[Business] Couple of students looking to start up a donut shop!

Desert_Eagle25

My best friend and I are currently undergrads at UC in CA and are seriously considering opening a donut shop in the local neighborhood right by campus. New restaurants are opening and closing pretty regularly around here, so having a location won't be an issue for now.

The business model looks pretty good, and our customer base looks even better. There are two other places in the area that offer donuts, but they certainly aren't donut shops. In this respect, there won't be much competition for us, as we're looking to offer much more. We'll cater specifically to students, offering a variety of diferent donuts and uniquely flavored frostings for 0.99c a piece, 1.99 specialty donuts, homebrewed coffee, a variety of take-out box sizes and combos (all cleverly named and priced), and giant gourmet donuts for 3.99 and up. We also plan to have a menu of custom donuts, where students offer suggestions throughout the month in a suggestion box, and at the end of the month we pick our favorites and offer them for the following month.

But right now we really don't have any idea where to start.

Does anyone here have any experience starting a business, let alone one in the food industry? We'd love some advice on how to jump into this - advice on getting the correct permits, insurance, licensing, and finding the right whole sale distributors for ingredients and machinery/supplies would be fantastic. Or at the very least, a starting place for us to do our research.

VisionOfClarity

It takes a butt ton of capital to get something like this off the ground. I'd talk to the SBA for advice about loans. You're going to need a business plan before anyone gives you money.

scrivenerjones

how much startup capital do you have?

scrivenerjones

wow VoC sniped the "how much money you got" question a second before I hit post. you're dead to me.

Deebaser

Also keep in mind that getting a loan of any magnitude will be pretty rough without some sort of collateral, especially if you're all undergrads with limited credit histories. Do you have any parents or relatives that will help you chase your dream?

scrivenerjones

leaving aside the huge fixed costs of getting something like this off the ground, the usual rule of thumb for a new restaurant is "assume you won't make any money for the first three years." so if you can't front enough cash to cover that scenario, don't bother.

ceres

You also said that new restaurants are up and down all the time there, if you don't already it might be worth looking into why and seeing if the why could affect your stay, as well.

Also, college towns are awesome during the year, but awful during the summer. I know the way lots of people do it in my area is with things like lunch trucks that cater to whatever specific thing (hint, make sure you offer coffee) and park themselves along strategic roads on campus. During the year they're there 12 hours a day and during the summer they find construction sites and things so they can keep some money coming in through the summer months.

I know one of them actually got a restaurant started this way: everyone knew them already from their truck.

Slider

A new donut establishment opened up in my town. I checked it out one day. The prices were affordable and they offered a delicious bacon maple bar. I highly recommend putting bacon on some of your donuts.

Red Raevyn

Deliver. Deliver late at night. Students are impulsive, drink a lot, stay up late, and are often spending someone else's money - if they can order by phone, text or internet and not have to actually go somewhere or be remotely sober, they'll buy more.

I'm basing this off of the cookie delivery business that did well starting out of someone's townhouse at James Madison University. Doing something like that makes a lot more sense to me than the enormous risk of a storefront and full-business sized loan (if you can even get it).

http://www.campuscookie.com/about_people.html
(check out the press link for a bunch of articles about them).

Neaden

Slider wrote: »

A new donut establishment opened up in my town. I checked it out one day. The prices were affordable and they offered a delicious bacon maple bar. I highly recommend putting bacon on some of your donuts.

I originally read this as some sort of bar that served specialty maple syrup with bacon and am now disappointed that reality is less delicious then I thought.

So have either of you worked at a bakery before or have any experience making large amounts of donuts?

zilo

The very first specialized eBay store was for slightly used restaurant equipment. Depending on who you ask, between 60% and 90% of new restaurants fail within their first year. They aren't kidding when they say the best way to make a million dollars in the restaurant business is to start with two million

Have you considered perhaps making a donut truck, instead of a retail location? Food trucks are hot now, especially in LA.

Also... you're an undergrad? Are you planning on running a business while going to school? Because speaking from experience, running a small business is at least one and a half full-time jobs.

Improvolone

Start small not stupid, do not jump straight into store front territory if you don't have restaurant, bakery, and/or small business experience.

dispatch.o

Start with a Donut Van.

Fortunately donuts are easy to make. You fry the shit out of a batter/dough and then put sugar on them. You should be able to do a meal-truck or even cart for a tiny percentage of what a storefront would cost.

bowen

dispatch.o wrote: »

Start with a Donut Van.

Fortunately donuts are easy to make. You fry the shit out of a batter/dough and then put sugar on them. You should be able to do a meal-truck or even cart for a tiny percentage of what a storefront would cost.

This is a good idea.

How are you guys making donuts and selling donuts now?

Cauld

Talk to your local small business association. They can get you a free adviser who's a former or current business owner who can help you with everything you need. Write a business plan, the SBA can help you with that too.

The suggestions here to start with a truck sounds like a great idea to me, but you should write a business plan for both having a store front and also a truck and maybe a combination of them or other options. That will let you evaluate all your options.

Darkewolfe

Are you at all aware of the requirements that you'll have to meet to operate a bakery/food production facility? They are incredibly stringent in most places, and you might be surprised to find that you can't just pick a building and start going.

You also almost certainly won't be able to prepare food in your own homes.

NotYou

I also agree that starting with a donut truck would be a great way to start off and see if your business has legs. You can even move around locations to see what areas are the most profitable.

SniperGuy

Bacon donuts are a good idea, if only for the word of mouth of people going "Bacon donut?!" A place called "Julie's Darling Donuts" opened around here, and it has done pretty well I think. They also do "Facebook Specials" where if you follow them on facebook they'll tell you fancy specials and discounts they do each day. Makes me pay more attention to them at least.

Oh, and they deliver! To businesses and such, with a minimum order, but I'll sometimes get a dozen assorted for the office just for fun cause it's cheap and delicious.

Forbe!

Starting off as a street vendor may be a cheaper route. A nice vending cart can be purchased from between 500$-$2000 depending on how fancy you want to get.

Think about renting a church kitchen (or another NPO's kitchen) to do all the prep and cooking in. These types of kitchens typically have to be inspected by the government and will be an easier and cheaper route to go than buying or renting property. Go there every couple days to make a new batch, and package everything.

Street vending licenses vary from city to city. In my college town it was $200/year, and you needed to have a mobile cart (push or bicycle).

Deadfall

Red Raevyn wrote: »

Deliver. Deliver late at night. Students are impulsive, drink a lot, stay up late, and are often spending someone else's money - if they can order by phone, text or internet and not have to actually go somewhere or be remotely sober, they'll buy more.

I'm basing this off of the cookie delivery business that did well starting out of someone's townhouse at James Madison University. Doing something like that makes a lot more sense to me than the enormous risk of a storefront and full-business sized loan (if you can even get it).

http://www.campuscookie.com/about_people.html
(check out the press link for a bunch of articles about them).

This. Definately.

Hell, in college I would have probably kept you in business by myself if you offered delivered bakery goods.

zilo

A donut cart outside the bars on weekends would probably do well. Bonus if the bars are near the dorms.

streever

Do the cart. Wildly successful over night, guaranteed! Well, not really guaranteed, but a friend of mine started a grilled cheese truck here (student town) and it has been crazy successful, even in the summer. Whereas another guy I know started a grilled cheese restaurant at the mall (which has even more traffic) and it still isn't revenue positive.

If you don't have VC, you need to make a profit as soon as possible. That's why I recommend the cart/truck approach.

And yes, do deliveries at night, or setup the cart/truck in a popular area for drunk students.
(that is what the cheese truck guy is planning next)

CooterTKE

look up voodoo donuts as this place has a line out the door almost all the time. They are open late night or early morning depending on your life style and right in the middle of the bar district. I would steal their business plan.