Do you want to open a donut shop, but you don’t know how much for setting up you’ll need? This article critically looks into how much it will cost to open a donut shop. Read on to know what you are getting into.
Are Donut Shops Good Investment?
Yes, donut shops are a good form of investment. Unlike what you have in the case of restaurants, where owners find it difficult to diversify the type of products being sold, the case is different for donut shops. With a donut shop, you have the opportunity to sell different products.
For instance, a typical donut shop can decide to sell coffee, espresso, and other baked products to increase sales and profit. Whether you are running a personal business or you decide to buy a franchise from an established donut brand, you are still on the right investment path, and you’ll benefit from it in the long run.
When you consider the amount you’ll be making each year, say an average of $120,000 to $150,000, you’ll know that the opening cost of your donut shop will be worth it after running the business for a few years.
Cost of Opening A Donut Shop
The cost of opening a donut shop depends on several things. This depends on whether you’ll be opening a new restaurant, renting a space, constructing your building, or opting for a franchise. Depending on the franchise you are opting for, you may need about $250,000. But if you’re going for a personal, small donut shop, about $80,000 should be okay. However, you have to consider extra expenses when calculating the total cost.
How Do Donut Shops Make Money?
The primary means by which donut shops make their money is via direct charging of customers for sales of products which can either be donuts or coffees. Typically, donuts cost between 80 cents to $1.25. You should note that donut prices depend on the size, type, and quality of donuts. At times, the quality of donuts can impact sales.
Checklist for Starting A Donut Shop
Location is important irrespective of whether you want to open a brick or mortar store, food truck or pop-up location.
When starting, you should research your location to determine the type of competitors around. Setting up shop in a populated community is key because you have a wider target market.
You will need around 1000 Square feet to run a thriving donut shop. Thus, using a smaller building in a prime location may be perfect for that intimate personal touch you need.
Pre Opening Cost, Staffing, and Management
When planning to open, you should consider the pre-opening cost. Like the cost of training new staff, creating marketing plans, and obtaining permits. Depending on the size of staff and if you will be opening a franchise or not, your pre-opening cost can be between $20,000 and $120,000
Also, for your staffing, you should consider hiring an experienced pastry chef or manager. This will aid the smooth running of the business and the production of quality donuts. You should budget around 30% of your revenue for the labor cost and staffing.
Depending on the type of production method, the amount you will be spending on equipment can vary. Typically, you will need equipment such as funnel cake and donut fryers, fryer oil filtration machines, donut depositors, donut glazing and finishing tables, espresso machines, coffee makers, and bakery convection ovens. On average, you will need about $15,000 for your equipment. There might be a huge gap in this price depending on your location.
Due to technological advancement, you should also consider a point of sale(POS) machine when purchasing your equipment. This is because today’s customers love to have a digital dining experience. POS platforms make placing an order easy and seamless, and your customers don’t have to worry about “cutting the line”.
Marketing, Branding, and Promotion
Typically, marketing and branding are always part of the franchise fee. But if you are opening a personal business, you may need to cater for this on your own. Branding and marketing may include; email marketing, digital advertising, public relations, social media marketing, giveaways, local advertising, contests, and SEO. Different marketing services come at varying prices, so you can prioritize, say, social media marketing as you start and add more to your marketing budget as you grow. This way, you can try out SEO and other elaborate marketing strategies.
Permits and Organizational Cost
Operating a restaurant business will require you to obtain food safety and handling permits and other standard licenses for operating a business. The restaurant license and permit you’ll need to obtain include; a business license, certificate of occupancy, food service license, sign permit, and building health permit. You should consult a lawyer or restaurant consultant if you need help obtaining any of the earlier permits.
Since you now know what it will cost you to open a donut shop, all you have to do is get the needed things, particularly funds, and set the ball rolling.