Donut Shop Business Plan Template
If you want to start a Donut Shop business or expand your current Donut Shop business, you need a business plan.
The following Donut Shop business plan template gives you the key elements to include in a winning Donut Shop business plan.
Donut Shop Business Plan Example
I. Executive Summary
Business Overview
[Company Name] is a new, unique, local donut establishment that will serve freshly made specialized donuts to the community of [company location]. It is owned by [Founder’s Name], an award-winning pastry chef that has perfected his donut recipes over the years and has developed a delicious menu of homemade donuts to be served daily and also offer seasonal/holiday flavors throughout the year. [Company Name] will serve the residents of [company location] who work, attend school, or live in the area.
Products Served
[Company Name] will sell a variety of donuts all expertly crafted in unique flavors. All products will be made using only fresh and all-natural ingredients and sugar. Because each donut is made fresh every day, it will not include any chemicals or preservatives.
[Company Name] will also offer soda, water, and coffee beverages.
Customer Focus
[Company Name] will serve the community of [company location]. The community is in a diverse, highly populous location where there is a nearby university, local schools, office parks, and neighborhoods within a five-mile radius.
- 93,606 residents
- Average income of $65,000
- 74.9% married
- 23 schools to include elementary, middle, and high schools
- Median age: 36 years
In addition to the university, family, office, and school population, there are also a large number of church organizations, blue collar industries, and community non-profit organizations.
Management Team
[Company Name] will be solely owned and operated by [Founder’s Name]. He has been working at five-star restaurant establishments as a pastry chef for over ten years. He has won multitudes of awards, been featured in culinary publications, and has been a widely sought pastry chef all over the country. [Founder’s Name] has perfected his donut recipes and is ready to come back to his hometown of [company location] to proudly serve the local community.
[Founder’s Name] will employ a staff of part-time employees to assist him with the daily donut preparation, customer service, inventory, marketing, and cleanliness of the business.
Success Factors
[Company Name] has several advantages over its competition. Those advantages include:
- All-Natural and Homemade Ingredients: The company’s competitors are large franchises who use ingredients filled with trans fats to preserve freshness. [Company Name]’s donuts are made fresh, in-store, using all-natural ingredients and natural sugar.
- Location: [Company Name] will be located in a highly trafficked, prime retail location in a busy intersection of town.
- Uniqueness: [Company Name]’s donuts are made from a pastry chef who has perfected his recipe. Customers will flock to his donut shop repeatedly as the donuts are made with unique ingredients and are fluffier and moister than the competition.
- Pricing: [Company Name] will offer premium artisanal donuts at a price point that is competitive with other establishments and be moderately priced for freshly made donuts.
Financial Highlights
[Company Name] is seeking $100,000 in funding to launch its donut shop. The capital will be used for funding capital expenditures, staffing, marketing and advertising expenses, and working capital.
The breakout of the funding may be seen below:
- Store design/renovation: $50,000
- Capital expenditures: $20,000
- Marketing and advertising: $10,000
- Staffing costs: $10,000
- Working capital: $10,000
The following graph outlines the pro forma financial projections for [Company Name] over the next five years:
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $738,000 | $1,716,272 | $2,007,297 | $2,331,125 | $2,694,524 |
| Total Expenses | $639,595 | $1,021,515 | $1,110,127 | $1,190,308 | $1,273,715 |
| EBITDA | $98,405 | $694,757 | $897,169 | $1,140,817 | $1,420,809 |
| Depreciation | $16,560 | $16,560 | $16,560 | $16,560 | $16,560 |
| EBIT | $81,845 | $678,197 | $880,609 | $1,124,257 | $1,404,249 |
| Interest | $18,554 | $16,235 | $13,916 | $11,596 | $9,277 |
| Pre Tax Income | $63,291 | $661,962 | $866,694 | $1,112,661 | $1,394,972 |
| Income Tax Expense | $22,152 | $231,687 | $303,343 | $389,431 | $488,240 |
| Net Income | $41,139 | $430,276 | $563,351 | $723,230 | $906,732 |
II. Company Overview
Who is [Company Name]?
[Company Name], located at [insert location here] is a new, local donut shop that specializes in unique, gourmet, delicious donuts expertly crafted by a local artisanal pastry chef.
[Company Name] was founded by [Founder’s Name]. [Founder’s Name] has been perfecting his dessert craft with an emphasis on donuts for over ten years. [Founder’s Name] has been trained at the Culinary Institute of America and quickly became an acclaimed pastry chef working in some of the most prestigious restaurants in the United States. [Founder’s Name] has decided to venture out on his own and do what he loves to do most – making delicious donuts in his hometown community of [company location].
[Company location] is a diverse community that is made up of all income brackets, families, working class, business professionals, and college students. [Company Name] is located in an area that is within five miles of a local university, office park, schools, and churches. The customer demographic will be made up of all segments living, working, or attending school nearby.
[Company Name]’s History
[Founder’s Name] has been consulting with an attorney and CPA over the last few months to understand the business and financial obligations that go with owning their own business. His lawyer has advised [Founder’s Name] that [Company Name] should be incorporated as an S-Corporation on [date of incorporation].
[Founder’s Name] has identified a 2,000 square foot retail space already outfitted with a small kitchen and a drive-thru. The space was a former fast food chain that recently shut down. [Company Name] will make small design changes to fit their brand image and donut preparation requirements.
Since incorporation, the company has achieved the following milestones:
- Found retail location and signed Letter of Intent to lease it
- Decided on the company name, and developed the logo and website located at www…
- Developed the donut menu
- Determined the equipment and inventory requirements
- Began recruiting key employees that will be integral in the operation of the donut shop
[Company Name]’s Products
Below is [Company Name]’s initial menu. All donuts will be prepared fresh daily.
- Double Down Chocolate
- Strawberries n’ Cream
- Cookies n’ Cream
- Blueberries n’ Cream
- I Want S’More
- Lemon Lovers
- Honey Glazed
- Birthday Cake
- Chocolate Éclair
- Apple Fritter
Store Design
[Company Name] will design a functional donut shop in a 2,000 square foot space. The donut shop will include the following:
- Ordering counter
- Display area for available donuts
- 8 small tables to accommodate 15–20 customers
- Small kitchen with oven, prep area, small sink, and washing area
- ADA-compliant restrooms
[Company Name] will have 10 dedicated parking spots in the retail strip area where it will be located.
III. Industry Analysis
The Donut Shop industry is expected to continue to grow over the next five years, reaching over $13 billion. A number of factors are expected to help this industry growth including:
- Positive conditions in the overall economy place upward pressure on consumer spending.
- Industry players are expected to introduce more health-conscious choices, such as low-fat doughnuts or beverages that contain fruit. As new firms enter the Doughnut Stores industry, they will similarly need to provide healthy options to potential patrons.
- Per capita coffee consumption is projected to remain steady over the five-year period, at about 9.5 pounds. Doughnut stores have already caught on to the coffee trend, expanding their beverage options beyond basic coffee. This move is placing the industry in direct competition with major coffee chains.
- Other beverages offered by doughnut stores include an assortment of shakes, ready-to-drink beverages and fountain sodas. These offerings will continue expanding as stores attempt to attract more customers by strengthening their beverage product portfolios. Moreover, such low-cost, high-profit menu items offer a quick way for companies to increase revenue and fatten their bottom line.
- The majority of independent doughnut shop operators rely on personalized customer service to drive revenue. In fact, labor intensity is likely to rise for many operators that seek to increase their coffee offerings due to the time and skill required to make espresso coffee drinks.
IV. Customer Analysis
Demographic Profile of Target Market
[Company Name] will serve the residents of [company location] and its surrounding areas.
The community of [company location] is in a populous area with a large demographic target market. There are office buildings, schools, churches, and a local university within five miles. The community also houses multitudes of neighborhoods of all income brackets.
The precise demographics of the town in which our retail location resides is as follows:
| Springdale | Wyndham | |
|---|---|---|
| Total Population | 26,097 | 10,725 |
| Square Miles | 6.89 | 3.96 |
| Population Density | 3,789.20 | 2,710.80 |
| Population Male | 48.04% | 48.84% |
| Population Female | 51.96% | 51.16% |
| Target Population by Age Group | ||
| Age 18-24 | 3.68% | 3.52% |
| Age 25-34 | 5.22% | 4.50% |
| Age 35-44 | 13.80% | 13.91% |
| Age 45-54 | 18.09% | 18.22% |
| Target Population by Income | ||
| Income $50,000 to $74,999 | 11.16% | 6.00% |
| Income $75,000 to $99,999 | 10.91% | 4.41% |
| Income $100,000 to $124,999 | 9.07% | 6.40% |
| Income $125,000 to $149,999 | 9.95% | 8.02% |
| Income $150,000 to $199,999 | 12.20% | 11.11% |
| Income $200,000 and Over | 32.48% | 54.99% |
Customer Segmentation
We will primarily target the following four customer segments:
- University students: the nearby university will be a driver as lots of college-age students, administration, and faculty will flock to the donut shop for a tasty treat.
- Nearby schools: there are a handful of middle and high schools who have students wanting to stop by for a donut.
- Nearby office parks: the area also houses nearby office parks where there are hundreds of office workers Monday – Friday.
- Neighborhoods: there are diverse neighborhoods in the area where there are lots of families who are likely to purchase donuts on any given day.
V. Competitive Analysis
Direct & Indirect Competitors
Hank’s Donuts
Hank’s Donuts is an international donut and coffee retailer. The company has over 7,600 points of distribution in the United States and is one of the largest coffee and baked-goods chains in the world. The chain is a market leader in coffee, donut, bagel, muffin and breakfast sandwich categories. According to the company website, it sells more than one billion cups of coffee each year.
About 85% of Hank’s Donut’s points of distribution are traditional restaurants, consisting of stand-alone locations and those contained in gas and convenience locations. In addition, the company has full- and self-service kiosks in grocery stores, hospitals, airports, offices and other locations with small retail footprints.
Donut Depot
Founded in 1937, Donut Depot is a leading branded retailer and wholesaler of doughnuts. The company produces more than 20 varieties of doughnuts, along with a broad array of coffees and other beverages. Donut Depot generates revenue from company-owned stores, domestic franchise stores and international franchise stores. The company has 95 company stores, 159 domestic franchise stores and 574 international franchise stores in 21 countries.
As well as selling products through its retail outlets, the company also wholesales branded doughnuts and packaged sweets to a variety of retail customers, including convenience stores, grocery stores, and other food service establishments.
Competitive Advantage
[Company Name] has several advantages over its competition. Those advantages include:
- All-Natural and Homemade Ingredients: The company’s competitors are large franchises who use ingredients filled with trans fats to preserve freshness. [Company Name]’s donuts are made fresh, in-store, using all-natural ingredients and natural sugar.
- Location: [Company Name] will be located in a highly trafficked, prime retail location in a busy intersection of town.
- Uniqueness: [Company Name]’s donuts are made from a pastry chef who has perfected his recipe. Customers will flock to his donut shop repeatedly as the donuts are made with unique ingredients and are fluffier and moister than the competition.
- Pricing: [Company Name] will offer premium artisanal donuts at a price point that is competitive with other establishments and be moderately priced for freshly made donuts.
VI. Marketing Plan
The [Company Name] Brand
The [Company Name] brand will focus on the Company’s unique value proposition:
- Offering unique, freshly made donuts in a variety of delicious flavors.
- Located in a prime retail location in a highly trafficked part of town.
- Offering the highest quality donuts at competitive prices.
Promotions Strategy
[Company Name] will target all residents of [company location] within a 20-30 mile radius. The Company’s promotions strategy to reach the most clientele include:
Public Relations
[Company Name] will contact the local media to request a media blitz of the new, up-and-coming local and unique donut shop. They will be featured in local newspapers and publications as well as local television stations.
Social Media
[Company Name] will be active on social media and use targeted social media advertising to attract its most likely customers. The company will post frequently of upcoming specials, events, and seasonal featured flavors.
Website
[Company Name] will have an informative and attractive website that will feature professional photos of the shop, its donuts, store hours, address, and contact information. It will also use SEO to constantly stay at the top of search engines for anyone searching for donut shops near them.
Billboard
[Company Name] will have a billboard in an area of town at a busy intersection where thousands of cars and pedestrians pass daily. The billboard will have an eye-catching picture of its donuts that is sure to grab everyone’s attention.
Partnership with Local University
[Company Name] will partner with the local university to advertise the donut shop around the campus, in its sports programs, and have a large printed advertisement in the basketball arena. There will also be large printed ads around the campus student union.
Partnerships with Local Businesses
[Company Name] will partner with neighboring local businesses and request they hand out coupons for the company at their place of business in exchange for discounts for their employees.
Pre-Opening Events
[Company Name] will organize a pre-opening event designed for prospective customers, local merchants, and press contacts. The event will be fun and inviting in order to create awareness for the company. Attendees will be able to sample the different flavors of donuts.
Advertising
[Company Name] will invest in advertisements in featured local publications, such as community newspapers and newsletters.
Pricing Strategy
[Company Name]’s pricing will be moderate, so customers feel they receive great value when purchasing its products.
VII. Operations Plan
Functional Roles
[Company Name] will need to fulfill the following functional roles in order to execute their business plan and ensure the company’s success:
Administrative Functions
- General & administrative functions including legal, marketing, bookkeeping, tax, etc.
- Sourcing and storing ingredients
- Hiring and training staff
Small Kitchen Functions
- Daily donut preparation
- Maintain sink, counter, serving utensils, display area, and oven cleanliness at all times
- Ongoing donut menu creation and modification
Store/Retail Functions
- Order taking and fulfillment (for take-out and dine-in)
- Customer service
- Janitor personnel to maintain cleanliness at all times
Milestones
[Company Name] will achieve the following milestones in the following [] months:
- Secure prime 2,000 square foot space with drive-thru in retail location
- Develop website, logo, and company website
- Secure small business loan bank financing
- Implement advertising and public relations campaign
- Hire and train staff
- Finalize donut menu
- Plan and execute effective Pre-Grand Opening Event
- Grand Opening of [Company Name]
The following are a series of steps that lead to our vision of long-term success. [Company Name] expects to achieve the following milestones in the following [xyz] months:
| Date | Milestone |
|---|---|
| [Date 1] | Finalize lease agreement |
| [Date 2] | Design and build out [Company Name] |
| [Date 3] | Hire and train initial staff |
| [Date 4] | Kickoff of promotional campaign |
| [Date 5] | Launch [Company Name] |
| [Date 6] | Reach break-even |
VIII. Management Team
Management Team Members
[Company Name] is owned and operated by [Founder’s Name], a pastry chef who was trained at the Culinary Institute of America and has worked in some of the country’s most prestigious five-star restaurants. [Founder’s Name] has won many awards for his desserts and has been featured in three different culinary publications. Now that [Founder’s Name] has over ten years in the fast-paced fine dining restaurant industry, he wants to come back to his hometown and wake up every morning to do what he loves the most….making homemade donuts. He has been perfecting his donut recipes over the years and has won awards at pastry competitions and shows for his delectable donuts. [Founder’s Name]’s passion is to spend the rest of his professional pastry career back home and serving his world-famous donuts every day.
Hiring Plan
[Founder’s Name] will serve as the store manager. He will hire the following personnel in order to maintain an effective and profitable donut shop:
- Assistant store manager (will assist [Founder’s Name] with all operations functions and run the store when [Founder’s Name] is unable to be there)
- Donut Shop Servers (3-4 part-time employees who will handle customer service requests such as taking orders, serving, and cash register).
- Donut Preparers (2 part-time employees will assist [Founder’s Name] with donut preparation every morning so that all donuts offered are made and served fresh daily. They will also manage inventory of ingredients).
- Store Janitors (1-2 will clean the store part-time to ensure the cleanliness of the store at all times).
IX. Financial Plan
Revenue and Cost Drivers
The revenues for [Company Name] will come from the sales of the homemade donuts that will be offered to its customers.
The company will have dine-in and take-out options for its customers.
The major costs for the company will be sourcing the ingredients and production of the donuts. Other cost drivers will be the salaries of the staff, company overhead, and advertising costs.
Capital Requirements and Use of Funds
[Company Name] is seeking $100,000 in funding to launch its donut shop. The capital will be used for funding capital expenditures, staffing, marketing and advertising expenses, and working capital.
The breakout of the funding may be seen below:
- Store design/renovation: $50,000
- Capital expenditures: $20,000
- Marketing and advertising: $10,000
- Staffing costs: $10,000
- Working capital: $10,000
Key Assumptions
The following table reflects the key revenue and cost assumptions made in the financial model:
| Number of customers per day | Per location |
|---|---|
| FY 1 | 100 |
| FY 2 | 105 |
| FY 3 | 110 |
| FY 4 | 116 |
| FY 5 | 122 |
| Average order price | $7.00 |
| Annual increase in order price | 5.00% |
| Annual Lease (per location) | $60,000 |
| Yearly Lease Increase % | 2.50% |
5 Year Annual Income Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| Revenues | ||||||
| Product/Service A | $151,200 | $333,396 | $367,569 | $405,245 | $446,783 | |
| Product/Service B | $100,800 | $222,264 | $245,046 | $270,163 | $297,855 | |
| Total Revenues | $252,000 | $555,660 | $612,615 | $675,408 | $744,638 | |
| Expenses & Costs | ||||||
| Cost of goods sold | $57,960 | $122,245 | $122,523 | $128,328 | $134,035 | |
| Lease | $60,000 | $61,500 | $63,038 | $64,613 | $66,229 | |
| Marketing | $20,000 | $25,000 | $25,000 | $25,000 | $25,000 | |
| Salaries | $133,890 | $204,030 | $224,943 | $236,190 | $248,000 | |
| Other Expenses | $3,500 | $4,000 | $4,500 | $5,000 | $5,500 | |
| Total Expenses & Costs | $271,850 | $412,775 | $435,504 | $454,131 | $473,263 | |
| EBITDA | ($19,850) | $142,885 | $177,112 | $221,277 | $271,374 | |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 | |
| EBIT | ($56,810) | $105,925 | $140,152 | $184,317 | $234,414 | |
| Interest | $23,621 | $20,668 | $17,716 | $14,763 | $11,810 | |
| PRE-TAX INCOME | ($80,431) | $85,257 | $122,436 | $169,554 | $222,604 | |
| Net Operating Loss | ($80,431) | ($80,431) | $0 | $0 | $0 | |
| Income Tax Expense | $0 | $1,689 | $42,853 | $59,344 | $77,911 | |
| NET INCOME | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 | |
| Net Profit Margin (%) | - | 15.00% | 13.00% | 16.30% | 19.40% |
5 Year Annual Balance Sheet
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| ASSETS | ||||||
| Cash | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 | |
| Accounts receivable | $0 | $0 | $0 | $0 | $0 | |
| Inventory | $21,000 | $23,153 | $25,526 | $28,142 | $31,027 | |
| Total Current Assets | $37,710 | $113,340 | $184,482 | $286,712 | $423,416 | |
| Fixed assets | $246,450 | $246,450 | $246,450 | $246,450 | $246,450 | |
| Depreciation | $36,960 | $73,920 | $110,880 | $147,840 | $184,800 | |
| Net fixed assets | $209,490 | $172,530 | $135,570 | $98,610 | $61,650 | |
| TOTAL ASSETS | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 | |
| LIABILITIES & EQUITY | ||||||
| Debt | $317,971 | $272,546 | $227,122 | $181,698 | $136,273 | |
| Accounts payable | $9,660 | $10,187 | $10,210 | $10,694 | $11,170 | |
| Total Liabilities | $327,631 | $282,733 | $237,332 | $192,391 | $147,443 | |
| Share Capital | $0 | $0 | $0 | $0 | $0 | |
| Retained earnings | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| Total Equity | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| TOTAL LIABILITIES & EQUITY | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 |
5 Year Annual Cash Flow Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| CASH FLOW FROM OPERATIONS | |||||
| Net Income (Loss) | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 |
| Change in working capital | ($11,340) | ($1,625) | ($2,350) | ($2,133) | ($2,409) |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 |
| Net Cash Flow from Operations | ($54,811) | $118,902 | $114,193 | $145,037 | $179,244 |
| CASH FLOW FROM INVESTMENTS | |||||
| Investment | ($246,450) | $0 | $0 | $0 | $0 |
| Net Cash Flow from Investments | ($246,450) | $0 | $0 | $0 | $0 |
| CASH FLOW FROM FINANCING | |||||
| Cash from equity | $0 | $0 | $0 | $0 | $0 |
| Cash from debt | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| Net Cash Flow from Financing | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| SUMMARY | |||||
| Net Cash Flow | $16,710 | $73,478 | $68,769 | $99,613 | $133,819 |
| Cash at Beginning of Period | $0 | $16,710 | $90,188 | $158,957 | $258,570 |
| Cash at End of Period | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 |
