Emerging Franchisors to Watch: Factory Donuts

When David and Heather Restituto set about establishing their own franchise brand last year, they didn’t start with donuts. The married couple had spent 14 years owning and operating a Rita’s Italian Ice, and they were determined to start a brand that had the same operational advantages and consumer appeal as Rita’s.

After exploring a few different ideas, the Restitutos settled on a concept that prioritized all the advantages they were looking for: made-to-order donuts served in hip, factory-inspired spaces. Factory Donuts opened its first location in Philadelphia last year, and David says they plan to expand the franchise dramatically over the next five years.

David spoke to 1851 about what lessons he and Heather took from their work with other brands when developing Factory Donuts and why they plan to grow slowly in their first year before expanding rapidly.

1851: How does Factory Donuts stand apart from competitors in its segment?

Restituto: We stand apart by being a fresh, made-to-order donut concept that emphasizes our guest experience as well as the quality of our products. There are many other donut shops and bakeries who have donuts already prepared for you, but our unique concept is to make the freshest made-to-order donut for each individual order, within just a few minutes. Having been operators of other franchises, we know what it takes to make sure the processes are streamlined and the products are prepared in a timely manner. 

Of all our products are made with premium ingredients, and we take pride in making sure the guest experience is as good as the quality of our products each and every time.

1851: What do you wish more people know about Factory Donuts?

Restituto: I wish more people knew that our coffee line is as good if not better than most big chain and premium coffee cafes. Our guests are hooked on it once they give it a try. We are looking to add some more coffee product lines to continue to keep up with the demand for specialty coffees as well as specialty donuts. Currently we offer a medium blend, dark blend and a decaf. We also have an amazing ice-coffee and flavored ice-coffees. We are testing some other products as well, and we look forward to expanding our coffee line, but we’re keeping it simple so operationally we can still be quick for our guests. 

1851: What qualities make for a great Factory Donuts franchisee?

Restituto: We are looking for people who are highly motivated and love to win. My wife and I are highly motivated individuals who like to compete, and that brings a sense of pride to what we do. We want franchisees who look at Factory Donuts and see their name out on the building alongside of “Factory Donuts.” When people take pride in what they do they give 110% all the time. That’s how we are, and that’s what we are looking for in our franchisees: someone who understands that they are responsible for their individual success and that the more effort you put in, the more you will get out. 

1851: As Factory Donuts begins to grow, what cues have you taken from your previous franchise ventures?

Restituto: Since we have more than 20 years of experience in the franchise industry, we have built Factory Donuts on the ability to be ahead of the curve for new and innovative practices. We have taken the knowledge from what we have been through and have applied it to what we feel will benefit Factory Donuts now and in the future. We want to make sure we are set up for growth and franchisee success. We won’t jump across the country like some other franchises do just to expand the brand, which can often put franchisees in jeopardy. Rather, we will grow strategically and from within so that our brand will carry more weight and our franchisees will benefit from more brand recognition. We have seen far too many instances of franchisors growing into outer markets quickly to capture the money people are willing to give them, instead of doing it the right way with smart growth. 

1851: What kind of growth plans do you have for Factory Donuts in 2018 and beyond?

Restituto: 2018 is a year for us to open 5–10 units. We want to make sure the first 5–10 units are strong and have the necessary support to help get them off the ground. The most important factor, we believe, is making sure the franchisees are making money. When that occurs, we will start to see exponential growth. Our goal is to be at 300 units in 5 years. The most important factor in that goal is to make sure we give our franchisees the ability to make the best return on investment possible. When franchisees make money, they will want to continue to open more locations. Franchisees success is our success and vice-versa.