Article published January 07, 2009
Hole in sales of doughnuts may be filling
Chain looks at Toledo area to aid planned expansion
By JON CHAVEZ
BLADE BUSINESS WRITER
Over the last decade, Toledoans' love affair with doughnuts appears to have waned a bit.
In that span, the area lost several free-standing doughnut shops - four Dunkin' Donuts, two Krispy Kreme stores, and two sites of a local favorite, Hinkle's Donuts. But that trend may be reversing.
Dunkin' Donuts, which is based in Canton, Mass., has pegged the Toledo area for a major expansion if it can find the right franchisee. The company, recently placed an ad in a local business journal seeking a franchisee.
The retailer is interested in opening up 24 new sites in the metro area over the next several years, part of Dunkin' Donuts announced plan to add up to 7,000 stores by 2016, said a local businessman who has heard the company's plans.
The owner of the Toledo area's last remaining Dunkin' Donuts, however, had slightly different information.
"They are looking for the right franchisee who can develop 5 or 10 stores right away," said B.D. Patel, who owns the store at 2709 W. Central Ave.Mr. Patel said the company pulled the franchises years ago from the other stores in town, but that his store still does high volume thanks to its location near the University of Toledo.
It could be said that 1997 was the Toledo area's year of doughnut renaissance. That year, there were five Dunkin' Donuts, two Krispy Kreme stores opened, and a new owner, Dan Stakley, bought Hinkle's.
But all of those since have disappeared.
Competition from grocery stores hurt many free-standing doughnut shops. Kroger added Krispy Kremes to their bakery several years ago, and Meijer, Wal-Mart, and Costco all offer freshly made doughnuts.
Some small mom-and-pop doughnut shops have managed to survive. The former Dunkin' Donuts on Monroe Street, for example, converted to a locally owned store called Cafe Donuts.
But the free-standing doughnut shop is a struggling concept, said Steve Serchuk, a commercial real estate agent with the Toledo office of Signature Associates.
"People have shifted to want more than just coffee and doughnuts. They have become more health conscious and are not eating a lot of heavier stuff anymore," he said.
Changing consumer habits forced Tim Hortons, originally a coffee-and-doughnut franchise, to adapt its menu. The retailer expanded into the Toledo market in 1998 and now has nine stores.
Rachel Douglas, a spokesman for Tim Hortons, said the company built its reputation on doughnuts, but its growth has been because it moved beyond coffee and baked goods.
"We now do baked goods like muffins and bagels, lunches, sandwiches, soups," she said.
Mark Zyndorf, a commercial real estate developer whose family operated the former Zyndorf Bakeries in Toledo, said these days a free-standing doughnut shop would have trouble generating a lot of revenue.
"It's expensive to buy a site and build a free-standing building. And then, it's a nickel-and-dime business," he said. "By that, I mean you've got to do a lot of volume to survive."
Contact Jon Chavez at:
jchavez@theblade.com
or 419-724-6128.
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