In early February, 92-unit doughnut chain Duck Donuts released its first mobile app, complete with an offer for a free doughnut on users’ initial order.
The new app, as it turned out, was timely.
By mid-March, the growth franchise had seen 20 of its locations temporarily close, while the rest are getting only about 40% of their usual sales.
“We’re fighting every day,” said Russ DiGilio, founder and CEO of the Mechanicsburg, Pa.-based chain. “Lots of franchisees are fighting every day to continue to promote what we do.”
Duck Donuts was founded in 2007 in the beach resort towns of Duck and Kitty Hawk, N.C., as an experiential doughnut concept. The donuts are made to order and served warm. That makes the coronavirus shutdown particularly challenging for the chain.
To be sure, Duck Donuts has a growing convenience business from customers who know the chain well. The company started online ordering last year and also began working with delivery services. The mobile app was next.
“Not everyone needs the experience,” DiGilio said. “We have loyal fans. They need the convenience like any other store such as us.”
But the lack of those experiential diners, combined with consumers simply staying home, has forced many of the chain’s locations to close while hurting sales at the remaining units. The company has offered to defer operators’ royalties “until some time in the future” to alleviate their financial burden.
Duck Donuts is also advising operators on speaking with landlords and banks and encouraging them to talk with the Small Business Administration if they have a government-backed loan. “We’re talking with all of our vendors to see who can defer invoices until stores get back up to fully functioning,” DiGilio said.
The coronavirus is disrupting a good year for the company. The chain was rapidly expanding, and now that is “on pause.”
“We were really positioned for a great year,” DiGilio said. “We had a lot of growth planned. By the end of the year we were going to have 120 stores operational. Everything is on pause now.”
“I still think we can salvage this,” he added. “It’s going to be a matter of getting through it.”
That means sales. The company is communicating with its franchisees every other day to share ideas and recommendations.
Many operators are bringing doughnuts to grocery stores and other areas that could use relief.
They’ve also started curbside service. Franchisees were able to turn that on quickly, and the company integrated it into online ordering. “[That's] the silver lining,” said Kristin Kellum, Duck Donuts’ PR manager. “Now we have these additional convenience options for guests.”
And some operators began bringing the experience to customers. They’ve added sprinkles, icing, Oreos and other toppings in souffle cups for customers’ children to decorate their doughnuts at home.
“Doughnuts are a comfort food,” Kellum said. “We’re really encouraging franchisees to think outside the box.”