Duck Donuts Races Ahead, Ready for its Next Act

Betsy Hamm heard through a friend Duck Donuts was moving its headquarters to Mechanicsburg, Pennsylvania, and searching for a marketing leader. What she wasn’t familiar with, though, was the brand itself. The population last year of its origin town—Duck, North Carolina—was 782 full-time residents. The Outer Banks vacation spot, which sees that number climb over 20,000 during peak season, is the 11,252th largest city in America.

But Duck Donuts knows how to leave an impression. Hamm, a Pennsylvania native with 15 years at Hershey Entertainment & Resorts on her resume, texted a couple of confidants who had visited the concept’s day one store on the Sound side of the sandbar island.

“I asked, ‘should I take this interview?’” Hamm recalls. “And their responses were so over the top with excitement I thought, ‘why are you guys so excited about a donut company?”

It didn’t take a marketing genius to pinpoint the opportunity. Could the brand replicate cult-like fervor? Vacationers for years had asked founder Russ DiGilio, who debuted Duck Donuts in 2007, to spread through hometowns across the U.S. “How do we make that a national household name? And how do we grow that awareness?” Hamm says. “That was definitely what attracted me to the brand—that excitement from fans when you talk about Duck Donuts.”

The canvas had yet to be filled in as well. Hamm took the job as marketing director and got to work examining the pieces of Duck Donuts’ story. The identity. Its logo. Who it was targeting and what it planned to say. The brand didn’t even have pictures of donuts at the time; there hadn’t been any shoots. These days, Duck Donuts takes a “curated messy” approach, where guests see visuals of donuts dripping with icing and sprinkles scattered around the box, just as you would in-store.

Hamm had the enviable task of marketing Duck Donuts from the ground level, while still balancing innovation against tradition. DiGilio was open to all of it, she says. There were 22 locations at the time (2016) and Duck Donuts had been franchising for only three years. Hamm was the chain’s 12th employee and first outside its friends and family circle.

About a year later, Hamm was promoted to chief operating officer. Then, in the mouth of COVID, Philadelphia-based firm NewSpring, which managed more than $2 billion at the time and had investments in north of 170 companies, backed Duck Donuts after the brand “interviewed quite a few candidates.” NewSpring could offer industry expertise as well as financial power, as partner Patrick Sugrue was the former CEO of Saladworks.

At this stage, Duck Donuts sat on the doorstep of 100 units (it would have 102 when the deal was eventually struck), and, like Hamm, NewSpring clearly saw DiGilio’s vision. Duck Donuts had multi-year strategies stirring. After 100, it wanted to reach 300 units within the next four to five years. Ultimately, this would mean opening 50 restaurants per calendar.

NewSpring kept Duck Donuts' team in place. But one big change was DiGilio’s decision to step aside and have Hamm assume the role of CEO.

So within five or so years, Hamm progressed from Duck Donuts researcher to brand leader. Yet while it was a rapid ascension, it was hardly an abrupt one. DiGilio previously told QSR he recognized skills in Hamm beyond marketing, which led to his call to move her up to COO. And for the year leading up to its investment from NewSpring, he’d given her more responsibilities and groomed her for this moment.

Duck Donuts

Duck Donuts takes a “curated messy” approach with its photography, where guests see visuals of donuts dripping with icing and sprinkles scattered around the box, just as you would in-store.

And by the way, Hamm had become a Duck, North Carolina, veteran of sorts. She took a pilgrimage with DiGilio’s daughter and new leaders early on and has continued to return with her family since. Her teenage girls love the northernmost OBX town.

“My job was really to buckle down and be able to start accelerating that growth,” Hamm says of becoming CEO. “So of course, there’s been some challenges along the way, from supply chain to labor. We had a big challenge last year getting shops open, which a lot of people did, from delays from either getting equipment or permitting delays. But the great thing is, though, during these last two years, we’ve really been able to reset our foundation, which is our team.”

Chad White joined as VP of operations in October 2021. Previously, he held the same title—plus overseeing culinary—at fast casual Tacos4Life, and before, was the senior director of culinary and beverage at casual-dining brand Cheddar’s Scratch Kitchen.

Chief development officer Eric Lavinder, a former Garbanzo, Frutta Bowls, and Saladworks exec, arrived in January 2022.

As Hamm mentioned, expansion has been a bit slow-going in recent calendars. The chain grew by a net of seven stores last year, six in 2021, and 13 the year before that. Average gross sales per unit in 2022 were $569,701. The total investment to open a Duck Donuts franchise ranges from $464,650 to $649,000.

Kristin Kellum, director of communications, says expansion has begun to pick up. Duck Donuts has opened seven shops already in 2023 and has a “strong” pipeline ready to materialize. The brand signed 10 franchise agreements for 25 shops and one food trailer during the first quarter. In the U.S., franchisees inked deals to expand in Greater West Palm Beach, Florida; Huntington and Babylon, New York; Queens, New York; South Manhattan, New York; Greenville, South Carolina; and Centerville, Virginia. Barring any permitting and construction delays, Duck Donuts anticipates opening 35 locations in 2023, which would, naturally, balloon its 117-store footprint in a hurry.

And as that happens, the brand will “be able to continue to engage with our guests and give them a traditional experience, but in a modernized way as well,” Kellum says.

That’s a tangible statement. Just recently, Duck Donuts unveiled a “Shop of the Future,” or a localized, modern design with a focus on optimized ordering in-store and on-the-go.

Duck Donuts

Duck Donuts new model is energetic and flexible across ordering formats.

Some features include:

Optimized Ordering Experience: Guests will now have two in-shop options for ordering—at the front upon entering the store, optimizing flow from order to pick up, or through self-ordering kiosks. There is also a dedicated area for mobile and third-party pickup orders for grab and go convenience.

Modernized Designs: To support ownership, new shops will now feature a sleek interior design with localized artwork, including an accent wall designed to “sprinkle happiness” in operators’ local communities. Additional aspects will add dimension with 3D graphics, digital menuboards, and high-top barstools to watch the donut making process. The exterior highlights a colorful awning and seating with umbrellas, pending landlord approval.

Dedicated Catering Prep Area: The new shop will allow employees to work hard behind the scenes, handling more catering and digital business without interfering with in-shop guest orders.

Cost Savings: The new shop design also allows for smaller footprint options, 1,000–1,400 square feet, enhancing return on investment by reducing build out costs up to $75,000 for franchise partners.

Hamm says the ideation process took learnings from the past three years. How customers interact with Duck Donuts webbed into new directions. The brand wanted to remove friction from all of it, whether at the counter or otherwise.

The brand’s hallmark of guests getting to watch made-to-order donuts come to life, remains front and center. But this version of Duck Donuts is cleaner, more energetic, and flexible across ordering formats.

For instance, the kiosk, which launched as a pilot last fall at a corporate store, doesn’t replace the cashier. Rather, it gives guests options.

In Mechanicsburg, during the test, Hamm often watched customers, especially younger ones, walk in and bypass the register for the kiosk. It’s been helpful in catering to two occasions of Duck Donuts users: the customer who wants the original experience of talking to an employee, customizing donuts, getting walked through options, if needed, and then seeing that process begin in real-time; but it’s also helped those who just want to get through quicker.

“We have a little bit more of a complicated ordering process because you get to build or choose your doughnut,” Hamm says. “If some people want to come in and grab a sandwich or a coffee and be quick, they don’t necessarily need to wait in line or be behind a customer picking a dozen doughnuts [with the kiosk]. Of course, we still have the customer who wants that experience of someone, maybe it’s the first time, maybe they need recommendations to walk them through. I think the nice thing is we’re able to meet both expectations of whether it’s that human walking me through and helping me place my order or if I have an order and know exactly what I want, I can just come in. And that goes in our queue line like if we had two cashiers, essentially.”

The dedicated catering prep feature fits an evolution as well. That’s always been a key part of Duck Donuts’ business, and one that, like the rest of the restaurant field, took a dive when COVID shut gatherings down. As it’s come back, Hamm says, so has the need to serve catering demand with agility. Duck Donuts speaks to “office heroes” and has leveraged digital ordering to fuel celebrations of all kinds, she says, from weddings to birthday parties.

Overall, however, Duck Donuts continues to shift focus from navigating pandemic-fueled challenges to rocketing upward once again. And Hamm says the brand’s never been in a better place to do so. The company’s loyalty (the platform launched in January 2020) and digital tools (online ordering is up to 23 percent of sales) are more embedded than ever, targeted marketing and data stronger, and its brand and design in tune with guest evolution.

“I think this is a once-in-a lifetime opportunity to have the exposure to so many challenges and being able to overcome them and continue to grow the brand,” she says. “I’m very thankful that we have such an amazing team and this amazing group of franchise partners that all are so passionate about the brand and wanting to serve Duck Donuts literally around the globe. It’s been an evolution for sure, but it’s really been fun.”