Source: Franchise Times
Debuting a brand in new markets can be tricky. Selling donuts makes it a bit easier.
Houston-based Shipley Do-Nuts has 370 units in 12 states, predominantly in the South and Southeast regions. The donut concept has its sights set on expanding out east.
The company is making its debut in two states this year, opening its first North Carolina location this week and one in Virginia by the end of April.
Furthest from the brand’s home city is franchisee Mid-Atlantic Do-Nuts, which operates three units in Maryland.
Co-founded by cousins Brian Lemek and John Egan, Mid-Atlantic Do-Nuts signed a 25-unit deal in 2022 to open stores throughout Maryland and Virginia. Development followed in quick succession since opening their first unit in early 2023; the company opened its third location shortly after a second opening in November.
“One of the unique things about Shipley Do-Nuts is that we’ve got brand fans all over the country … so I would say Maryland is kind of a case study to prove that,” said Keith Sizemore, senior vice president of franchise development. “You couldn’t get much further away from home base.”
The company expects to open 48 locations nationwide in 2025, doubling the 24-unit increase of last year.
“We want to enter a market with locations and a plan to do more because that helps with brand awareness,” Sizemore said. “It helps with marketing efforts and helps folks be more successful.”
Shipley’s average unit volume for franchises is $902,517, according to its franchise disclosure document, with an overall range of $151,935 to $2.7 million. Company units reported an AUV of $1.45 million. Sizemore said the Maryland locations have found success in a short time period, reporting higher AUVs than units in the company home base.
These statistics show the brand’s ability to adapt to new markets, he added, building excitement among Marylanders craving Shipley’s hot glazed donuts and meat-and-cheese-filled kolaches.
High-level experience from Lemek and Egan affirms the company’s efforts to seek out multi-unit franchisees with an established franchising background. Starting with a base level of trust makes it easier to build the franchisor-franchisee relationship, Sizemore noted.
Localized marketing efforts have been “absolutely critical” in growing brand presence, as Sizemore believes “there’s no really better way to market our product than to get the product in customers’ mouths.” Mid-Atlantic’s Clinton, Maryland, location gave away 10,000 donuts to schools, law enforcement and charities for a month to celebrate the newest opening.
“It’s just the most efficient and best way to market and build relationships with the folks in the community so they know who we are and know we’re always looking for ways we can help,” Sizemore said.
Shipley’s team helps franchisees come up with community-based marketing plans for their respective locations. The company has 10 events lined up in targeted markets during the first half of this year.
Beyond the Mid-Atlantic region, Shipley’s southeastern expansion plans continue.
Sizemore advised others to know their brand’s core values and mission when expanding outside existing markets, posing questions every franchisor should ask: Why is my brand successful where it is today? Where are the same similar, core customers in other markets? How can I be strategic about growth?
He finds it equally important for a brand to have a strong franchising model lending itself to franchisees’ success.
“At the end of the day,” he said, “if your franchisees aren’t making money, there’s not much hope that you’re going to be able to create or sustain much growth.”
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