuts and gelati (about 8-10 types of doughnut a day, and 6 gelato flavors, all based on the local farmer's market). As an added fun bonus, I'll be open bar-hours, so the stumbling crowds can be tempted in at 3am for fresh doughnuts and ice cream. When I make 10 billion dollars off of satisfying the local crowd of drunks, I'll be sure to donate some to eGullet...

That said, I'd love some advice from people in this or similar business. I'm in the midst of mountains of research, and lots of it seems pretty obvious. I'm a businessowner now, and relatively balanced left- and right-brain. The basics of opening a business aren't what I need more of.

What I need to hear are tips, tricks, and pitfalls that you wish someone would have told you ahead of time. Plans you'd made that didn't work out, and things you should have planned for but didn't. The stuff that one can only learn through "doing" rather than another "start your own business" manual.

Any help/information/discussion will be most helpful, as I'm moving headlong into this at a smart but steady pace!

Cheers!

[Lisa Shock]

Do everything you can to get customers their food as quickly as possible. Make certain that the front of house works with a sense of urgency, in some places they set a standard like 'no more than two minutes greeting a customer and ringing them up' or 'no more than two minutes between paying and being handed their food.' Give incentives to employees for figuring out how to streamline service.

Schedule enough time to clean up. Make certain that employees know that closing time isn't the same as the end of their shift.

Make a cleaning chart and make sure that people sign off on it, otherwise some tasks will never actually get done.

-And make me some doughnut flavored gelato sometime!

[TheStarvingArtist]

Doughnut-gelato. Genius. When I open, it's on the house if you can make it up to Michigan!

[Edward J]

Infrastructure, infrastructure, infrastructure!

You will need a ventilation hood and Ansul (fire supression system) for the frying the donuts no matter which way you slice it. Cheapest option is to find an old restaurant rather than starting from scratch.

You will need a lot of refrigeration for the gelato. Normal refrigeration for the raw ingredints and finished mixes, the icecream freezer itself, storage freezer for bulk, and a serving/dipping case. All this equipment puts out serious heat, especially in the summer, anticipate and plan for it.

[Holly Moore]

My biggest frustration when I was new product manager for Dunkin Donuts was that I could not persuade the dumbass operations department to test market premium jelly donuts filled with fruit laden preserves. I still think it would make a great family of donuts. Also, a natural for your concept, is a donut ice cream (gelato) sandwich.

Curious if savory donuts would work, using a savory donut batter and savory fillings?

Coffee is tremendously important. An espresso maker may complicate things with all the other stuff you have going on. But buy the best grade off coffee you can, even if it means importing the coffee beans from outside your area. Offer light cream along with half and half and milk. Wonder if gelato base would work as coffee cream?

For gelato inspiration, might be worth your time to visit Capogiro in Philadelphia.

[TheStarvingArtist]

The pro-side of the coffee issue is that we've got one of the nationally top-ranked roasters/baristas downtown, and they're going to be working with me. I'm not planning to offer anything special coffee-wise, but the roastery is going to blend me my own coffee formulated for the doughnuts, and they're going to sell the doughnuts at the coffeeshop. I don't need to overcomplicate things with coffee-drinks-- I'm doing it good ol' fashioned diner-style.

I have the bonus of a lot of community-support-- farmers, other food-businesses, etc., so that will definitely help on some of the ends.

Good point on how much heat all that equipment puts out...I often forget about how warm the gelaterie were in Italy.... unfortunately, finding an old restaurant won't really be an option. Our food-scene isn't old enough to have any sort of glut of those (and considering I want to keep this small and fast (not a cafe), if I DID find an old restaurant, it'd be way too expensive and way too big, assumedly).

[TheStarvingArtist]

Holly: that's exactly something I'll be working with: farmers-market filled donuts. We get great seasonal produce, so all filled sweets will have homemade jams in them! I can't imagine why your old bosses didn't see how great of an idea that is!

[TheStarvingArtist]

As a follow-up question, my preliminary numbers are looking like the whole project is going to be about $42,000, which includes an estimated 5 months of payroll and rent, pre-considered. Having never done anything like this before, does that sound average? Way too much? A deal? I'd just like to contextualize things before I start asking for money and applying for loans... haha.

[Panaderia Canadiense]

I'd say you should always plan for (and have if you possibly can) a year's expenses in the can before opening. That allows for emergencies, far better than only 6 months. However, it does sound like your costing is about right.

[Edward J]

How did you calculate rent and renovations?

Savory donuts sound like a great idea.

[Holly Moore]

Things often overlooked in calculating initial investment - Inventory, rent and itility Deposits, licenses and drawings for licenses and health department, pre-opening labor and training, cash on hand, Renovations typically cost far more than anticipated. There are always surprises. Exhaust and Ansel system can be very expensive.

Same for operating costs - social security and other employer paid payroll taxes, waste and shrinkage, garbage disposal, liability insurance, credit card processing fees,

[Lisa Shock]

One thing that many people neglect to plan for is space for dry storage. You'll need space (usually a whole room) to store cases of napkins, paper bags, to-go boxes, paper cups, hot cups, straws, lids, plastic silverware, paper towels, toilet paper, packets of sugar & sweetener, plus dry foods. I recall one place I worked at that ignored dry storage in the initial build-out and the owner's office was eventually taken over with stuff needing to be stored.

[mgaretz]

Do not neglect getting yourself a good real estate lawyer to negotiate your lease. They can save you way more than their fees. (I'm married to one.) If you can get it, an easy out after a year is good to have in case the biz doesn't make it. You don't want to have to be paying rent on a space you're not using.

It sounds like you're coming from the world of a one- person business. If you've never had employees that will be a big difference. Don't forget to build in the cost of payroll taxes, workers comp, insurance, a payroll service or program etc. into salaries. Also, it sounds like in your current business it's easy to take time off. Not so with retail unless you have enough trusted staff to run the business when you're gone. Easier said than done.

Don't forget your marketing budget. If you build it, they usually won't just come.

Last, not sure how it goes in your area, but don't forget to build in a few extra months of paying rent and leases on equipment while you are closed (before you can open up for business) as the health department drives you crazy!

Edited July 28, 2012 by mgaretz (log)

[jrshaul]

I know a guy who has a fairly successful semi-commercial bakery. (They sell a lot to grocery stores.)

A few things he's brought up include:

1. Waste. Doughnuts stale extremely quickly, and stale donuts are useful only for making bread pudding.

1.1: A "day-old" bin will cannibalize profits. Go all Paula Deen and make them into something else.

2. Wholesaling. Unless you're operating at peak capacity (in which case you don't need my help), you may derive significant profit from selling to other vendors. It's hard to compete with semi-commercial places using prefab ingredients, but not an opportunity worth overlooking.

3. Promotion is a bitch. The majority of advertising is extremely expensive for the customers it brings in, and discounted or free merchandise can translate directly to lost sales.

3.1: Groupon is evil.

4: Not hiring a graphic designer is a bad idea. Paying too much is a worse idea.

5: Find some way to vent your donut exhaust outside at 2AM, and don't close until 60 minutes after bar time. It works fabulously for the cookie cart.

EDIT:

Also, mgaretz is 100% correct. Find a lawyer with experience, and he'll save you thousands down the line.

Edited July 28, 2012 by jrshaul (log)

[Edward J]

3.1: Groupon is evil.

A big "Amen!" to that observation!

A good breadn'butter idea is to sell coffee and donuts to offices in the area....

[TheStarvingArtist]

Wow, some great tips! The real estate lawyer is a huge bonus. I've got a space in mind, offered to me for a song, but if that doesn't work I'll definitely talk to my lawyer.

jrshaul, thanks for the great info: I'm definitely set to be open until at least an hour after bar-time, with a fresh bake on the schedule just before then. I'll need to figure out how the fudge shops can rig their exhaust to the front sidewalk....

I think my day-olds will be donated. I talked to a great bakery several states away that donates all their day-olds to a rotating assortment of local charities, from women's shelters to homeless shelters to after-school programs, etc. I think I'm going to aim for this (plus the side-stack of bread pudding, donut-chunk gelato, and donut-ice cream-sandwiches)

[mgaretz]

Wow, some great tips! The real estate lawyer is a huge bonus. I've got a space in mind, offered to me for a song, but if that doesn't work I'll definitely talk to my lawyer.

Even if the deal is (or seems like) a good one, still get your lawyer involved. I can't tell you the number of seemingly great deals that went way wrong and now my wife has to get people out of trouble.

[Lisa Shock]

There are uses for stale product, especially the unfilled doughnuts. Here's an article that covers some of it:

http://modern-baking.com/supermarket_baking/stales-can-improve-profitability-0111/

A lot of classic recipes rely on stale crumb. If anything, there's always rum balls. The nice thing is, the recipes that use a substantial amount of crumb can't really be made by most people at home and are 'special baked goods' from the bakery only. A&P supermarkets used to be famous for a cake that was made from a high % of crumbs.

Some dried crumbs are very useful additions to baked items with fruit toppings or fillings. Some bakeries, for example, lay down a layer of crumb before placing the fruit on Danish -it helps absorb any excess juice that might run in the oven.

Some recipes for struesel or crumb-cake type toppings can be greatly improved by using stale crumb.

[Kerry Beal]

There are uses for stale product, especially the unfilled doughnuts. Here's an article that covers some of it:

http://modern-baking...itability-0111/

A lot of classic recipes rely on stale crumb. If anything, there's always rum balls. The nice thing is, the recipes that use a substantial amount of crumb can't really be made by most people at home and are 'special baked goods' from the bakery only. A&P supermarkets used to be famous for a cake that was made from a high % of crumbs.

Some dried crumbs are very useful additions to baked items with fruit toppings or fillings. Some bakeries, for example, lay down a layer of crumb before placing the fruit on Danish -it helps absorb any excess juice that might run in the oven.

Some recipes for struesel or crumb-cake type toppings can be greatly improved by using stale crumb.

Lisa,

Out of curiosity - do you have a recipe for that A&P Spanish Bar cake that uses recycled cake doughnuts?

[ChrisZ]

Good coffee + good gelato = great affogato!

I don't know what the climate is like in your area, are gelato sales likely to drop off in winter? If they do, you could use your farmers market contacts to add soup or something else more seasonal to your winter menu to help even out the takings...

[pastrygirl]

Infrastructure, infrastructure, infrastructure!

You will need a ventilation hood.... All this equipment puts out serious heat, especially in the summer, anticipate and plan for it.

I cannot agree with this enough. We recently moved the resto, beautiful million dollar build out, new custom hood system, and now that it is summer it gets to be upper 80's F in the prep area, wreaks havoc with chocolate, butter, yeast, spinning ice creams. If only I could have sat in on the planning meetings and pleaded with all my heart for air conditioning.... It's not just the heat coming off the oven/stove, it's making sure there is air flow, making sure dry storage is fairly cool so your chocolate doesn't melt and your nuts don't go rancid. Kitchens are hot, fine, just make sure there is someplace cool for the stuff that needs it.

[Badiane]

Save your fancy donuts for the daytime crowd...the after hours crowd isn't looking to try some new taste sensation. They just want to cram a sugar bomb into their mouth as fast as possible. Or maybe that is just me. Make fresh glazed donuts just before the bar closes and as suggested above, vent out into the street. They will be beating each other with sticks to get through the door. Again, maybe that is just me

[jrshaul]

Have you looked at some sort of cart? Aside from the obvious convenience and possibility of selling perishable product at farmers' markets, the congestion of sugary fat vendors lined up outside the university bars suggests serious profit potential. They appear to do brisk business even in the frigid months.

The main restriction on cart ownership (at least, around here) is the requirement of a permanent licensed kitchen, providing brick-and-mortar establishments like your own an advantage.

[Lisa Shock]

I just posted some formulas for various spice cakes and gingerbreads in the scrap cake thread:

Some use cake crumbs, and you can substitute cake doughnut crumbs. Others just call for 'crumbs' and that is generally a mix of pastry crumb, cake and maybe a little bread. So, in those you can probably use a 50-50 mix of yeast doughnut crumbs with cake doughnut crumbs.

You could replace half of the flour in some of these with whole wheat to make a spice breakfast muffin.

Or, you could work on one of these and make a spice cake doughnut out of it. Yup, a doughnut from leftover stale doughnuts....

[TheStarvingArtist]

I'd love to figure out some sort of cart... our city is in the midst of a street-food battle, with a contingency trying to outlaw/overregulate food trucks and the like (stupid, I know...). That said, I'm a little hesitant to put any money into something that might be illegal/red-tape-filled in a year or so.... but It's definitely on my radar.