Sales definitely sweet for nation's fastest-growing doughnut chains

By Bruce Horovitz
USA Today

It's time to poke a doughnut-sized hole into the notion that Americans want healthier food.

The fastest-growing dining category nationwide last year wasn't fine dining or family restaurants: It was doughnut shops.

That's right, doughnuts — as in, how many calories can you cram into that deep-fried, glazed, jelly-stuffed pastry? The $3.6 billion category sizzled with 9 percent sales growth last year — about twice the industry average, according to a yet-to-be-released study by Technomic, a restaurant consultancy.

The three fastest-growing doughnut chains: Dunkin' Donuts, Krispy Kreme and Tim Hortons.

Some experts attribute the growth to consumers' desire for small indulgences during stressful times. Others credit the nation's multitasking consumers who like to drive, eat and talk on cell phones at once.

Others cite the bum economy. "The tighter the economy, the better doughnuts sell," says Bob Pitts, a technologist at Dunkin' Donuts. "A dozen doughnuts for $5 is not a lot of money to feed a family."

Nutritionists are alarmed. "There's no redeeming quality in a doughnut," says Hope Warshaw, author of "A Guide to Healthy Restaurant Eating." "It's high in sugar, fat and calories."

Adds Robyn Flipse, a registered dietitian: "Most disturbing is that many think of doughnuts as breakfast. Nutritionally, it's a terrible way to start the day."

But industry consultants are bemused. "The American consumer will drive to the health club while eating a doughnut," says Dennis Lombardi, executive vice president at Technomic. "It fits into the American lifestyle but not the American waistline."

How the Big Three are growing:

• Krispy Kreme. One of Krispy Kreme's keys to success is convincing consumers it's not just for breakfast.

More than half its sales are between noon and midnight, says CEO Scott Livengood.

The chain will add 77 stores in the next year. In June, it will open its first store in Australia and later this year, in Britain.

Its doughnuts are mostly calorie-laden. But its glazed doughnut has fewer calories than a bagel and cream cheese, Livengood says. "We've never called ourselves a health food and don't pretend to be," he says

• Dunkin' Donuts. No one will open more U.S. doughnut shops in the next year than Dunkin' Donuts, which plans to add 300. It's about to test stores inside Home Depots.

When it tests better-for-you doughnuts, they flop. An oat-bran doughnut in the '80s was a bust. And whole-wheat doughnuts sell so-so. "You don't eat doughnuts as health food," Pitts says. "They're for fun."

• Tim Hortons. The chain, with 2,000 stores in Canada, is expanding into the United States under owner Wendy's. It has 60 U.S. locations, with 40 more on tap.

"People are so health conscious," says spokeswoman Patti Jameson, "that doughnuts are a fun splurge."