Duck Donuts Franchise Review – Average, Median, High, and Low Gross Sales for Franchised Outlets (2020 FDD) | Franchise Chatter

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Duck Donuts Franchise

In this FDD Talk post, you’ll learn the following:

  • Section I – Background information on the Duck Donuts franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Duck Donuts franchise, based on Item 7 of the company’s 2020 FDD
  • Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Duck Donuts franchise, based on Items 5 and 6 of the company’s 2020 FDD
  • Section IV – Number of franchised and company-owned Duck Donuts outlets at the start of the year and the end of the year for 2017, 2018, and 2019, based on Item 20 of the company’s 2020 FDD
  • Section V – Presentation and analysis of Duck Donuts’ financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:
  • 2017, 2018, and 2019 average, median, highest, and lowest gross sales for the franchised Duck Donuts outlets that were operational for the full 12 months of the applicable calendar year
  • 2019 average gross sales for the 25 highest and the 25 lowest franchised Duck Donuts outlets that were operational for the full 12 months of calendar year 2019
  • 2019 average cost of goods sold and labor costs for the franchised Duck Donuts outlets that were operational for the full 12 months of calendar year 2019

Section I – Background Information

20 Things You Need to Know About the Duck Donuts Franchise

Launches Duck Donuts Rewards App

1.  In mid-February 2020, Duck Donuts launched Duck Donuts Rewards, a mobile point-based loyalty program powered by LevelUp. Available to download on the Apple App Store and Google Play, the app is designed to work seamlessly with Duck Donuts’ existing point-of-sale technology.

2.  As a Duck Donuts Rewards member, guests can order ahead in the app and skip the line, or scan the app in-store to pay. Consumers will earn five points for every dollar spent that will unlock sweet rewards as the status levels increase, including free donuts and coffee. As a signup perk, customers receive a free donut after their first purchase and on their birthday, in addition to other surprises throughout the year.

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3.  Russ DiGilio, founder and CEO of Duck Donuts, said, “We are thrilled to announce the official launch of Duck Donuts Rewards, giving us the opportunity to further engage and reward our loyal guests with our point-based system. Duck Donuts Rewards provides a mobile-friendly user experience and convenient way to enjoy our warm, delicious and made-to-order donuts. Having the ability to order donuts and earn rewards in the same app truly streamlines the checkout experience for our customers.”

4.  The following rewards are unlocked at each status level:

  • Welcome: Free customized donut after first purchase;
  • Fantasduck: Earn 300 points and choose between a free donut or medium coffee;
  • Incrediduck: Earn 600 points and enjoy two free donuts and a medium coffee;
  • Magnifiduck: Earn 1,200 points to earn a free half dozen;
  • Stependuck: Earn 2,250 points to receive a free dozen donuts.

5.  April Hoelscher, director of marketing for Duck Donuts, added, “Our goal is to increase customer frequency, drive consumer behaviors and continue to grow brand awareness. We anticipate receiving strong consumer-driven data that will give us a better insight into our target audiences, allowing us to best meet the needs of our loyal guests.”

Hires New Vice President of Franchise Development

6.  In late July 2020, Duck Donuts announced that Dwayne Hoffman had joined the growing company as vice president of franchise development. In this newly-created position, Hoffman is responsible for overseeing franchise sales and real estate activity related to the development of Duck Donuts locations and the growth of the brand. Hoffman reports to Betsy Hamm, chief operating officer of Duck Donuts Franchising Company.

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7.  “We are excited to have Dwayne join our franchise development team as we continue to focus on strategically moving forward as a national brand, entering new markets and backfilling in existing,” said Hamm. “His extensive expertise will play an integral role as we strive to transition from an emerging to a well-known established franchise brand across the country.”

8.  The hiring of Hoffman builds upon the company’s shift from an organic to strategic growth model. In order to continue the momentum as one of the fastest-growing donut franchises, the company is looking at a more aggressive approach to selling franchise agreements domestically and internationally.

9.  With a focus on being more intentional in its growth pattern, the company is particularly interested in adding locations to its portfolio west of Missouri and in tourist and resort areas. Duck Donuts plans to open 35 domestic stores per year. Franchise opportunities are available for traditional brick-and-mortar locations, with a reduced store footprint, and nontraditional venues, such as food trucks and airports.

10.  Hoffman joins Duck Donuts with more than 25 years of experience working in the food and beverage industry. Specializing in brand repositioning, new market expansion, and market planning, Hoffman most recently worked for companies including Nathans’s Famous, The Coffee Bean & Tea Leaf, and Starbucks. Hoffman currently serves as a board member for the Catholic Youth Organization in Downingtown, where he resides. He is an alumni of Bloomsburg University of Pennsylvania and former NCAA athlete.

Announces Two Corporate Promotions

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11.  In mid-November 2020, Duck Donuts announced two corporate promotions in an effort to strengthen its leadership roles. April Hoelscher, formerly marketing director, and Devon Mailey, formerly financial analyst, were both promoted to vice president roles of their respective departments.

12.  In Hoelscher’s role, she will oversee the national consumer marketing strategies and programs that drive brand growth, relevance, and store traffic, inclusive of menu development, promotions, digital and social strategy, local store marketing, and the overall Duck Donuts brand experience.

13.  Mailey will lead the organization’s financial function and performance through planning, development, and organization. She will provide oversight and management of the accounting and finance activities of the organization, offer counsel on strategic financial matters, and provide fiscal planning to achieve budget expectations. Mailey will also be responsible for the analysis of store level data in support of focusing the team’s efforts on franchisee profitability. Both positions will report to Chief Operating Officer Betsy Hamm.

14.  According to Hamm, “Since joining Duck Donuts Franchising, April and Devon have made significant and positive impacts to our emerging company. They are both committed to helping our brand move forward, and their leadership will serve a vital role in strategically positioning us as a sound resource for our franchisees to ensure their success.”

15.  Hoelscher joined Duck Donuts Franchising Company in 2019 with 20 years of marketing experience in building results-driven programs for both B2B and B2C organizations across multiple industries. April previously held the position of commercial channel marketing manager for Armstrong Flooring, a large global manufacturing organization. She also worked for Auntie Anne’s Pretzels for nine years, serving as the director of marketing, overseeing marketing strategy, campaigns, local marketing programs, and support for retail, fundraising, and business development efforts. Hoelscher holds a Bachelor of Science in Marketing from Penn State University.

16.  Mailey joined Duck Donuts Franchising Company in 2019 with nearly 20 years’ experience. Prior to Duck Donuts, Devon worked in finance for more than 10 years with Hershey Entertainment and Resorts, most recently holding an analysis manager position. She also has project management and customer service experience working for Highwood Properties and Highmark Blue Shield. Mailey holds a Bachelor of Arts in Corporate Communication and Business Management from Lycoming College.

Company History

17.  Duck Donuts was founded in 2007 by Russ DiGilio and his business partner Robin Griffith in Duck, North Carolina. DiGilio was inspired to start Duck Donuts after he and his family noticed that there was nowhere to get fresh, warm donuts in Duck, North Carolina, even though they had been vacationing in the town for years. After many months of research and development, and testing recipes, DiGilio and Griffith opened the first Duck Donuts store and it was a hit with the locals.

18.  The first Duck Donuts was followed by a second location in Kitty Hawk, then two others were opened in Corolla and Kill Devil Hills. For the next few years, Duck Donuts only had locations in North Carolina’s Outer Banks. Franchising started in 2013 and the first franchised store was opened in Williamsburg, Virginia.

19.  Duck Donuts continued to expand to other states over the past few years. The brand also opened international locations in Chile, Puerto Rico, and Dubai. Today, there are Duck Donuts locations across 17 states and there are plans to open an additional 145 stores throughout 26 states in the coming years.

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20.  Duck Donuts did not rank on Entrepreneur’s 2021 Franchise 500 list.

Section II – Estimated Costs

  • Please click here for detailed estimates of Duck Donuts franchise costs, based on Item 7 of the company’s 2020 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

  • Please click here for detailed information on Duck Donuts’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2020 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2017

  • Outlets at the Start of the Year:  31
  • Outlets at the End of the Year:  56
  • Net Change:  +25

2018

  • Outlets at the Start of the Year:  56
  • Outlets at the End of the Year:  77
  • Net Change:  +21

2019

  • Outlets at the Start of the Year:  77
  • Outlets at the End of the Year:  83
  • Net Change:  +6

Company-Owned

2017

  • Outlets at the Start of the Year:  0
  • Outlets at the End of the Year:  0
  • Net Change:  0

2018

  • Outlets at the Start of the Year:  0
  • Outlets at the End of the Year:  0
  • Net Change:  0

2019

  • Outlets at the Start of the Year:  0
  • Outlets at the End of the Year:  2
  • Net Change:  +2

Section V – Financial Performance Representations (Item 19, 2020 FDD) and Analysis

Part 1 – Statement of Gross Sales (2017 to 2019)

  • Part 1 presents unaudited information about the historic actual gross sales for retail locations previously operated by Duck Donuts franchises which were in business and operating during 2017 through 2019 (the “Reporting Outlets”). Part 1 presents the annual Gross Sales, for 2017 through 2019, of the Reporting Outlets.
  • Gross Sales reported are the total revenue derived from the sale of goods or services less sales tax, discounts, allowances, and returns.
  • The table presents (1) the highest Reporting Outlet, (2) the lowest Reporting Outlet, (3) the average of all Reporting Outlets, and (4) the median value.
  • Duck Donuts has only included franchises operational for a full 12 months. Duck Donuts has not included Gross Sales from its stores’ non-traditional locations (e.g., food trucks). Duck Donuts has not included Gross Sales from its Richmond, Virginia outlet, which has its primary location within a theatre.
  • In order to help you better understand the Gross Sales figures, Duck Donuts has provided the average Gross Sales for the 25 stores with the highest Gross Sales and the average Gross Sales for the 25 stores with the lowest Gross Sales open for at least 12 months, as of 2019.
  • The following figures in Part 1 do not reflect the costs of sales, operating expenses, or other costs and expenses that must be deducted from the gross revenue or gross sales figures to obtain your net income or profit.

2017

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