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) $446,000 on average to open a new location.

The downside though is that Duck Donuts isn’t the most profitable franchise: it has a 7 years payback period (as in, the time to recoup your investment).

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

Duck Donuts franchises: key figures

Franchise fee	$40,000
Royalty fee	5.0%
Marketing fee	3.0%
Investment (mid-point)	$446,000
Average sales	$427,000
Sales to investment ratio	1.0x
Payback period*	7 years
Minimum net worth	$350,000
Minimum liquid capital	$150,000

What is 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 $446,306 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.

Here’s the full breakdown of costs:

Expense	Amount
Initial franchise fees	$40,000
Construction improvements	$173,416-$294,491
Equipment	$91,000-$111,000
Insurance	$3,000-$5,000
Additional funds -3 months	$20,000
Other	$13,748-$60,957
Total	$341,164-$531,448

What’s the turnover of a Duck Donuts restaurant?

On average, a Duck Donuts franchised restaurant grossed $427,271 turnover in 2020.

Unfortunately, Duck Donuts doesn’t provide much information about its franchise restaurants’ financial performance in its Franchise Disclosure Document. Instead, we obtained this number by dividing the total revenue of all the franchises ($41 million) by the number of franchise-owned restaurants (98 as of 2020).

How profitable is a Duck Donuts franchise?

On average, a Duck Donuts franchise makes $119,636 in profits per year. This corresponds to a 28% adjusted EBITDA margin.

Duck Donuts is a profitable franchise: indeed, we found that the 28% profit margin is higher than the average for similar restaurant franchises (25-27%).

We calculated this number using the information available in the Franchise Disclosure Document 2021. Unfortunately, Duck Donuts has not provided detailed information on the cost of goods sold (COGS), rental costs, and labour costs. Therefore, we used industry benchmarks instead (see below).

Profit and loss	Amount	% of sales
Sales	$427,271	100%
COGS	($106,818)	25.0%*
Labor	($123,909)	29.0%*
Rent	($42,727)	10.0%*
Royalty + marketing fees	($34,182)	8.0%
Adjusted EBITDA	$119,636	~28.0%

Is opening a Duck Donuts franchise a good investment?

We found that Duck Donuts has a payback period of 7 years on average. This means that you would need to use 7 years’ worth of profits to repay creditors (banks) and investors before you can finally reap the profits of your investment.

To estimate this number we used a 15% net profit margin, in line with the 28% adjusted EBITDA margin calculated earlier.

Whilst Duck Donut isn’t the most profitable franchise, it’s not a bad investment either. Whilst the most profitable franchises have payback periods under 4 years, a payback period of 7 years is average for restaurant franchises in the US.

In addition, 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.

How does it compare vs. other franchises?