Starting Up A Donut Shop? You wouldn’t be alone. We have seen our overall equipment sales go down slightly with the poor economy, but for some reason donut shops appear to be going strong as ever. Every week we get at least a couple calls from people planning to open a new donut shop in their area. If you are one of these people, here are some tips from an equipment supplier’s perspective:
The first big thing is funding a start-up. The current financial world is challenged to provide leases or loans to new food related businesses like a bakery, unless you have good credit history and/or you are willing to live with fairly high interest rates. Even then, the amount of money they can get for you may only be a fraction of what you really need to get the business going. You can’t cheap out either. Yes, every entrepreneur starting a new business has to be frugal to an extent, but starting a business like this is truly somewhat of a “go big or go home” endeavor. Beyond budgeting for the build-out, you need additional funds to cover ingredient replenishment, marketing efforts, the first several weeks of rent or mortgage payments, utility bills, and staff payroll, etc, etc. Many unexpected costs can also come before you even open your doors to start making some revenue, such as from your trades/general contractor (costly delays, oversights or mistakes are inevitable), inspections, city approvals and licenses, and so on. And even when you do open, your sales at first may not come fast and furious enough to dig you out of a financial hole while you are continuing to incur more expenses. You must have a fairly significant reserve to get over the opening hump.
Location, location, location! Yes, the success of your business is largely dependent on your site selection. But here are a few other things to keep in mind in choosing a location, with regards to equipment:
1. Having three phase electricity available at your panel will be helpful when it comes time to shop for equipment. Many of the commercial machines require three phase by default. If you only have standard single phase power, it may restrict your selection of equipment to some degree. For example, if you have decided that a 60 quart mixer is right for you, most of what you see on the market, new or used, will be 208-220V/3ph/60Hz. So you may have to dig deeper into the used market, possibly even special order a new one with alternative electrical requirements, or consider using a phase converter. You can usually get three phase power brought in to the building from the nearest source, but it can be wildly expensive to do this.
2. Having street level rear access with at least a double wide door is great. Not only for receiving your equipment, but also for receiving your regular shipments of ingredients. Can you imagine having to schlep a pallet of donut mixes every week up a flight of stairs?
3. An adequate natural gas supply to the space. Although electric fryers have gained some popularity over recent years, gas is still the utility of choice to heat a donut fryer (or commercial oven). If you intend to fry with gas, and there is no gas supply to the building, you’ll have to look into the cost of getting it installed by your local gas company.
4. It’s nice to have at least 500 square feet for your production area. Of course, you will find a way to cope with a small area, but more room is better.
5. Do your research, using any local resources you can identify and contact, on all potential zoning and permit issues, as well as finding out what inspections you would be subject to prior to opening and what their criteria are. Lastly you need to look at what your locale or local codes will require for venting and fire suppression. Believe it or not, many bakery equipment dealers don’t sell exhaust hoods and such because they are regulated by local authorities, even potentially down to your landlord and the lease agreement you are signing, and vary from one location to another. So I recommend you use a local established and reputable HVAC contractor with restaurant and commercial food experience, to design, fabricate and install your exhaust hood for over the fryer. A company like this should know the local code, including with regards to fire suppression.
Now for a bit of soap-boxing…
So you’ve found inspiration on the Food Network and despite having zero bakery experience you think you have what it takes to open and run a donut shop. But now you are curious how much all this would cost. You may think a good way to start by googling equipment dealers and asking them to quote you on your “complete equipment package”.
But only inexperienced people begin this research stage with this mainstream consumer mentality and set of expectations. The world of bakery equipment is a relatively small world in terms of the number of suppliers, technicians, etc and there are big differences in standards of service. The people who make a vague excel spreadsheet shopping list and email or fax it to several different equipment businesses… well the unfortunate reality is that very few, if any, of these businesses will even respond.
I am constantly surprised at how many people I get every week calling me and saying stuff like “I have no baking experience at all but I am thinking about opening a donut shop in my area. Can you tell me how to do this, and give me a complete run-down of everything I need to buy and what the costs are?” This kind of question tells a supplier you are not likely to even get past the googling and calling stage into the serious planning stage. It’s like expecting driving lessons from a car dealer, or like going to a Home Depot and asking one of the people in the orange aprons for a complete list of everything you need, including instructions, to build your own garage.
Bakery equipment salespeople aren’t really there to educate you “from scratch”. That is the job of professional consultants, franchisors, vocational institutions, or of yours by just throwing yourself into the workforce for a while to get experience. We are just an equipment store, so usually people come to us telling us what they need rather than the other way around. Yes, most of us can give you some basic advice on equipment once they learn a bit more about your plans and preferences, but they can’t do the planning and research for you and probably don’t have a one-size-fits-all shopping list to give you.
In fact, the equipment selection process is made up of many decisions and variables. It’s quite a lengthy process requiring extensive knowledge of your plans and your location which can’t easily be done long distance, nor will most professionals or organizations embark on that journey for free, without so much as a commitment from you. So unfortunately there is no “Acme Bakery In A Box.”
Another thing to keep in mind is that, if all your doing at this moment is trying to budget or figure out if you even have what it takes financially to put your idea into motion, an equipment supplier can only tell you what the equipment might cost, a range from low to high, an estimate at best. But they have no clue what you need to lay out in acquiring your location, for construction/renovation, utilities and venting, P.O.S. system, advertising/marketing, ingredients, beverage equipment, signage, staff payroll etc, etc. So what if I pick a number like $20,000 for the equipment? It means nothing because your final number to get open might be $50,000 or even $80,000.
Finally, if you do get far enough along the process to be able to actually start ordering equipment, don’t plan to open in two weeks. New equipment often has a 2 to 3 week manufacturing lead time. On top of that there is a day or two to place and process the order through us to the manufacturer, plus a few to several days in transit to the destination. And then you need some time to get it hooked up, calibrated or started up, and get the staff familiar with it, etc. Used equipment, can be faster in some cases, but not always. Equipment dealers like us often get stuff in and put it into storage until one of two things happen: either we sell it and prioritize it at that point, or we get caught up on all other work and can work ahead on getting unsold stock equipment ready to ship. For the more successful shops, the latter never happens because we’re always selling and always playing catch up.
Good luck and happy planning!