Donut Whole owner has new plan to save his struggling business

Four months ago, The Donut Whole’s owner Michael Carmody was looking to sell.

A combination of personal issues and ill-timed mechanical failures led Carmody to explore selling the popular decade-old business, which he said is currently carrying an unsustainable amount of debt.

Now he’s changed his tune.

Carmody wants to keep The Donut Whole afloat, and to do so he’s asking for help.

On Thursday, Carmody launched “The Donut Whole Project X,” a crowdsourced fundraiser that aims to raise $100,000 over the next two months to stabilize the business.

“It was hard for me to find the right buyer for it on terms that would work for everybody,” Carmody said. “I’ve put more than a decade of my life into this, and it’s been pointed out to me repeatedly that my best shot as an individual of affecting this community in a positive way is through this venue.”

A road construction project at Douglas and Hydraulic has adversely affected the business, Carmody said. It’s making roughly $500 less per day than is normal for this time of year, he said.

He’s had to spend $150,000 to replace equipment failures in the last few years, he said. Part of his frying system, a mixer, a walk-in cooler, half of his building’s heating system, an espresso machine and others have all broken down.

“This was all stuff I had to buy on credit,” he said. “Then you’re carrying a debt load and all of a sudden you have something where people aren’t coming down your block anymore – it’s problematic.”

Carmody said he gleaned “a lot of good advice” by talking with local business professionals and friends who want to see The Donut Whole succeed.

“I was advised by numerous people to try, before giving up or declaring bankruptcy or whatever else, to reach out to the community and ask for some support,” he said. “I’m not one who is comfortable asking for help most of the time. I have great difficulty with that. I didn’t want it to be where I’m just begging.”

“Project X” utilizes a tier-based donation system, where donors at different cash levels receive various perks. For example, $25 donors will receive a six-pack of donuts, two drinks and a “Project X” pin, and $100 donors will become members of its new loyalty program, Club Ed, and receive other perks. Everyone who donates will receive a pin.

The immediate priority is to “stem the leak” and pay down debts, he said.

But Carmody also sees “Project X” as a reboot for the doughnut shop. He plans to use funds raised to “address longstanding complaints about our business.”

“It’s a chance to regroup, take the criticism we’ve received and work to make it better,” he said.

These are some of the projects Carmody would like to accomplish:

▪ Revamp the way donuts are stored and displayed in-store. He plans to buy new, “donut-specific” cases to store the treats.

Currently, donuts are stored in metal racks behind the counter. By the time late-night customers arrive, the store is frequently out of donuts, or those donuts that remain can often taste stale, Carmody said.

“We’ve been aware of it for a long time, but there’s been nothing we can do about it,” he said. “That was something we were working on when (Donut Whole co-founder) Angie (Mallory) died. That’s way high on the list, to upgrade our display and storage so our products stay fresher all day.”

▪ Add more food and drink options, installing a soda fountain and adding non-sweet food.

“People have been begging us for (a soda fountain) for years,” Carmody said.

▪ Develop and train staff more thoroughly.

Carmody said he has received complaints in the past that his staff “wasn’t friendly enough or accommodating enough.”

“We’re going to have ongoing development and training across the board to make sure the product is consistent and the service is consistent,” Carmody said.

▪ Establish a loyalty program, Club Ed.

Those patrons who support “Project X” with at least $100 will become members of Club Ed, which grants the member free birthday donuts for life, as well as access to member-only perks and Donut Whole merchandise. People can join Club Ed – named after the shop’s rooftop rooster, Big Ed Buttermilk – even after the fundraising campaign is scheduled to conclude in April, Carmody said.

The Donut Whole plans to run the “Project X” fundraiser through the end of April.

If the project hits its $100,000 goal, leftover funds will be earmarked to charter a nonprofit foundation, according to the shop’s website.

For more information on the fundraiser, visit www.donutwholeprojectx.com or come in to the store at 1720 E. Douglas.

Donations may be made at www.gofundme.com/donut-whole-project-x.

This story was originally published March 2, 2018 at 1:40 PM with the headline "Donut Whole owner has new plan to save his struggling business."