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- 🤘🤘 The Competitive Field of Donuts - yup you heard that right
🤘🤘 The Competitive Field of Donuts - yup you heard that right
↳ Krispy Kreme vs Dunkin' Donuts vs Alternative vs Artisanal Donuts
Dejan Gajsek
May 16, 2024
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Howdy!
In this week’s newsletter, we’re talking donuts.
Dejan - @dgajsek
The Competitive Market of Donuts
We all freaking love donuts, don’t we?
One bite of the sugary treat tickles your amygdala in a naughty way and is as pleasurable as a perfect pancake flip (we’re going to keep it carb-heavy on this one).
It’s hard to resist having less than one.
In the US, there’s an increased demand for these funny-shaped glucose vehicles and it’s paralleled with increased weight and obesity levels.
But I’m sure it’s just a coincidence right?
Donuts (or doughnuts?) are:
Delicious!
Easy to gobble
Come in endless varieties (check these puppies)
Cheap to make - affordable to buy
You could rotate them around your middle finger prior to consumption (USP?)
Do you say donuts or doughnuts? 🍩 |
Product Offering and ICPs
An average American gulps down an average of 31 donuts per year. That’s 0.6 donuts per week. I haven’t had any for months meaning someone out there is eating my share.
Just like almost any business, even donuts have their own categories and ideal customer personas.
Need something fast from known brands - mass-produced Krispy Kreme, Dunkin Donuts
Focused on better flavor and supporting local business - Alternative local shops like Mikiko Mochi Donuts
Artisanal offering with experimental flavors and perfectionism - boutique bakeries and dedicated Donut artists like Lola’s Doughnuts
Each has its own place in the sub-niche of pastry delights each catering to a different audience.
Aspect | Krispy Kreme | Dunkin' Donuts | Mikiko Mochi Donuts | Lola's Donuts |
|---|---|---|---|---|
Product Strategy | Automated, consistent donuts | Diversified into beverages and food | Unique mochi donuts, baked | Artisanal, gourmet ingredients |
Production Process | Automated, high volume | Hub-and-spoke, efficient | Streamlined, small-scale, efficient | Labor-intensive, handcrafted |
Brand Positioning | Mass-market appeal | All-day drink destination | Niche market, premium | Upscale, artisanal |
Customer Experience | Entertainment value, open kitchens | Convenient, varied menu | Personal, unique flavors | High-quality, laborious process |
Market Strategy | Rapid expansion, global | Steady growth, high-margin products | Local focus, innovative flavors | Local focus, high-quality |
Challenges | Demand saturation, novelty wore off | Balancing product focus | Maintaining uniqueness, competition | High costs, low sales, inefficiencies |
Strengths | Brand recognition, automation | Diverse offerings, efficient | Unique product, efficient operations | High-quality, artisanal approach |
Weaknesses | Quality vs. volume, novelty | Donuts secondary, brand dilution | Competition, scalability | High operational costs, low footfall |
Let’s look at the main players.
Krispy Kreme
A massive global franchise that works with McDonald’s level automation. Fast consistent production and branded product.
Their unique selling feature is a transparent window where customers look at how the glucose daddies are being made in front of their eyes. I keep thinking that those donuts represent clogged arteries.
KK has had an amazing model but has expanded and saturated fast. They moved the production to a centralized hub-and-spoke model to streamline production.
Market demand attracted competitors which threatened their market share.
Dunkin’ Donut
What goes best with donuts? Laughing with sugar around your lips.
But the second best is… coffee!
Dunkin’ started as a regional shop but started offering beverages as well. The introduction of coffee and drinks paid off. Drinks are high-margin items and DD accounts 60% of sales of drinks.
Mikiko Mochi Donuts: An Alternative to the Mass Product
Mikiko Mochi Donuts in Portland gives a dedicated donut-muncher something else - variety. MMD combines Japanese-American fusion flavors with efficient production.
Instead of frying them in oil, their mochi donuts are baked, reducing perishability and allowing better inventory management. Dunkin and KK have to throw their donuts away every single day.
Their streamlined operations and unique flavors have made them a local favorite, with high-profit margins despite a small operation.
They are different and a combination of affordable ingredients allows them to pull decent revenue despite having to pay bigger fixed costs for labor.
Margins are 😌👌
Artisanal Doughnuts: High-Effort, High Quality
What if we look for Balenciaga of donuts?
LA’s, Peter's Lola’s Donuts focuses on high-quality, artisanal donuts with gourmet ingredients.
Looking at those bad bois makes my pancreas do a somersault.
Customers will pay $5 or more for these pieces of diabetes pixie powder. But a high price doesn’t guarantee high margins. The owner of Lola’s, Peter struggles with high costs, low sales, and inefficient operations.
His experience highlights the difficulty of balancing craftsmanship with business acumen.
Takeaway
All these four businesses are viable and successful and come with a unique set of challenges. It’s up to you in which field you want to play.
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Competitive Job Opportunities This Week
Who: Ripple
Type: Director of Competitive Intelligence
Salary: New York $143,040—$178,800 USD
Deets: https://ripple.com/careers/all-jobs/job/5550674/
#2 Gong.io
Type: Director of Competitive Intelligence
Salary: $153,000 - $227,000 USD
Deets: https://www.gong.io/careers/4301424006/
#3 TalkDesk
Type: Director, Competitive Intelligence & Strategy
Salary: they didn’t say ¯\_(ツ)_/¯
Deets: https://careers.talkdesk.com/us/en/job/TALKUS5672419EXTERNALENUS/Director-Competitive-Intelligence-Strategy
PS: If you’d like to receive job opportunities in CI/CE industry faster, I’m sharing them in Andy’s Healthy Competition Slack channel under Open-Jobs as soon as I spot them.
Have a great week!
Dejan
If this made your day a tiny bit - would you please share it with another human being?
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This lil’ hitter etched into my brain, not far away from JRE’s Mothership.
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