A donut shop is a tried and true business idea that can come in a variety of shapes and sizes. Whether you choose to open a more bakery style shop, a quiet café, or perhaps a more expensive franchise, the potential for growth is incredible. The margins on donuts are excellent.

In a securities filing by a single Krispy Crème franchise, margins were in excess of 70 percent. Operating as a franchise model, it is safe to assume similar margins for other stores operating under the same brand. Meanwhile, a large franchise also has the ability to source ingredients at lower rates than a small business. Expect a slight reduction to margins for operating on a smaller scale.

Donut shops are ideal for individuals who have a passion for sweets, a creative side, and a solid work ethic. Donut shops stock an assortment of standard treats, but it can take a special dish, or a unique take on an old classic, to really solidify your business as a local hotspot.

If your intention is to bake these goods yourself, culinary knowledge becomes extremely important and should be a top priority. It is up to you to decide how to run your business, if you feel you have gaps in your knowledge, it is imperative to educate yourself or find others you trust to fill those gaps.

Have it in mind that up-selling will bolster profits in a donut business. Coffee is a natural companion that also has excellent margins. According to Coffee Makers USA, the margins on a Starbucks Grande cappuccino are above 90 percent (coffee only). Dunkin’ Donuts has expanded coffee sales to grocery-store shelves, creating a larger scale brand through coffee sales alone.

Additionally, competition has a major influence on your ability to succeed at selling donuts. Location-dependent shops are expected to focus on high traffic areas with great exposure. It is always advisable to pick areas that are not near major chain stores to grab the maximum amount of market share in a locale.

Selling creative donuts that combine unique flavors like bacon and maple can distinguish a business through higher quality products. Mobile businesses and delivery models can expand into a larger area and increase the profit potential. Office delivery and event catering are both effective sales strategies.

Your ideal client type will be coffee drinkers and early morning school and business commuters that require caffeine and sugar to help them start their day. Examples of such clients include university students, business professionals, and parents of school age children, and churches on Sunday morning who need several dozen donuts to feed their parishioners. Many businesses make great customers too!

Corporate office buildings will often stock employee break rooms with donuts. Factories will quite often bring in donuts for their line crews. You only have to think outside the box to understand who your ideal customer is. One of the notable things you can do is to talk to someone else who is already operating a donut shop and ask them who their best customer is. Listen to what they say, because this will also be true for your own donut business.

Smart Ways Donut Shops Make Money

Donut shop businesses are known to make money from charging customers for their primary products, which are donuts and coffee. The price of a donut is around 80 cents and $1.25 and it is more or less based on the size, type, and quality of the donut. Howbeit, it is also possible to charge for larger quantities where you give a discount to customers who purchase a half-dozen or dozen donuts.

The average cost of a half-dozen donuts is $5.95, while the average cost of a dozen is $9.99. It may look like you are not really making a lot of money selling such a large number of donuts, but always remember that the average cost to make a donut is just 12 cents.

This is a substantial mark-up when you start thinking about it. Also note that you will need to sell a lot of dozens per day if you plan to stay in business due to the costs involved in running a business. However, a little known donut shop secret is that coffee is where the brunt of the profits come from. A single cup of coffee averages out to $2.70. The cost to make that one cup averages out to 27 cents.

The add-ons are where the real money’s at though. Add milk and chocolate or some flavored syrup to the coffee and the same cup sells for $3.95 per cup. The add-ons are an insignificant cost, but they mean huge profits for your donut shop business.

What you have to understand is that sugar, which is what donuts are packed full of, and caffeine which is what coffee is packed full of, are both addictive stimulants that people can hardly live without.

By selling these two items together, you stack the deck in your favor, as people will keep coming back again and again to your donut shop to get their daily fix of sugar and caffeine. It’s proven that sugar is more addictive than heroin and cocaine.

It is reported that the average donut shop makes $577 per day. A small location in a popular location can make up to $150,000 in profit annually. Additionally, it is important to keep in mind that sales can fluctuate seasonally.

Sales start slow in January as people try to stick to their New Year’s resolutions and avoid sweets, and then slowly increase as summer approaches. Then, they will likely stagnate or stay at a relatively fixed rate until the fall and winter months roll around, where you are likely to see a sharp increase in profits.


If you intend to boost profits in your donut business, you have so many options. A donut shop that gives customers the option of other menu items, like for instance breakfast sandwiches, a small lunch menu, etc., can add to your profit margins.

There are other actions you can take as well where you can partner with convenience store chains and get your donuts into these businesses on a daily basis to generate more brand visibility but also more sales.

Also note that you can partner with food-truck vendors, and doing so can be a great way to rake in more profits. The sky’s the limit as far as ways you can generate profits with your donut shop business. Indeed you can use your imagination to come up with other innovative and strategic methods of generating funds for your business.