Baby Donut Co., Sherman Oaks, Calif

Nation's Restaurant News, Nov 29, 2004 by Lisa Jennings

Not long after Matt Massman opened a small doughnut shop called Baby Donut Co., he realized that he would have to do something unique to make it stand out.

The Los Angeles area is known as the Doughnut Capital, with more doughnut shops to be found than any other foodservice business, and Massman was up against locally based players, such as Yum Yum Donuts, with 71 units, which recently purchased the 200-unit Winchell's Donut House chain.

So Massman developed a "design your own doughnut" concept, which he described as Krispy Kreme meets Cold Stone Creamery, the latter being an icecream shop where customers can choose various mix-in options.

At Baby Donut Co. the first decision customers must make is the type of doughnut they want: glazed, cake or plain, which is a yeast doughnut that is not glazed. Two sizes are available: the smaller "baby" doughnuts or slightly larger versions. The restaurant makes doughnuts fresh throughout the day.

Next, customers may choose a filling. Several different options are offered each day, such as chocolate mousse, Vienna cream and strawberry.

What's unique, says Massman, is that the fillings are added to ring doughnuts, not the traditional no-hole doughnut more commonly filled with jelly or custard. Massman developed equipment with five jets, instead of one, to squirt the filling throughout the ring.

The third step involves choosing an icing, such as chocolate, marshmallow, maple ice or caramel.

And, finally, one must choose the topping, such as sprinkles, M&Ms, nuts, crushed Oreo cookies or Nestle Crunch bars, Golden Grahams cereal, coconut, white chocolate, cinnamon or Rice Krispies.

Of course, guests don't have to load their doughnuts fully. Unadorned glazed doughnuts still account for about half of Massman's business.

Doughnuts that are not frosted, filled or topped are sold for 50 cents each. or 65 cents topped or filled any style. Six-packs are $3 plain, or $3.50 any style, and a dozen is $5 plain, or $6 any style.

The "design your own doughnut" concept has been particularly popular with wholesale and catering accounts. Massman says. He has developed a cart from which doughnuts can be customized, and it has been a hit at bar mitzvahs and weddings. Baby Donut Co. also offers personalized boxes for such events.

Baby Donut Co. delivers and also offers curbside pickup for those who call ahead--a key service when one considers that the store is in a crowded shopping strip with limited parking.

Massman, a 20-year-old who attended college for a few weeks before he decided he would rather run a business, has limited foodservice experience. He worked for a couple of months for a nationally known doughnut shop chain and attended a weeklong class in doughnut making at the American Institute of Baking in Kansas.

Operating the store, which has seven employees, has been a crash course in business studies, from developing recipes and maintaining consistency to labor management and insurance, he adds.

The store reaps the benefit of being next to a lively Starbucks, but walk-in business has been slow, says Massman, "because people just don't know about us yet."

Word has been getting out, however. Massman says he has fielded about 30 calls from people interested in franchising, and the requests are coming from around the world. He is particularly interested in one offer from the Philippines, where doughnuts are very popular, he says.

Massman says that once he gets established, he's hoping to open more umts in Los Angeles. But he's not happy with his current location, which is in the San Fernando Valley. "Once I get the capital. I'd like to move."

And, since this is Los Angeles, the location he seeks is predictable: "Hollywood--with a drive-thru."

Location: 15030 Ventura Blvd.

Concept: design your own doughnut

Opened: Oct 24, 2003

Transaction average: $7 in-store; $25 delivery

Seats: takeout only

Average daily transactions: 350

Labor cost: 15 percent

Food cost: 10 percent

Best-selling items: glazed and chocolate with sprinkles

Slowest-selling items: white chocolate and coconut

Menumaker: owner Matt Massman