It’s good to be the ‘Donut King’
During Covid-19 lockdowns, donuts have become more popular than ever.
In fact, the staggering rise in global donut eating this year has been large enough to give Homer Simpson’s 20 year consumption record a run for its money.
According to a recently released report by Reports Globe, the global donuts market is set to reach US$63.3 billion ($88.82BN) by 2025.
The report suggests Australians are leading the charge. Suffice to say, there is an enormous appetite for donuts among Australian consumers which is good news for donut makers.
Following a complete rebrand, Donut King is riding the wave of positive sentiment towards these well-loved tasty treats.
Parent company, Retail Food Group (ASX: RFG) has recently spent several million dollars rebranding Donut King: a total of $3 million has been spent on rebadging the coffee branding alone.
The focus of RFG has been to bring what some may have seen as a tired brand, up to par with independent operators and to offer an affordable, family-priced alternative to the $10-plus extreme donuts that have pervaded the market.
Donut King is focused on affordability and flavour profile, not how fancy they can make the dessert. This is important as many of its stores are located in mass market centres.
However, while the donuts remain well-priced, the stores have been upgraded to look more modern and inviting. Fresh products – including coffee served in beautifully branded cups – made on site, rather than shipped in is also a focal point of the brand moving forward.
In essence, Donut King now offers a premium brand at an affordable price. This is reflected in the packaging, five new recently released flavours ranging in glazed. Filled donuts and a children’s range complete with unicorn donuts.
The focus on packaging now means customers can purchase boxes of six and 12 donuts. They can buy birthday boxes and a range of affordable options for various events.
“While our coffee has improved, we have kept the family favourite donut ranges with a renewed focus on driving average transaction values through boxed donut sales. We now have a range of donuts that merits customers purchasing 4,6 and 12 packs which means we can keep our retail prices affordable whilst still driving growth.” says franchisee Garry Spring who is a Queensland Donut King franchise-partner based in Booval and has a second store in Toowoomba.
New focus puts franchisees onside
The refocus has had a positive impact on existing franchisees and is designed to attract new franchise partners to the brand.
“This is a great business to be in,” says Mick Bully, a Townsville-based franchise-partner, who has just bought his seventh Donut King site.
“Our affordable product lines and low entry costs make the business attractive for existing partners to expand but also prospective new franchise partners to put their first store on the ground.”
Spring has similar sentiments.
“The parent company, Retail Food Group, is now totally focused on supporting us franchise-partners”, says Spring.
“I cannot speak highly enough of the company; they took a step back had a look at things and then stepped forward with a great future ahead.”
Given its re-focus, Donut King is currently expanding its network by attracting franchise-partners who want to be owner-operators of this famous brand.
The name has history. It has identity. It has brand equity. And despite, the advent of the over-the-top donut revolution, it still has a large consumer following.
In fact, Donut King has been Australia’s favourite donut destination for 40 years, and ‘owns’ the donut market where other premium-priced brands have come and gone.
With 220 domestic outlets serving 18 million customers per year, Donut King generated $50 million in donut sales and $38 million in coffee sales in the last financial year.
“One of the strengths of our dominance is pricing,” says Bully. “Donut King has kept the average sale one of the lowest of the quick-service restaurant brands. For a lot of families, we are an affordable treat.
“People come back time and again, because we have consistent quality, which essentially comes down to fresh donuts and now premium coffee.”
As mentioned, the brand has recently invested $3 million into changing to a premium blend of coffee, along with new equipment and regimented training content, repositioning its stores towards the coffee consumer.
Also of note is the roll out of the Donut King mobile van trials that align with the ‘affordable and fresh’ values of existing stores. This roll-out will offer a unique point of difference to competitors: the vans will provide freshly made donuts and premium freshly brewed coffee compared with poor quality frozen food and poor-quality coffee.
Donut King mobile vans will also have the ability to leverage off the $4 million per annum marketing done by the store network which has created high brand awareness over the last two decades.
For prospective franchise partners, Donut King not only offers an attractive consumer price point, it is also an affordable business model to buy into.
Store development fees now range between $150,000 and $300,000 – much cheaper than any other food retailer. As a mass market brand, competition is minimal, and it is one of the most affordable franchises to break into because stores are predominantly kiosks in shopping centres meaning the rental and other overheads are considerably lower than larger store-based systems.
A new outlook
There’s a lot to like about Donut King at the moment … beyond the donuts.
The new management team has put an enormous amount of work into reinvigorating the brand.
CEO, Peter George and Head of Retail, Jessica Buchanan have focused their energies on the success of the franchise-partners by implementing systems to improve sales, lower costs and deal with business problems with an agility that was previously lacking.
The moves have paid off.
Bully says he and his wife had been building their Donut King stores for 30 years. They recently bought their seventh – and during COVID – a testament to their enthusiasm about Donut King’s new management, strategy and direction.
“We are very optimistic about Donut King. Working hard and following the system is what franchise-partners need to do. And when head office is on your side, great things are possible.”