Donuts are on the rise, seemingly unaffected by the recent attention paid to healthy lifestyles and clean eating. Travel + Leisure, citing Instagram data, recently claimed that the three most popular bakeries in the United States are donut shops.
Donut shops are seeing success by innovating and pushing the boundaries of the traditional donut.
“Paying attention to trends and what’s happening in the food world is what helps us be in the know,” Danette Kuoch, manager of California Donuts, told bake magazine. “We have now become a late-night dessert spot in Los Angeles. Our product is unique. We are inventors, not followers.”
Retailers are taking notice and reaping the benefits. United States retail sales of donuts at supermarkets and convenience stores reached $1.97 billion for the 52 weeks ending Nov. 27, 2016. That number was up 3.4 percent from the previous 52 weeks, according to Information Resources, Inc., a Chicago-based market research firm. Over the past four years, supermarket sales of fresh donuts have risen by an average of 5.2 percent per year.
Those supermarket and c-store retailers can also stay ahead of the donut trend and will look to their suppliers to help them deliver sweet treats that differentiate themselves.
“Fresh, new donut concepts have created a new type of demand for donuts,” says Rebecca Loveland, vice president of business marketing for Dawn Food Products. “While the glazed or iced yeast raised ring still reigns king, there is a sense of creativity when it comes to donuts. We see consumers looking for unique and different flavors to match their mood at the time.”
Keith Appling, executive vice president, sales and merchandising, for Lawrence Foods, says seasonal and promotional LTOs are a key driver for donuts.
“Keeping the selection fresh by offering specialty flavors keeps consumer interest high,” he says. “We are also seeing a lot of branding within the category.”
Donut offerings can be kept fresh and evolving with unique flavor pairings, integrating flavors from around the world or by capitalizing on current trends such as mashups.
“We’re seeing donuts increasingly appear on restaurant menus and specialty donut shops are opening up around the country,” Loveland says. “It’s a donut evolution and consumers are craving creativity and for Dawn, it’s a very exciting opportunity for us to continue to provide them with a high-quality foundation for the donut experience.”
Paying for premium
Loveland says Dawn is seeing more consumers willing to pay a premium for higher-end donuts. This doesn’t necessarily mean the production cost will shoot through the roof, however. All it takes to grab consumers’ attention is a little creativity.
Donuts are no longer synonymous with the word bargain. Specialty donuts at California Donuts sell for $2, $2.50 or $3. The specialty menu includes the signature Panda donut made with Oreo pieces, Blueberry Toast Crunch, Strawberry and Nuts, Samoa, and Lucky Charms.
Along those lines, Hurts Donut Company has grown from one Springfield, Missouri, location in late 2015 to locations through six states from Wisconsin to Arizona. The growth is thanks, in large part, to donuts topped with quirky ingredients like breakfast cereal and Nutella.
“Those unique flavor combinations like those used by Hurts and different applications with donuts can satisfy consumer appetite for creativity and flavor,” Loveland says. “And these types of donuts can command a higher price in the bakery. The success we’ve seen with customers doing this is proof that it is possible in the market.”
Of course, helping retailers deliver with these higher-end donut products calls for some extra attention.
“Planning for high-end concepts shares the same supply chain forecasting tools used in the control of inventory for the preponderance of all SKUs,” says Appling. “If a unique ingredient is called for, uncertainty in the forecast must be balanced in the forecasting model by adjustment of safety stock buffers.”
Loveland says the high-end donut trend has been a success for Dawn, which has focused on the support it provides to customers when they are starting up or making changes in operations.
“Our technical baking team has vast knowledge of the equipment, the processes and all the nuance of making great donuts,” she says. “They work hand-in-hand with our customers in their manufacturing facilities, as well as during local store openings. We’re doing a lot of work with research and insight to identify consumer trends that are happening now, and ones that are on the horizon so we continue to provide our customers with the tools and ingredients they need to grow their bakery.”
Downfall of daypart
Donuts are no longer just a breakfast staple, Appling says. “One trend that is growing is featuring fresh donuts all day long,” he says. “Consumers love donuts all day long, from afternoon snacking to late night ‘desserting’; it’s a perfect base for creating signature products.”
As an example, California Donuts in Los Angeles says its walk-in traffic peaks between 10 and 11 p.m. every Friday, according to a new Facebook feature that helps retailers generate excitement about their brand and monitor customer demand.
“It’s incredible to see the growth of donuts and how much consumers love them,” Loveland says. “Consumers’ expectations are increasing and they want to be delighted with colors, textures and flavors – and customers are capitalizing on the opportunity to expand donuts into different parts of the day.
“Savory is an opportunity for that afternoon and evening time and even the trend of Enlightened Eating – where consumers seek inherent benefits from food like protein or probiotics – can be applied with donuts. Creating differentiation within the bakery with unique flavors can help drive demand and drive consumers into the bakery.”
Much of the late-night success can be attributed to social media. When consumers find a unique or high-end creation, they want to share it with their friends. That, in turn, can drive more traffic to the retailer offering those new donuts.
“Consumers are looking for donuts that deliver on flavor experience and eye appeal,” Appling says. “With social media such an integral part of life, consumers actively share food experiences, and donuts are close to the top of the list for posting. Our customers are looking for products that enhance the visual and taste appeal of the end product.”