Duck Donuts Franchises: Sales, Costs & Profits (2023)

Founded in 2006, Duck Donuts only started franchising its donut shops in 2013. Ten years later, the chain now has more than 100 shops in the US. Besides its simple and efficient business model, Duck Donuts is also very popular among franchisees.

Indeed, Duck Donuts is a rather affordable franchise: you would need to invest (only) $382,000 on average to open a new location. But what about profits?

So should you invest in a Duck Donuts franchise? How much profits can you really make with this business? Let’s find out!

Key stats

Franchise fee$40,000
Royalty fee5.0%
Marketing fee3% to 4%
Investment (mid-point)$556,000
Average sales$570,000
Sales to investment ratio1.0x
Payback period[franchise_value_investment_payback]
Minimum net worth$350,000
Minimum liquid capital$150,000
Source: 2022 Franchise Disclosure Document

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About Duck Donuts

Duck Donuts is an American quick-serve chain of doughnut shops headquartered in Mechanicsburg, Pennsylvania.

The chain was founded in 2006 by Russ DiGilio and Robin Griffith in Duck, North Carolina.

It serves customizable, made-to-order doughnuts, other baked goods, sandwiches, coffee, desserts, and beverages.

Duck Donuts started franchising in 2013 and now has more than 100 restaurants in the US.

Duck Donuts franchises pros and cons

Pros

  • Quality training: Duck Donuts has an extensive training program for the pre-opening, grand opening, and ongoing success of its franchisees. It trains franchise owners about its products and procedures, customer services, restaurant operations, hiring qualified staff, and growth strategies.
  • Real estate support: The franchisor provides its franchisees with real estate experts and site selection advice. It helps franchisees identify the most convenient business location, and design and construct the restaurants as per the brand’s standard specifications. It also helps them with lease negotiations.
  • Absentee ownership allowed: The brand allows for a passive investment opportunity. Franchise owners are not required to be fully involved in the daily restaurant operations.
  • Flexible franchise models: Duck Donuts offers its franchisees a variety of franchise formats that are flexible and can fit into the available real estate opportunities. Franchisees can choose to operate multi-unit development options, multiple store layout designs to fit different scenarios, non-traditional locations and food trucks, or catering and events to boost their sales.

Cons

  • Competition: The brand faces a lot of competition from donut brands such as Dunkin’ Donuts and Krispy Kreme
  • No financing: The franchisor does not directly or indirectly finance its franchisees for start-up or development costs.

How much do Duck Donuts franchises cost?

You have to invest around $382,000 to open a Duck Donuts franchised restaurant.

Yet, this is an average. Indeed, it varies based on many factors, such as the location of your restaurant and its size.

In addition to the initial franchise fee of $40,000, which you must pay to the franchisor, you would also pay for construction improvements, equipment, professional fees, signage, insurance, etc.

Startup costs

Here’s the full breakdown of costs:

ExpenseAmount
Initial franchise fees$40,000
Equipment$91,000 – $111,000
Insurance$3,000 – $5,000
Additional funds -3 months$20,000 – $30,000
Other$$135,066 – $288,991
Total$289,066 – $474,991
Source: 2022 Franchise Disclosure Document

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What’s the turnover of a Duck Donuts restaurant?

On average, a Duck Donuts franchised restaurant grossed $546,000 turnover in 2021.

Unfortunately, Duck Donuts doesn’t provide much information about its franchise restaurants’ financial performance in its Franchise Disclosure Document. The highest franchise made around $1.46M whereas the lowest one made only around $140K in revenue.

23 out of 92 (25% of total) franchises generated more than $850K in revenue in 2021:

How profitable is a Duck Donuts franchise?

We estimate that, on average, a Duck Donuts franchise makes $127,000 in profits per year. This corresponds to a 23% EBITDA margin.

This is an excellent profit margin, and as such a very profitable business.

Fortunately, Duck Donuts provides detailed information on the cost structure of its franchises, especially COGS and labor costs which we are summarizing below. Note that EBITDA isn’t given, which we had to estimate instead.

Profit and lossAmount% Sales
Sales$546,035100%
COGS$(99,924)18%
Gross Profit$446,11182%
Labor$(133,233)24%
Marketing and royalty costs$(54,604)10%
Occupancy$(49,143)9%
Other OpEx$(81,905)12%
EBITDA$127,22626%
Source: Franchise Disclosure Document 2022, estimates

Is opening a Duck Donuts franchise a good investment?

With such profits, no wonder that Duck Donuts has an excellent payback of 4 to 5 years on average. This means that you would need to use 4 to 5 years’ worth of profits (only) to repay creditors (banks) and investors before you can finally reap the profits of your investment.

It’s a profitable business, and investment. Indeed, we found that restaurant franchises in the US have 7-8 years payback on average.

Yet keep in mind you should also consider other factors than profits when making a decision when it comes to franchises: the franchisor’s support, brand name, territory protection and more.

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Disclaimer

Disclaimer: This content has been made for informational and educational purposes only. We do not make any representation or warranties with respect to the accuracy, applicability, fitness, or completeness of the information presented in the article. You should not construe any such information or other material as legal, tax, investment, financial, or other professional advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, advertisement, or offer to buy or sell any franchises, securities, or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the franchise and/or securities laws of such jurisdiction.

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