How Much Do Donut Shops Make?

Donuts are a versatile product. You can have them for breakfast, as a sweet dessert after your meals, or a snack that pairs well with coffee or tea. That’s why it’s only natural to consider opening a donut shop.

But how much profit a donut shop can actually make depends on many factors, from location and labor to the products you sell and how well you manage your operations.

Let’s go through how much donut stores make yearly, what affects shop profitability, how to forecast sales, and which business models bring in the most revenue.

How much profit can a donut shop make?

Selling donuts is a lucrative venture, especially for families with kids. In fact, 64% of parents with children under 18 reported buying these treats regularly.

Donut shops may see a profit margin of 10% to 20%, depending on various factors, such as location, operational efficiency, and business model.

So, if a donut shop generates $300,000 in annual revenue. With a net profit margin of 15%, the shop would earn a profit of $45,000 for the year.

Take note that different shop types have different cost structures. For instance, franchise donut shops may have higher initial costs due to franchise fees and standardized equipment, while independent shops might have more flexibility in sourcing ingredients and managing overhead.

Donut stores also have to consider seasonal fluctuations. Typically, the months following major holidays, such as January and February, see a dip in sales.

It may be due to consumers tightening their budgets after holiday spending. Additionally, colder weather in some regions may reduce foot traffic to retail locations.

On the other hand, certain times of the year can lead to increased donut sales. Graduations, weddings, and festivals often boost demand because they’re easy gifts to bring to gatherings, especially potlucks.

Halloween, Thanksgiving, Christmas, and New Year’s can also drive sales, particularly when shops offer seasonal flavors like pumpkin spice, apple cider, and gingerbread.

Factors that affect donut shop profitability

Creating a profitable business requires a careful mix of strategic elements. Your donut shop’s location, number of customers coming in daily, and operational costs affect how well you can maximize your profits.

Location, foot traffic, and lease

Location, foot traffic, and lease terms are key factors that impact a donut shop’s profitability. Urban areas often offer higher foot traffic, which can lead to increased sales. However, rents in these areas are typically higher.

Suburban strip malls may have lower rents, but they might not provide the same level of foot traffic.

Rent is a significant fixed cost for any donut shop, accounting for 30% to 40% of sales. The average commercial or retail lease rate is $29.08 per square foot.

So, if a donut shop leases a 1,500-square-foot space, it might pay around $43,620 in rent. This cost can significantly impact overall profitability, making it crucial for shop owners to negotiate favorable lease terms and optimize their space utilization.

Small business owners should also consider additional location-related expenses like utilities, parking availability, and proximity to complementary businesses that could drive customer traffic and increase potential sales opportunities.

Labor costs

Labor plays a significant role in a donut shop’s profitability. This restaurant cost typically accounts for 30% to 40% of revenue, including wages, benefits, and payroll taxes for all employees, from bakers to FOH staff.

For example, a donut shop generating $50,000 in monthly revenue might allocate between $15,000 and $20,000 to labor expenses. Managing these costs effectively is crucial to maintaining healthy profit margins.

In our restaurant labor costs playbook, we found that 68% of restaurants train staff to perform multiple roles. Doing so allows for greater flexibility in scheduling and can reduce the need for additional hires during peak periods.

You can also opt to implement split shifts to make sure you have the right number of staff throughout the day. Additionally, you can hire one or two temporary staff to help manage increased foot traffic during peak seasons or special events.

Ingredient and supply expenses

Managing ingredient and supply expenses is another important factor to consider. You mainly want to monitor restaurant cost of goods sold (COGS), such as ingredients like flour, sugar, eggs, and oil. This accounts for about 15% to 20% of a shop’s revenue.

Choosing premium or locally sourced ingredients can enhance the quality and appeal of your donuts, potentially allowing you to charge higher prices. However, these choices can also increase your COGS.

The best course is to balance quality with cost. Consider offering a mix of standard and premium products to cater to different customer preferences while managing expenses.

Bulk purchasing is another effective strategy to reduce ingredient costs. By buying in larger quantities, you can often secure discounts from suppliers, lowering your overall expenses.

Aside from COGS and labor cost, monitor additional restaurant metrics such as inventory turnover ratio to prevent waste, especially for perishable items. Implementing an inventory management system can help track ingredient usage and reduce spoilage.

Then, forecast demand to minimize waste and optimize ordering. Check your sales data to spot trends and peak times. Once you have that information, you can make sure you always have the right amount of ingredients on hand.

Marketing and brand visibility

Having the right marketing strategy for a brick-and-mortar business like a donut shop is important to keep people coming in. Social media is considered a high-ROI platform, especially Instagram, Facebook, and TikTok, with ad campaigns garnering an average ROI of 250%.

You can post high-quality images of your donuts and how you make them. User-generated content (UGC) is a good restaurant social media marketing strategy. Encourage customers to share photos of their favorite flavors by running contests that boost your page’s engagement.

Aside from social media, you should join local events, like festivals, farmers’ markets, and food fairs. Offer samples of your best flavors to attract attention and generate buzz around your donut shop’s brand.

Additional products and revenue streams

Diversify your offerings to add more income streams. You can offer catering for events, offices, and parties to get the word out and introduce your products to new customers. You can also implement systems for customers to place pre-orders or subscribe to regular deliveries, which improved profitability for 81% of donut shops. After all, it’s one of the best types of food that travels well for delivery.

To keep customers excited, you can introduce limited-time offerings during holidays or local events to create buzz and encourage repeat visits. Additionally, train staff to suggest additional items, such as beverages or combo deals, to increase the average transaction value.

To calculate the average transaction value (ATV) for your donut shop, divide your total revenue by the number of transactions over a specific period. So, if your shop generated $10,000 in sales from 1,000 transactions in a month, your ATV would be $10. This means that, on average, each customer spends $10 per visit.

How to forecast sales for your donut shop

Working with numbers may not be everyone’s cup of tea, but donut store owners must learn to understand them. Sales forecasting helps you predict revenue and the needed inventory, so you can make better operational decisions.

Step 1: Check daily order volume

Start by analyzing your shop’s foot traffic or reviewing past sales data for daily order volume. If your donut shop averages 150 orders per day, over a 30-day month, that’s approximately 4,500 orders monthly. This figure provides a baseline for projecting monthly sales and identifying trends.

If you’re a new shop owner without past data, consider industry benchmarks. Donut shops can generate daily revenues ranging from $200 to $900, depending on factors like location and customer volume. Assuming an average order value of $5, this translates to 40 to 180 orders per day.

To make your estimates more accurate, observe similar businesses in your area. What does their daily traffic look like? Consider local demographics, nearby businesses, and population density as well.

Step 2: Calculate Average Order Value

A donut shop’s AOV ranges between $5 and $10 per transaction, which typically includes a donut or two, plus a beverage. If your shop processes 4,500 orders in a month and your AOV is $6.50, your gross monthly revenue would be $29,250.

Bundling donuts with coffee or tea, or upselling add-ons, like specialty toppings or extra donuts, can boost your AOV and impact your shop’s profitability.

Loyalty programs also work well for donut shops. You can reward repeat customers with discounts or free items after a certain number of purchases, encouraging them to keep visiting and spend more in your store.

Step 3: Use the sales formula

With your order volume and AOV, you can get actual sales data in order, which you’ll use for forecasting. Use the formula:

Order Volume × Average Order Value (AOV) = Sales

Let’s say your order volume is 150 orders/day × 30 days = 4,500 orders/month, and you have an AOV of $5. Your monthly sales would be: 4,500 × $5 = $22,500

On the high end, you can have 200 orders/day × 30 days = 6,000 orders/month, and an AOV of $10, if you implemented upselling and combo deals. As a result, your monthly sales would be 6,000 × $10 = $60,000.

Step 4: Factor in seasonality and special events

Donut shops often experience seasonal fluctuations in sales, which may dip in January following the holiday season. Meanwhile, holidays like Valentine’s Day, Halloween, and Christmas can lead to increased demand for themed donuts and treats.

Take note of these seasons as you check your past sales data to spot patterns. For example, you may have higher sales during Halloween due to creative, spooky donut designs or increased weekend brunch traffic.

Step 5: Project profits

After estimating your donut shop’s monthly sales, the next step is to calculate your potential profits. This involves applying your expected profit margin to your projected revenue.

Quick service restaurant profit margins fall between 6% and 9%. So, if you have a monthly revenue of $35,000 and a profit margin of 9%, you can expect a monthly net profit of $35,000 × 8% = $3,150.

Start building month-to-month projections that align with your marketing efforts, seasonal specials, and staffing needs.

Update your estimates regularly based on real performance. For example, if you launch a holiday promotion that boosts your AOV, adjust your next month’s forecast to reflect that growth.

What types of donut shops make the most money?

Different types of donut shops have different earning potential. Traditional brick-and-mortar establishments, franchises, gourmet shops, and food trucks typically yield the sweetest returns, depending on how well they’re managed.

Traditional brick-and-mortar

Traditional brick-and-mortar donut shops are a classic choice, and for good reason. A great example is Tepuy Donuts, a Venezuelan-American bakery that recently opened its first storefront after building a loyal following through pop-ups in Raleigh, North Carolina.

The shop reportedly earned $80,000 in revenue in 2023. Tepuy now benefits from a stable physical location, steady customer traffic, and recurring revenue from regulars who loved their donuts long before the shop opened.

If you’re operating a local, family-run donut shop, especially one located in a strip mall with consistent foot traffic, focusing on high-quality ingredients, friendly service, and creative seasonal offerings can make a big difference.

Traditional donut shops may have higher fixed costs than food trucks, but they also offer more stability and room to scale. With proper planning and execution, these shops can consistently earn strong margins while becoming a staple in their community.

Franchise donut shops

Franchise donut shops like Shipley Do-Nuts and Krispy Kreme typically generate between $20,000 and $80,000 per month in revenue. Their profit margins tend to be lower, around 5% to 15%, mainly due to franchise royalties, national marketing fees, and operational support costs.

For shop owners, the appeal of a franchise is brand recognition and built-in systems. Take Krispy Kreme, for example. In its 2024 earnings report, the brand reported $442.7 million in Q4 revenue, showing how powerful a well-known name can be in drawing consistent traffic.

Shipley Do-Nuts is another fast-growing brand. According to a 2024 press release, the franchise opened 24 new locations across multiple U.S. markets and enjoyed record-breaking systemwide revenue.

For a donut shop owner who wants to scale fast, joining a franchise can provide training, support, and a proven model.

Still, franchise donut shops come with higher startup costs and fixed fees. Many require a minimum liquid capital of $100,000 to $200,000, and ongoing royalties can eat into your shop earnings.

Nonetheless, strong support systems and marketing campaigns from the parent brand can help offset those expenses and maintain steady customer flow.

Keeping costs in check and upselling high-margin products can help improve profitability for franchises. You should also take advantage of your brand’s marketing materials and analytics. Most brands provide data that can help you optimize inventory, predict demand, and keep operations efficient.

Gourmet or specialty donut shops

Gourmet or specialty donut shops offer unique, high-quality products that command premium prices. These establishments often focus on innovative flavors and exceptional presentation, attracting a dedicated customer base willing to pay more for a distinctive experience.

A great example is Beechwood Doughnuts. As Niagara’s first and only 100% vegan donut shop, Beechwood has carved out a niche by offering plant-based treats that appeal to both vegan and non-vegan customers alike.

Their commitment to quality and innovation has led them to produce over 10,000 donuts each week, showcasing the scalability of their operations.

Donut food trucks

Donut food trucks are a great way to enter the industry with lower startup costs and higher flexibility. The average donut food truck startup cost is around $28,000 to $114,000.

The success of donut food trucks often hinges on strategic location choices and event participation. For instance, DonutNV operates mobile units that serve fresh mini donuts and beverages at various events and locations, allowing it to earn about $133,000 annual net profit.

To bring in the most money, donut food truck operators must focus on efficient operations and targeted marketing. This means finding the best routes and engaging with customers in person as well as on social media. Successful food truck operators also diversify their revenue streams by catering private events or collaborating with coffee shops.

Beyond the glaze

No matter what type of donut shop you start with, turning a solid profit entails an understanding of your numbers. This way, you can control your costs and create a consistent experience that keeps customers coming back. The key is to stay competitive by reviewing your finances and adjusting your strategies as needed.

Run a smoother, more profitable donut shop by using quick service restaurant management software. With 7shifts, you can take the guesswork out of scheduling, reduce labor costs, and improve communication across your staff, so you can focus on making donuts and satisfying customers.

FAQ

How long does it take for a donut shop to become profitable?

Most donut shops take between 6 months to 2 years to become profitable, depending on their startup costs, overhead, and how well they manage sales and marketing.

If you start lean, such as operating a food truck or renting a shared kitchen, you may break even faster. Brick-and-mortar shops with higher rent and staffing costs typically need more time to recover initial investments.

What’s a good revenue goal for a new donut shop?

For a new donut shop, a monthly revenue goal of $20,000 to $30,000 is a solid starting target, especially if you’re running a small storefront or food truck.

That range gives you room to cover your cost of goods sold (usually 15% to 20% of revenue), labor (30% to 40%), and rent, while still aiming for a net profit margin of 10% to 20%.

Let’s say you sell an average of 150 orders a day with an AOV of $6.50. That’s about $975 per day or around $29,250 per month. Hitting that number consistently would put you in a good position to cover expenses and reinvest in the business.

What donut sells the most?

Glazed donuts are consistently the top seller at most shops. Some even consider them the “original” flavor. They’re classic and affordable, which makes them ideal for first-time customers. Other popular flavors include chocolate frosted and Bavarian-filled.

Should I open a franchise or start my own donut brand?

It depends on your goals and experience. Opening a franchise gives you brand recognition, built-in systems, and corporate marketing support. But it comes with higher startup costs, royalties, and less flexibility in how you run your shop.

If you want more creative freedom and lower long-term costs, starting your own donut business may be a better path. You’ll have to handle everything from recipes to marketing, but you’ll also keep more of the profits and can build a business that reflects your vision.