Ideas & Opportunities

Introduced into the market without fanfare in December of 2003, Go Nuts Donuts instantly became Metro Manila's latest fast food sensation. Daily sales at its then sole outlet at The Fort Strip in Makati have soared to 20,000 donuts a day, obliterating initial projections and forcing its owners to revise the business plan.

"The store is doing eight times better than we had expected," says Michael Trillana, president of Doughnut People Inc., the company that owns Go Nuts Donuts. "It's crazy." It took Doughnut People two and a half years of research and development here and in the U.S. to come up with the kind of donuts that people would stand in line for, says Michael's younger sister Christina, the retail manager

"Our donuts are less sweet. This was deliberate," says Christina. "One feedback we got from the consumer panel is that donuts that are on the sweet side tend to lose their appeal over time." And knowing what would please Filipinos' taste buds, "we removed the lemon and cinnamon taste commonly used by U.S. bakeries." They also made their donuts "twenty to twenty-five per cent bigger" than rival brands, says Michael.

The Trillanas expect to recoup their investment and pay off a small bank loan by June. "The thrust now is to open additional theater stores," says Michael. He sees one rising up in May or June in Alabang, and another in Ortigas or Quezon City. Like the first outlet, whatever follows will have a cooking area that would allow customers to see how the donuts are being made. The Trillanas also plan to acquire more high-tech machines to speed up production. "Demand always outstrips supply," says Michael. "We plan improvements in the process, the people and the equipment, so we can cut down the line."

It is likely the Trillanas will have to franchise the business sooner than later. They counted 2,000 applications as of February, and expect more to roll in. "Some want to invest in the company while others just want a franchise," says Michael. "We are studying this very carefully. We still have to decide what kind of stores we want to franchise, the terms that will have to apply, how product quality can be maintained. But we will definitely hand out franchises in due time."

The store at The Fort originally was conceived to serve fifteen satellites, but as sales soared, the company dumped its plan and hired dozens of employees overnight to produce round the clock. It also shelved its marketing plan, and another plan to produce twenty-two donut varieties as a result of the queues that began forming a week after the store opened. It had to settle for eleven.

"The holding time for our donuts is only 20 minutes, which means they are sold almost as soon as they are cooked," says Christina. And with names like Amazing Glaze, Chocolate Frost, Yummy Vanilla, Berry Full, and Pastillas de Leche, the donuts literally invite hoarding.

Currently, Go Nuts Donuts has 14 stores in Metro Manila and has reached other parts of Luzon and the Visayas.

Do you think it's time for Go Nuts Donuts to accept franchisees?