Donut Bar to franchise - with craft beer

In the category of almost everything goes better with craft beer, San Diego doughnut impressario Santiago Campa is planning an ambitious expansion of his popular downtown outlet that will pair his artisan pastries with selected brews.

Before you turn up your nose at the thought of biting into a frosted red velvet doughnut followed by a swig of a pale ale, Campa will tell you that whenever he held periodic beer and doughnut pairings last year at his Donut Bar, the same early morning lines-out-the-door showed up in the evening hours as well.

The new concept, slated first for an expanded Donut Bar on B Street, is the foundation for plans to franchise the store to as many as 20 new stores over the next three years to what he calls destination cities.

He and partner Wendy Bartels are hoping to open two more Donut Bars this year, one in downtown Las Vegas - they signed a lease this week - and another in downtown Los Angeles.

“There’s a hipster kind of feel to getting your doughnut and your beer. Surprisingly enough, doughnuts and beer go together,” Campa said. “Last year we did 15 to 20 night openings in the summer, and whenever we’d announce that opening, they would flock.”

In order to bring craft beer, as well as wine, to their downtown location, Campa and Bartels are expanding into the space of their next-door neighbor, Robek’s Juice, which closed last month. While they hope to open the enlarged space by March 23, beer and wine service may not come until a month later, once they secure their license to serve alcohol.

The plan is to continue to open the store in the early morning and remain open until 11 a.m. and then reopen around 5 or 6 p.m. Closing time would be around midnight or 1 a.m., Campa said.

Rather than open a number of new doughnut outlets that they would own and operate themselves, Campa and Bartels opted to go the franchising route and are in the process of finalizing paperwork in hopes of rolling out franchise opportunities by June.

Last year, sales at Donut Bar spiked 39 percent over the previous year, Campa said. A second Donut Bar that opened in Orange County in 2014 experienced slightly slower growth - a 25 percent increase - but Campa opted to close it last month after his lease rate was scheduled to rise. He sold the business to another gourmet doughnut operator who is rebranding Donut Bar.

The Fountain Valley location, Campa added, wasn’t a good fit for Donut Bar’s new craft beer concept.

“Yes, there would be more of a reward for us if we wholly owned each location but our biggest thing is this - we want somebody like a franchisee to have a vested interest in their business who will put the same love and devotion we put in there,” Campa explained. “That was my biggest challenge with my Orange County store, to be there and have someone with that passionate energy.”

He and Bartels expect to roll out their solicitation for franchisees in June and are estimating buildout costs for each location to be around $200,000, a cost that will be borne by the operators. The franchising fee would be about $25,000 to $40,000, with Donut Bar sharing in a percentage of the revenues of each venue.

Campa said he expects to spend up to $250,000 on the expansion of his current Donut Bar.

San Diego Brewers Guild president Mike Sardina says he has no doubt that the pairing of beer and doughnuts will prove to be a wise business decision.

“I only have anecdotal experience, but Dr. Bill Sysak from Stone Brewing Company has hosted numerous beer and doughnut pairing events - during Beer Week, during the National Homebrewers Conference last year, and at Brewers Association events like SAVOR: Craft Beer,” said Sardina, of Societe Brewing Company. “And each and every time, he offers his presentation to a full house of folks. People, literally, eat it up.

""We’re actually doing a Valentine’s Day event here at Societe, and we’re featuring a chocolate cruller s’more doughnut from Nomad Donuts paired up with The Butcher, our Imperial Stout.”

Source: DiscoverSD