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The Honolulu Advertiser
Posted on: Monday, December 24, 2001

Doughnut sales still on a roll

By Andrew Gomes
Advertiser Staff Writer

Nearly one year after bringing Dunkin' Donuts back to Hawai'i, the operators of the franchise are ahead of their original expansion schedule and have begun to look for an operating partner on Maui to run a doughnut factory and six retail stores.

Dunkin' Donuts' Pearl City store drew large crowds when it opened in January.

Advertiser library photo • Jan. 12, 2001

Honolulu foods wholesaler Sushi Chef, the local Dunkin' Donuts franchisee, has opened six O'ahu stores since January and expects to have at least 10 by the end of next year.

The company had anticipated operating 10 stores within three years, and was given up to five years by the Randolph, Mass.-based franchisor to reach the 10-store mark.

"We're going to do this in less than two years," said Dean Matsushima, executive director of Iwilei-based Sushi Chef. "And we haven't even hit Kalihi yet. We don't have one in our back yard."

The stores in Pearl City, Ala Moana, Waikiki, Kailua and Kane'ohe have far exceeded expectations, selling more than an estimated 20,000 doughnuts a day per store.

When Sushi Chef's first Dunkin' Donuts store opened in Pearl City, it recorded the highest first-week sales in the history of the 50-year-old chain. When the second store opened on Kapi'olani Boulevard, it beat the Pearl City record.

The record sales and rapid rollout mark a dramatic change in Hawai'i for the world's largest chain of coffee and doughnut shops. Dunkin' Donuts was initially established locally in 1966 through a franchise with the owner of Foodland Super Market Ltd. The operation was sold in 1970, but subsequent operators had trouble sustaining the brand, and by 1976 the franchise was down to one location at Ala Moana Center. That store closed in 1995.

Dunkin' Donuts' return has contributed to what has been increasing competition among specialty coffee and pastry sellers.

Starbucks Coffee in the past year opened about a half-dozen stores, bringing its Hawai'i total to around 26. Krispy Kreme doughnuts plans to enter the Hawai'i market between 2005 and 2007.

Matsushima said Sushi Chef's initial plan was to open only retail stores on the Neighbor Islands, but if the consumer response is anything like it has been on O'ahu the company figured it was going to need another production facility to keep up with demand.

"Although we can do it from here, the amount of sales is reaching the max of the machine," he said.

The Maui production facility and six stores will require a minimum investment of $1.5 million, and could be a pivot point for delivering doughnuts to additional stores on the Big Island and Kaua'i, Matsushima said.

Another plan is to offer doughnut and coffee delivery to downtown Honolulu from the Iwilei plant.

Sushi Chef also expects to add four more stores on O'ahu by the end of next year, and is looking at various locations, including Kalihi, Mililani and Kapolei.

Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.