Sales of sweet baked goods surged during the pandemic as people sought comfort in food, and doughnut chains have been riding that wave ever since. They’ve also seen the competitive landscape heat up as more categories vie for a share of America’s insatiable sweet tooth.
Cookies are the latest dessert craze, joining the ranks of past favorites like artisan ice cream and gourmet cupcakes. Fast-food brands and coffee chains are sweetening up their menus with more sugary snacks, too.
“It seems like everyone is jumping into it—not necessarily doughnuts, but sweet treats in general,” says Chris Schultz, CEO of Portland-based Voodoo Doughnut. “For the longest time, I think we only compared ourselves to doughnuts, but now that competitive base has gotten much larger.”
Launched nearly two decades ago amid the rise of gourmet and artisan doughnuts, Voodoo has carved a niche for itself over the years with playful branding that matches its eye-catching toppings and creative, often unexpected flavors.
“More so today than ever in the past, our focus is on innovation, ensuring we’re in front of things, and communicating what we’re doing,” Schultz says. “That was important pre-COVID and is even more important now.”
The striking confections and offbeat personality have translated into a large and highly engaged social media following. That outsized brand awareness has helped it evolve from a single shop in downtown Portland to a growth-minded chain with a footprint in nine states. Currently, Voodoo has around two dozen stores across Oregon, Colorado, Texas, Washington, Illinois, Tennessee, and Arizona, plus two outlets at Universal Studios in California and Florida. This year, it plans to open its first brick-and-mortar location in Florida, expand into Seattle and Los Angeles, and open a second site in Chicago. Looking ahead, it aims to open five to seven new stores annually for the next few years.
Some of those shops will be in nontraditional locations, like the two airports where the chain already has units. With their lower startup costs and access to customers who haven’t encountered Voodoo before, the company sees those spaces providing the oxygen that will fuel its long-term growth, including more brick-and-mortar stores.
Schultz says the biggest challenge going forward will be preserving the brand’s ethos and delivering a differentiated experience as it scales. He recalls a line that was often repeated during his time at Starbucks in the early 2000s: “How do you get big but stay small?”
Voodoo is answering that question by being highly selective about where it goes and avoiding market oversaturation.
“We’re not going to be on every street corner,” Schultz says. “It’s not who we are. Nor is it who we want to be. We’re very selective about where we go and the types of stores we build, and we’re very focused on being a local destination for each community.”
Shipley Do-Nuts is looking to increase its brand presence and market penetration on the heels of a years-long hot streak. The Houston-born doughnut chain’s top 50 percent AUVs stand at $1.2 million, and senior VP of franchise development Keith Sizemore says stores in new markets outside of its home state of Texas are consistently outperforming expectations.
There are a few internal factors driving that momentum. The company recently revamped its playbook for entering new markets, reducing total investment costs for franchisees by shifting its focus to smaller in-line and end-cap locations. It made some changes on the marketing front, upping the required spend for new store openings. It also upgraded its tech stack with a new POS system and tools to help operators with everything from food costs and inventory to scheduling. More improvements are planned for the coming years.
“The baker is a critical position, and we want to make it easier to execute that in-store, but we don’t want to go fully automated and end up with a million-dollar equipment package,” Sizemore says. “What’s going to fuel our growth is keeping those costs down and keeping the margins high.”
On the menu front, Shipley is leaning deeper into the breakfast space. It added egg as a protein to its kolache platform this summer, featuring savory pastries filled with meat, cheese, jalapenos, and other savory options.
“We also recognize the success of sweet treats around us,” Sizemore says. “We think there are some things we can do in the future to compete in that space a little more.”
Shipley has over 350 locations in 12 states and is on pace to add at least 150 units this year, including in new parts of the country like North Carolina and Virginia. Sizemore says the brand awareness it has built up over nearly 90 years will help drive success as it continues entering previously uncharted territory.
In a category with strong visual appeal and social media engagement, brands like Pinkbox Doughnuts can create widespread demand quickly, even without long histories. Founded a little over a decade ago in Las Vegas, Pinkbox now operates about a dozen locations in the metro area and a few in other Nevada markets. It’s known for its flashy branding and store design, featuring giant donut sculptures and cases of creatively named donuts with unique flavors.
The flashy branding and decadent offerings have translated into a growing cult following among tourists and locals alike.
“The business is really bifurcated,” says CMO Holly Wagstaff. “It is a destination where people come to Vegas and experience us that way, but we’re also in the suburbs serving families and neighborhoods, so we’re very much a community organization. I think that picks up and transfers beautifully to leaving this market because people have heard of us and experienced us as a destination. When we do go into new markets, it’s already seeded.”
Pinkbox made its first out-of-state move two years ago to St. George, Utah. Now, it is gearing up to open three locations in Salt Lake City and exploring further expansion in the state.
“The real pivot for the business has been building our corporate foundation to grow fast, and then tackling it market by market, with Salt Lake City being our next focus,” Wagstaff says.
Long term, the brand wants to grow its footprint throughout the U.S. and eventually expand internationally. Much like Voodoo, that means maintaining the uniqueness and attention to detail that helped put it on the map in the first place.
“You’re not going to see a doughnut that is lopsided or that has toppings that don’t look right,” Wagstaff says. “We are truly maniacal about making sure that the product is perfect, more so than any brand I’ve ever experienced. And if you look at brands that we all think of as being industry leaders, they all have one thing in common: They don’t deviate from the core and the heart of who they are.”
