Winchell’s Donut House plans to grow its 311-unit chain by roughly 10% this year and is looking at entering the Midwest and East Coast markets.
Also, the Anaheim-based doughnut chain is venturing into the wholesale business, and it has dropped plans to develop the factory concept Winchell’s World that it had launched last year in Pomona.
Winchell’s CEO E. Thomas Dowling says the company is planning about 16 stores in the Los Angeles area this year as well as another 12 units in other areas.
“We have a greater capability for brand recognition west of the Rockies, but we have had so much inquiry in the Midwest and the East,” said Dowling, who explains that a move wouldn’t be feasible until fiscal 2001 or 2002.
Meanwhile, Winchell’s has closed about four retail store locations to build its wholesale doughnut business catering to schools and businesses. Dowling declined to name the locations for competitive reasons.
“The wholesale bulk pickup program is very lucrative,” Dowling said.
“We found a school system that wanted 300 dozen doughnuts delivered daily,” he added.
Retail Conversions
Winchell’s converted several low performance retail locations into pure manufacturing sites that are giving them a better return on investment than to run as a single unit.
“We’ve done it before, but never done it on such a grand scale,” Dowling said.
Additionally, about six months ago, Winchell’s teamed up with 7-Eleven to sell doughnuts in branded in-store sections at the convenience stores. The program is being tested in Pomona, Covina and Upland with negotiations under way to expand further into the convenience store’s 450-unit Southern California chain, Dowling said.
But other dual-branding concepts with the Blimpie and Subway sandwich-shop chains have been slow to take off. About a year ago, Dowling told the Business Journal his company planned to open 28 dual-branded concepts by March 2000, but it has since added four for a total of 11 stores.
Privately held Winchell’s, whose parent company is Vancouver-based Shato Holdings Ltd., does not release sales figures. However, a year ago the company estimated fiscal 1999 sales were $78 million and Dowling said that overall sales in fiscal 2000 were up 8%.
Back to Basics
About a year ago, Winchell’s developed a larger 3,000-square-foot factory store concept and opened its first one in Pomona, with plans to open more. But those plans have since been scrapped, Dowling said.
“We’ve decided that Winchell’s is a neighborhood bakery concept, and it has the most value to consumers in the smaller shops. Strategically we are going to stick to our prime core competency: the small local bakery concept. Not that the other hasn’t been successful, but it gets us away from our core competency, and we are best set up to operate those operations.”
Also last year, competitor Krispy Kreme announced an expansion into the West Coast and has since opened four stores in California: in La Habra, Orange, Van Nuys and Ontario.
Dowling said he isn’t worried.
“We were voted Los Angeles’s favorite doughnut,” he said. “Three weeks ago, Channel 7 did the best coffee and the best doughnut in LA and we were No. 1, garnering 34% of the vote. There was a tie between Yum Yum Doughnuts and Daylight Donuts with 26% of the vote and in fourth place was Krispy Kreme.”
Roger Glickman, president of Great Circle Family Foods in Los Angeles, which is the area developer for Krispy Kreme franchises in Southern California, said three other stores are under construction in Huntington Park, Long Beach and Gardena and will open in the spring. He said his company has plans to build a total of 42 stores in the Southern California area. n
