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What started on a whim in the small beach town of Duck, North Carolina, has quickly grown into one of the nation’s fastest-growing donut franchise companies. With more than 100 donut shops operational in the United States and internationally, Duck Donuts is loved and adored for its warm, delicious and unique made-to-order donut experience.
In 2007, Russ DiGilio, Duck Donuts founder and CEO, was on a mission to solve a family vacation problem. “Our family wanted a place to buy warm, delicious, made-to-order donuts, and when we couldn’t find one, we decided to start our own,” said DiGilio.
By 2011, Duck Donuts had expanded to four Outer Banks locations and the donut business was so successful that DiGilio was continuously approached about franchise opportunities by fans who begged for a Duck Donuts in their community. The first franchise opened in Williamsburg, Virginia, in 2013, and there are now 105 open franchise locations in 22 states and more than 145 additional contracts in 27 states. Internationally, Duck Donuts has two operating locations, with its most recent location opening in Riyadh, Saudi Arabia.
Through the unique experience, customers can create their own donut combination, starting with a vanilla cake donut and then choosing from a variety of coatings, toppings and drizzles, including traditional favorites such as chocolate icing with sprinkles and more adventurous creations such as maple icing with bacon. The family-friendly stores offer a viewing area where children and adults alike can watch their donuts being made from scratch to finish.
Another aspect guests enjoy the most, is the everchanging introduction of new limited-time flavors, such as Key lime and mint icing, and a chopped apple topping. With a strong focus on product innovation, in recent years, the company has also added menu items including vegan donuts, a chocolate cake-based donut, a donut breakfast sandwich, donut sundaes, espresso beverages, and milkshakes.
To date, Duck Donuts’s growth has been organic, with much franchise interest stemming from personal experiences at the original locations in the Outer Banks of North Carolina, or along the East Coast. In order to continue the momentum of one of the fastest-growing donut franchises, the company is looking at a more aggressive approach to selling franchise agreements domestically and internationally, with a strong focus in tourist and resort areas, as well as non-traditional locations.
Sweet international expansion
Despite the overall challenges of 2020, Duck Donuts continued to see positive growth both domestically and internationally. In June 2020, the company opened its first location outside the mainland of the United States in Bayamón, Puerto Rico to much fanfare. Most recently, the brand also celebrated an international milestone with the opening of its first store in Riyadh, Saudi Arabia.
Expanding Duck Donuts to the Middle East aligns with Saudi Vision 2030, a plan to reduce Saudi Arabia’s dependence on oil, diversify its economy, and develop public service sectors such as health, education, infrastructure, recreation and tourism. Vision 2030 has made the partnership with Duck Donuts more accessible. The development will also contribute to broadening the spectrum of job opportunities within an already thriving and diversified economy.
“Expanding Duck Donuts to the Middle East aligns with Saudi Vision 2030, a plan to reduce Saudi Arabia’s dependence on oil, diversify its economy, and develop public service sectors”
As the company looks towards 2022, Duck Donuts will begin operating in Canada, Egypt and Australia.
As Duck Donuts continues its global expansion, the company is now offering a flexible footprint that still remains true to its core brand focus, being able to serve warm, customized donuts, in a family-friendly atmosphere. Flexible footprints range from 400 to 1,500 sq. ft, and have demonstrated to be a proven business model for non-traditional locations such as food trucks, airports, and stadiums. Duck Donuts is prepared to keep striving towards achieving its mission of serving an edible ring of happiness around the world.
Consumer convenience
Duck Donuts significantly invests in technology in order to provide the best platforms for its franchisees, as well as provide a seamless and convenient customer experience.
Ahead of the COVID-19 pandemic, Duck Donuts launched its first system-wide mobile app point-based loyalty program, Duck Donuts Rewards. Available to download on the Apple Store and Google Play, the app is designed to work seamlessly with Duck Donuts’s existing point-of-sale technology.
As a Duck Donuts Rewards member, guests can order ahead in the app and skip the line or scan the app in-store to pay. Consumers earn five points for every dollar spent that unlock sweet rewards as the status levels increase, including free donuts and coffee. Since the official launch in February 2020, the company has secured more than 200,000 downloads, generating more than $4m in sales.
“The goal for our loyalty program is to increase customer frequency, drive consumer behaviors and continue to grow brand awareness,” said Betsy Hamm, Duck Donuts CEO. “In almost two years, we have been able to accumulate strong consumer-driven data that gives us a better insight into our target audiences, allowing us to best meet the needs of our loyal guests.”
As consumer behavior shifted during the pandemic, it brought to the forefront of the restaurant industry the need for brands to keep customer convenience top of mind. Duck Donuts continues to evaluate the ways it offers convenience to its customers in order to best meet their needs. Fortunately, before coronavirus struck the United States, Duck Donuts already had a few initiatives active, such as its online ordering platform and mobile app.
Ducks that flock together, stay together
As the coronavirus began to impact the United States in March 2020, Duck Donuts’ corporate team quickly prioritized internal communication with franchisees and began sharing critical operations and marketing next steps.
Duck Donuts franchisees immediately took preventive safety measures in an effort to mitigate the in-store risk of exposure to the coronavirus such as eliminating seating to promote social distancing, encouraging online and mobile orders through Duck Donuts’s website and Duck Donuts Rewards app, and expanding the option for curbside service, amended store hours to allow for employee relief and additional deep cleaning and disinfecting procedures, and moved the self-serve coffee bar behind the register.
“Our doors may have been temporarily closed, but our warm donuts were still available as we aimed to provide a comfort treat to families in the communities we serve,” said DiGilio. “Our corporate team and franchisees remained committed to demonstrating to our guests that we take great pride in delivering on our purpose statement – guaranteeing every customer a clean, courteous, family-friendly, fun and scrumptious experience. It is important we provide this quality of service now more than ever.”
As sales quickly began to drop across the industry, Duck Donuts started to think outside the box in order to survive. In addition to the safety measure put in place, the company launched a Duck Donuts Decorating Kit, serving as a unique and fun activity for those staying home and giving families the chance to become an official donut topper. To date in the U.S., many locations have resumed experiencing positive growth, including same-store sales over 2019.
During the second quarter of 2020, franchisees also continued to live out one of the company’s core values of being integrated with their local community. Many franchisees donated donuts as a way to thank frontline and essential workers in healthcare, groceries stores, mail clerks, and more.
“As we pushed through the pandemic together, I could not have been more proud of our corporate team and group of franchisees who demonstrated what it takes to be resilient, persistent and sprinkle happiness during a time of a global crisis,” said DiGilio. “Working alongside our franchise owners during a difficult time only further strengthened our relationship and trust.”
Corporate supports the flight
Duck Donuts has a team of experienced experts ready to assist its franchise partners during their journey. From the process of market research to site selection, construction and design to the operations, training and marketing support, the corporate team works closely with each franchise owner to help them succeed. The dedicated team ensures franchisees are prepared to run and grow a profitable Duck Donuts business.
The global donut market is expected to reach $63bn by 2025. The donut category continues to experience growth due to the accelerating habit of looking for comfort foods and changing lifestyle in urban cities, and makes a great fit for multi-franchise owners looking to round out their portfolio.
Duck Donuts is ready to transition from an emerging to an established brand and is looking for franchisees to be a part of the company’s growth.
At a Glance Duck Donuts
Franchising established: 2013 (first locations opened 2007)
Number of franchised outlets: 106 Company-operated units: 1
Location of units: United States, Puerto Rico, United Arab Emirates, Kingdom of Saudi Arabia, Canada, Australia, Egypt, France, Qatar, Thailand
International franchise fee: Based on territory and number of units. Area and master franchise opportunities available
Build-out options: Free standing, in line, malls, food truck, airports and stadiums
For international opportunities, contact: Marcel Portmann, mportmann@duckdonuts.com
