In the past few years, a wave of high-end donut shops opened in the Washington, D.C. metro area. Most of these either started in D.C. or in nearby East Coast cities and moved into the District. Are these donut shops stable, or will they end up like the cupcake and become another faded fad?
Only a few years ago, the cupcake craze was in full swing. Shops selling every kind of variation on the dessert were opening up, riding the the wave of the newest fad. But now, cupcakes, like frozen yogurt and the Kim Kardashian game, have faded into the distance. Tastes change over time. As a result, the boutique cupcake establishments of circa 2012 are mostly gone.
So what about donuts? In 2010, Time Magazine published an article titled “Doughnuts: In Sour Times, A Sweet Success Story” which chronicled the return of the donut to forefront of American desserts. Independent stores were opening, and even donut moguls Krispy Kreme and Dunkin Donuts opened new stores. This was particularly important, because America was still recovering from the recession. Investing in the donut was the perfect opportunity to not only make a profit, but also raise the spirits of downtrodden Americans.
In Washington D.C., donut shops across the region are offering fun and quirky twists on the hallmark of American pastries. A quick Google search and Yelp inquiry finds about seven to eight top-rated donut shops in the nation’s capital.
Now, the real question is: how successful are these donut enterprises? And will they stick around?
It seems like they are here to stay. While there are numerous potential factors that explain the donut phenomenon on the East Coast, the reliability of the donut in American food culture makes it a safe option to sell. In addition, social media and an untapped market shed some light on how donuts become popular again.
A prime example is local favorite Zombie Donuts & Coffee, which opened in the Columbia Heights neighborhood of the District in February of 2015. Manager Vanessa Castillo told me that when it first opened for business, the establishment was originally a frozen yogurt and coffee shop. One can clearly remember the frozen yogurt boom and bust of three years ago. But the business model changed. The shop moved from customizable frozen yogurt to customizable donuts. Toppings are extensive, ranging from strawberry icing to fruity pebbles. The store and its sister location at the University of Georgia in Athens have both been doing very well in the past year and half. That decision was not only very entrepreneurial, but also smart. Donuts and coffee make a better pair than yogurt and coffee.
Castillo explained that the success of Zombie is also attributable to Yelp and word of mouth, the two ways most people find out about the shop.
In an interview with Bon Appetit.com in 2014, David Sax, the author of The Tastemakers: Why We’re Crazy for Cupcakes but Fed Up with Fondue, said that the difference between a fad and a trend is that a fad comes and goes, while a trend will last even after its not “trendy“ anymore (think extra virgin olive oil or paninis). Donuts, especially on the East Coast, have been popular for decades and remain a staple. This helped spur on growth for new, higher end donut shops since the market was untapped.
Consumers get tired of the same donuts, despite the steady growth in chains such as Dunkin’ Donuts over the last few years. That leaves room for small producers of niche products like artisanal donuts to make a profit. Some arrivals in D.C. are not even originally from the area. Local favorites such as Duck Donuts and Sugar Shack started off in other cities (Duck, North Carolina and Richmond, Virginia) and eventually made their way up the coast. Duck Donuts now has 30 locations spanning from North Carolina to New Jersey.
These donut chains provide a quality product that you can count on. In contrast, independent food places are popular because they provide a unique product, something people cannot always get at a chain store or make at home. Consumers are then willing to pay more for these products, making the business venture profitable and worthwhile. If small donut shops can continue to provide quality products and profit in this niche market, they will be here to stay.
Andrew Meleta is a contributor to Economics21 and has an affinity for good donuts. Follow him on Twitter here.
Interested in real economic insights? Want to stay ahead of the competition? Each weekday morning, e21 delivers a short email that includes e21 exclusive commentaries and the latest market news and updates from Washington. Sign up for the e21 Morning Ebrief.