Shipley Do-Nuts is a popular donut shop that has been around since 1936, before WWII and most modern food brands. After the Great Depression, Lawrence Shipley developed a recipe for his Do-Nuts that first started out as wholesale products. Shortly after, due to growing popularity, the distinct donut became available in retail stores.

How much will it cost to open a Shipley’s Do-Nuts? You’ll need to invest between $655,000 – $1,400,000 for a location. You’ll also need liquid capital of $225,000 and a net-worth of $750,000. While it’s a lot of money to open any franchise, the startup costs are lower with this brand than similar concepts like Krispy Kreme that require a net worth of $2 million to even be considered. Take our franchise quiz to find your ideal business opportunity. 

But low startup cost isn’t the only thing to consider when looking at a franchise opportunity. And there’s no debate other brands like Dunkin’ have advantages in wider brand recognition. In this franchise review, I analyze what I view as the advantages and disadvantages of this long-standing franchise opportunity below.

Financial Requirements and Fees

To help you get an idea of what you might need regarding financials to open your own franchise, we have included some base requirements. Liquid capital is the amount you are ready to use or able to access quickly if needed. Net worth refers to the total amount of all your assets combined.

Total Investment is the amount you will likely need to use over time to get the franchise up and running. Finally, the franchise fee is the amount you need to pay Shipley’s in order to operate a store of your own. Note that these are merely base amounts, and the total amount you will need to spend may be slightly more or less than these estimations.

Along with these fees, there are leasing fees, equipment, marketing and a wide range of other fees that depend on the type of store or location of the store. Another fee that is ongoing is the royalty fee, which refers to the amount that the franchisee will pay the company that is usually calculated by a percentage of the gross sales of the store.

For Shipley’s franchises, the company requests a royalty of 5%, which is on the middle of the road compared to other donut franchises. Krispy Kreme has a royalty fee of 4.5% and Dunkin Donuts has a royalty fee of 5.9% for context.

Average Sales / Revenue per Year

Shipley’s Do-Nuts’ revenue in 2022 was $272,827,177. While this may seem like a relatively low number compared to other fast-food restaurants or coffee shops, the concept is a smaller franchise than most and operates with less employees, meaning simpler operations and better profitability.

Shipley’s Do-Nuts employees 9 people on average per store, which is less than most fast-food restaurants. While Shipley’s has been around for decades, their gourmet Do-nuts are gaining popularity and have room for growth. 

Shipley’s Do-Nuts Franchise Facts

The classic donut spot prides itself on serving hot do-nuts that keep customers coming back. The stores offer over 60 different varieties of do-nuts, but the most popular remains the good ‘ol classic glazed Do-Nut. While there are tons of donut shops popping up on corners all around the world and bigger donut and coffee shop chains becoming more prevalent, Shipley Do-Nuts still has a growing cult of loyal customers that come not only for the fresh gourmet donuts, but the excellent customer service and nostalgia. 

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Today, Shipley Do-Nuts has over 337 different locations around the country and provides fresh hot Do-Nuts and kolaches for everyone to enjoy. If you have a sweet tooth and are looking to own your very own business, a Shipley’s franchise may be what you are looking for.

While a smaller chain that many other fast-food or even donut or coffee shop chains, the nostalgia and fresh Do-Nuts keeps Shipley’s as top competitor in the business. To help you decide if a Shipley’s franchise is for you, I took a deeper dive and evaluate everything I think you need to know.

How Much Do Shipley’s Do-Nuts Make in Profit?

It is not known how much profit Shipley’s Do-Nuts receive but their AUV is $1.44 million. An unofficial estimate is also at $100,000 a year. Note that income range could be higher or lower depending on the location of the store and how well its managed.

Also it is important to note is Shipley’s is a growing franchise and is beginning to be noticed by many celebrities including Lizzo and Kylie Jenner. This is a brand with viral potential. 

Advantages of a Shipley’s Do-Nuts Franchise

Like most franchises, owning a Shipley’s Do-Nuts has its advantages and its challenges. To help you make a more informed decision, I outline the pros right here. Some of the main advantages include:

Menu Offerings

While most donut chains have resorted to automated production with machines churning out hundreds of donuts at a time, Shipley’s has a slightly different system that people love. The stores offer over 60 different kinds of Do-Nuts, cinnamon rolls, kolaches, and other pastries. Along with their most popular glazed donuts that customers crave, the donut shop offers kolaches, which are a popular Czech pastry featuring light, sweet yeast dough filler with fruity fillings.

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Although not as popular, these offerings help Shipley’s stand out from other donut shop competitors. The chain is able to offer hot donuts and pastries of every kind through its innovative balanced approach between traditional and automated production. The donut shop prides itself of its simply yet gourmet Do-Nut base that is shared between many of its Do-Nuts.

Through this method, Shipley’s is able to bring a higher quality without sacrificing the variety. This availability of a wide variety of pastries and donuts is enjoyable by people of all ages and tastes. While most coffee shops and donut stores offer classic options, the addition of kolaches and other pastries helps to set Shipleys apart from the rest. 

Smaller Investment

Compared to many other fast-food restaurants or donut chains, the initial investment is a lower amount due to the brand’s simplistic mindset. The company is committed to minimal costs, which helps franchisees keep a lower initial investment cost.

While it does vary depending on the size of the shop, price of land in the area, location, and other costs, the company keeps relatively low initial costs. There are many factors that affect the price including addition of proper equipment, fixture costs, leasehold improvements, and more, however, the other entry requirements are kept at a minimum. Especially for a company of this size that only operates within the U.S. the franchise fee is kept relatively low. 

Locations

It can be limiting to some due to the fact that there are no Shipley’s international locations and they are still a relatively small chain, however, the company takes great care in the location of its stores. Location is crucial for a store’s success because the fact is that some areas will bring in more foot traffic, and may be away from other competitors.

Related Reading: What’s the Total Cost (w/ Fee’s) to Open a Krispy Kreme?

Shipley Do-Nuts offers flexible locations that fit into different areas such as shopping centers, malls, and the traditional free-standing locations. This helps to provide franchisees with more options and to find the best possible location for their store. Shipley Do-Nuts has a space requirement anywhere from 1800 sq. feet to up to 2200 sq. feet, which allows for flexible decisions regarding location. The differing options allow franchisees to be located in the best areas including high profile trade areas where business will likely be better.

Training and Support

Especially for a first time franchise owner, adequate training and support can ensure the success of a location. Thankfully, Shipley Do-Nuts provides a wide range of support for its franchise owners that not only provide help in the initial process, but throughout ownership as well. Some of the main forms of support that the company provides include:

• Location Selection: Since this is a crucial aspect in ensuring the success of the ship, this can be a daunting task for many franchise owners. Shipley Do-nuts uses an established and thought-out method that uses updated demographic data in the area. This helps to identify major trade areas to help the franchisee choose the best location.
• Design: Although some may not focus on this aspect, many customers enjoy convenience, which the store’s design can bring. Shipley Do-Nuts provides trained in-house staff that help to design the layout or assist in designing the layout of the store. This helps to maximize cost efficiency and store operations that many owners would be knowledgeable about.
• Comprehensive Training Program: For those that know little about owning a franchise or about donut stores in general, the comprehensive training program covers everything you need to know. The program features over 120 hours of training that includes everything you need to know about daily operations, sales, service, production, employee staffing, inventory control, bookkeeping, marketing, scheduling, and even training in-stores. This in-depth program can be great for first time owners, and more experienced owners, as it helps the business run smoothly and efficiently. 
• Ongoing Support: While many franchises do not offer ongoing support, it is crucial for the success of the store. The company uses its knowledge on marketing to help its franchisee use their funds to help improve and grow the store’s sales. Marketing is something that can adapt and change over time, so the company has trained experts to help the specific needs of the particular location. This can include events such as catering events, community outreach and production.

New Ownership

Shipley is now under new ownership as of 2021, under the company Peak Rock Capital that also owns Halo Foods, Turkey Hill and Louisiana Fish Fry. While this new ownership originally caused some unrest, its new ownership seeks to expand the business and seek relationships with new partners that take interest in the concept. Since Shipley’s was originally a family business this new ownership might actually be beneficial to franchisees with the ambition to expand. 

Main Advantages:

• Do-Nuts Menu
• Smaller investment fees
• Flexible locations
• Training and support for franchisees
• New ownership always creates uncertainty.

Challenges of Shipley’s Do-Nuts

As with any franchise, there are challenges that you’ll face as a franchisee. The important thing is knowing about these challenges before getting involved. To help you decide if it is right for you, I explore the main challenges I see in acquiring ownership in a Shipley’s franchise.

Third Party Financing

The company does not offer direct financing, which can make it difficult for those that do not have the funds required. The company does offer third party financing, however it is not guaranteed that you will be offered assistance. If you do, the third-party finance assistance can help with funds for equipment or for payroll. 

Absentee Ownership

Another challenge that you may face is that the company does not allow absentee ownership of the franchise. Some, especially those that own multiple franchises, may want to take a backseat in day-to-day operations, however the company wants wonders to take a more proactive approach and be a part of the store’s day-to-day operations.

No International Stores

While many other fast-food restaurants or donut chains have expanded internationally, Shipley Do-Nuts has remained rooted in the United States. While the company has its following here, having international stores can help to grow the company and make it more well-known and popular. This can help with marketing as well as increase business. 

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Competition

While Shipley Do-Nuts has measures in place to reduce competition within its own stores, there is heavy competition from other donut chains or coffee shops. Shipley Do-Nuts has protections which ensure that the Shipley’s Do-Nuts stores are spread out in order to reduce competition.  This however, does not make sure that there isn’t a Dunkin Donuts or Krispy Kreme down the street.

Main Challenges:

• No direct finance support
• No absentee ownership
• No international stores, meaning less expansion opportunities. 
• Heavy competition

Is the Shipley’s Donuts Franchise Right For You?

If you have the necessary funds and value the nostalgic donut store that you may have had as a child, a Shipley Do-Nuts Franchise could be right for you.

While it has the brand has been franchising for more than 3 decades already, the business is still growing and new ownership could serve as a catalyst for the brand. Although Shipley Do-Nuts may seem like just another donut shop, its gourmet recipe and family-vibe help to keep Shipley Do-Nuts a contender. They’re also planning to develop 200 new units in the next five years. Click here to learn more about this opportunity at the official franchise website.