— Interview with Flynn Dekker —
With a fresh new development team in place, Shipley Do-Nuts leans into growing digital sales and new product innovation as it enters new states and markets.
Shipley Do-Nuts has been a sweet, savory mainstay for many generations, first opening in 1936 and now operating more than 360 units in 12 states — and growing. This year, the Houston-based brand added significant new members to its executive team, as well as more than 100 units to its development pipeline. To support this dynamic growth, Shipley also moved to a new Houston headquarters in September. Now, notably, the company continues to open one new restaurant per week through the end of 2024. Retail & Restaurant Facility Business recently interviewed CEO Flynn Dekker, who came onboard in May 2023, to see where the growing brand grows from here.
R&R: How many total stores have opened this year, and what is the growth forecast for 2025?
Flynn Dekker: Through Q3, Shipley opened 12 stores and are currently on track to open one a week through the end of the year. We’ve also added more than 100 units to our development pipeline this year.
Next year, we are looking to break another record for new shop openings in a year. Keith Sizemore, our senior vice president of development, and his team have developed a full-service approach to franchise development where they provide franchisees with cost-saving guidance on everything from real estate to design and construction, as well as shortening the timeframe from signing to opening. They’ve been able to beat industry averages — usually about 7-10 months — for franchisees from signing to opening.
R&R: In September, a new head of marketing joined your executive team. Tell me about Laurie Curtis, who came on as senior vice president of marketing, with more than 25 years of national brand marketing experience. What unique talents does she bring to Shipley Do-Nuts, and what are some of her forward-looking goals?
Dekker: Laurie has an incredible background having served most recently as CMO at Walk-On’s Sports Bistreaux and previously was vice president of marketing and menu innovation for Denny’s. Her additional brand experience includes leadership roles with TGI Fridays, Pizza Hut and Domino’s.
At Shipley, Laurie is responsible for all aspects of marketing, communications, culinary and product innovation strategy. Her strong background in all areas of marketing and specifically growing digital sales and product innovation — which are two major focus areas for us at Shipley right now as we grow — is key for us as we enter new states and markets and expand our footprint in existing markets.
R&R: Founded in 1936, Shipley is one of the nation’s oldest and largest donut brands. Tell me about the history of the Houston-based concept, and its secret to enduring success — over many generations.
Dekker: The secret is no secret: it’s our famous signature glazed donut! Founder Lawrence Shipley said, “When they bite into that hot do-nut, it will bring them back every time.” He was right. Shipley has had the privilege to serve generations of guests, and we’ve become part of their lives and family traditions.
What continues to make Shipley so special is we make everything by hand, in-house, fresh daily. That means that each and every day, at all 360-plus locations, we are making over 60 varieties of donuts plus our kolaches fresh from scratch.
R&R: Shipley Do-Nuts is in 12 states currently, correct? Does it have its eye on additional states next year for expansion?
Dekker: We are currently in 12 states and quickly approaching our first North Carolina and Virginia store openings that will open in Q1 2025.
Earlier this year, for the first time in company history, we opened territories for development in the Midwest, including Indiana, Kansas, Kentucky, Missouri and Ohio, and we are actively recruiting franchisees in the Midwest and throughout the Southeast.
R&R: What is your average square footage? Or are there a variety of sizes? Do all prototypes have drive-thrus?
Dekker: We have a variety of sizes, but ideally we look for spaces in the 1,400- to 1,800- square-foot range. We have multiple store prototypes — from freestanding to in-line to endcap — to offer lower start-up costs and more flexibility with real estate selection. We’ve proven that in-line prototypes without drive-thrus have great economics — it really depends on what makes the most sense in the community where the shop is located.
R&R: Shipley recently moved into a new 15,000-square-foot Houston headquarters, correct? Was that in 2022? We covered some news on the groundbreaking in 2021. Tell me how this new facility invests in your corporate team and supports overall growth.
Dekker: The brand is growing at the fastest rate in company history and surpassed 360 shops for the first time in company history in Q3. We are now one of the nation’s largest donut brands.
To support this growth, we moved to our new Houston HQ at 55 Waugh Drive in September 2024. We previously announced a plan to build a new HQ, but there were unforeseen issues with the original plan that made it cost-prohibitive to proceed. With our rapid growth, we needed an office space solution more quickly. The new space at 55 Waugh Drive has been a great pivot because it saves us money versus the old plan but still with plenty of space to house our Houston-based support team as the company continues its dynamic growth.
R&R: What percentage of your units are franchised vs. corporately owned? Do you intend to maintain a similar ratio or grow more on the franchising side?
Dekker: Shipley currently has 11 company-owned stores in Houston, and the rest of our locations are franchised. The majority of our growth has been through franchising, with a focus on attracting new multi-brand, multi-unit operators to the brand. Our current multi-unit, multi-brand franchisees also own brands like Panera, Wingstop, Pizza Hut, Church’s, Zaxby’s, Five Guys and T-Mobile and have been able to diversify their portfolios by entering the donut space. We plan to continue growing with a franchised, asset-light business model.
R&R: In 88 years, Shipley Do-Nuts has seen a lot. How did it weather the pandemic years? Do digital platforms now account for more systemwide sales? If there is growth in that area, do you attribute that to lessons learned during 2020 / evolution of the industry and consumer preferences? What changes from that era are here to stay?
Dekker: Online ordering and third-party delivery exploded during the pandemic, and it has remained a popular choice for our guests. In 2020, Shipley didn’t offer that as an option because we didn’t have the systems in place that we now have.
Today, digital is a major focus for us, and in the past 18 months we have almost tripled our digital sales mix. Online sales typically have a higher check average for us, and our loyalty app continues to drive digital sales. We’ve learned that today’s consumer doesn’t mind paying extra for the convenience of online ordering and delivery.
R&R: It seems like over the past year or two, Shipley Do-Nuts has revamped or added to its executive team, with a new CEO, CFO and VP of operations in 2023 as well as key additions to the construction/design and development teams this past summer. What’s next for the team, and your vision, this year and beyond?
Dekker: We’re incredibly proud of the team that we’ve built. They have major brand experience with industry leaders in their respective categories. We are able to attract top talent because of the excitement around the brand and its huge growth potential, which we are seeing come to fruition week by week.
Our company has undergone a transformation from a large, family-run business to a modern QSR since 2021. We’ve overhauled almost every aspect of our business, including updated accounting and finance systems, standardized point-of-sale at all locations, and launched online ordering and loyalty. With our new executive team in place, we will continue building on this foundation as we grow in both size and brand awareness, with our focus for the future on product innovation, digital sales growth and process automation.
R&R: Does Shipley Do-Nuts plan any non-traditional openings in airports, stadiums, college campuses?
Dekker: Non-traditional is not currently a focus for Shipley, but we’d definitely consider it if the right opportunity arises.
R&R: Do you plan to expand globally?
Dekker: Never say never, but that’s not currently part of our growth plan.
R&R: For the first time in company history, Shipley has been leaning into product innovation to drive engagement and increase sales, which were positive despite industrywide softness through Q2. We don’t normally cover new product launches, but please explain how significantly this tied into Shipley’s recent success.
Dekker: Product innovation is a key initiative designed to offer existing customers more reasons or times of day to visit, increasing frequency and therefore sales. It also gives us something to talk about to new consumers, to drive awareness in newer markets and to create excitement around the product launches in all markets.
Our product innovation has exploded in 2024, with new Egg & Cheese kolaches, offered in three varieties, becoming the biggest launch in company history. In fact, we’ve added them to the permanent menu and added Bacon, Egg & Cheese kolaches as an LTO [limited time offer] that is performing extremely well.
We’ve also had some cool brand partnerships throughout 2024 with SKITTLES and OREO for LTO specialty donuts, Poptastic and OREO Cookies & Dream. We launched our first-ever LTO for the holiday season, Candy Cane Crunch, on November 1.
R&R: Tell me about your back of house. What types of space-saving equipment do you have, and are there any other efficiency/design elements that enhance the operational flow?
Dekker: We use a semi-automated dough sheeter and cutter that saves time and space allowing donuts and donut holes to be cut out of the dough with precision and speed. Most of our other processes are hand crafted and manual with made-from-scratch ingredients.
R&R: Describe how Shipley Do-Nuts handles repair and maintenance. Do you have an in-house maintenance department or do you rely on vendors? Or do franchisees handle R&M individually?
Dekker: Franchisees handle repair and maintenance individually. We provide guidance from the equipment manufacturers on local service providers around the country.
R&R: Do you use local or national vendors? Why?
Dekker: We produce all of the flour dough mix ourselves for the franchisees, and it is produced in Texas. We use national vendors for other products with a mix of proprietary and non-proprietary products. National vendors allow us to have consistency all across the country.
R&R: How has everyday restaurant maintenance (jan/san and otherwise) evolved since the pandemic?
Dekker: We have always had strict janitorial and sanitation standards in our locations. Since the pandemic we have instituted a third-party company to audit all of our locations unannounced to ensure these standards are being adhered to strictly.
R&R: What do you enjoy most about your job day to day?
Dekker: We do have tastings! It’s a tough job but someone’s got to do it.
R&R: What goals have you set for your team, short term and long?
Dekker: Our short term goals are to continue driving positive sales and traffic through loyalty, digital sales and product innovation to improve our already great unit economics. Longer term, we want to double the brand in size over the next 5 years through franchising, with a focus on large multi-unit, multi-brand franchisees who see the incredible potential in the Shipley brand.
— This article originally published as the November 2024 cover story of Retail & Restaurant Facility Business magazine. To have your retail or restaurant company profiled in a future issue, email the editor, Katie Lee, at [email protected].