Houston-based Shipley Do-Nuts topped 360 units this year in a dozen states and added more than 110 units to its development pipeline.
When Virentes Hospitality went shopping for a donut concept to add to its restaurant portfolio, it considered all the options.
In the end the group landed on a beloved Texas-based legacy brand that’s been around for nearly 88 years and is pursuing expansion and embracing innovation under new management.
Virentes signed a 22-unit agreement with Shipley Do-Nuts to expand the brand’s presence in Florida and Tennessee. It’s the second multi-unit agreement the hospitality asset arm of Virentes Partners Group has signed this year following a 15-unit deal finalized with Sweet Paris Crêperie Café in February.
Virentes Partners Group, a multi-family office partnership headquartered in South Carolina, is a franchisee of Massage Envy and Orangetheory Fitness. It was a Jimmy John’s franchisee before exiting the brand earlier this year. Its principals are also minority shareholders of massage franchise Hand & Stone and own about dozen ghost kitchens.
Jim D’Aquila is a managing member of Virentes Hospitality.
“We did a very extensive search of a number of fast-casual concepts with breakfast offerings specializing in donuts, but what we found is there’s very few great donuts out there,” said Virentes Managing Member Jim D’Aquila. “When we did our research, it was Shipley that came out on top as far as quality of their donuts which they’re baking and glazing throughout the day and their speed in getting the donuts out the door.”
D’Aquila said his restaurant group is planning to open its first Shipley in Nashville, Tennessee, in March as a new build, followed by two more openings in Jacksonville and Tampa, Florida, in April and May. He said potential real estate for the new restaurants has been located and the staffing process is underway with Andrew Povec, vice president of operations, taking the lead
Shipley, a popular donut concept in the South that offers more than 60 types of handmade donuts, landed at No. 193 on the Franchise Times Top 400 with $300.4 million in sales in 2023. Shipley, which also has freshly made kolaches and coffee along with other treats, topped 360 units this year in a dozen states and added more than 110 units to its development pipeline. The brand is entering two new states, North Carolina and Virginia, in early 2025.
“We were extremely impressed with their leadership and their team building efforts with franchisees and staff,” D’Aquila said about Shipley. “We also really appreciated their authenticity, and long history along with its systems, software and respect for their heritage which allows room for creative menu innovations.”
D’Aquila praised Flynn Dekker, the former CEO of Bonchon and CMO of Wingstop who was hired by Peak Rock Capital in 2023 to lead Shipley, for being a catalyst in expanding the chain’s permanent menu items while also pushing for back-of-house automation upgrades to increase store productivity and efficiencies. This year, the company rolled out Poptastic donuts with freeze-dried Skittles and Oreo Cookies & Cream options and tested a breakfast egg and cheese kolache line.
Related: Legacy, New Product Ideas Require Balance at Shipley Do-Nuts
The company updated its franchise disclosure document in the second quarter to highlight lower investment costs, a higher average unit volume and EBITDA profitability projected at 18 percent to 20 percent. As a result, the brand signed 11 multi-unit development deals through the first half of 2024, which represented a significant increase over 2023, and opened eight restaurants during that period.
The cost of a Shipley Do-Nuts shop ranges from $496,400 to $1,029,000. AUV for franchised stores is $902,517 and $1.5 million for company-owned stores. Its highest performing store comes in at $2.7 million.
“Their training manuals are great, their recipes are great, their quality control is great, their procurement is great and all these things are getting better under Dekker and his executive team,” D’Aquila said.
“The first discussion I had with Flynn was last January and the best way to describe our relationship is it’s been an 11-month honeymoon period that’s just come to fruition now,” he said.
D’Aquila said while there is plenty of work to do to keep its Shipley and Sweet Paris development on track, he didn’t rule out Virentes Hospitality adding another quick-service brand to its portfolio in the near future. He said his group is evaluating protein concepts, including chicken brands, along with a beverage concept.
“Like a lot of other folks, we’re seeing a growing palette of America leaning in towards diverse, ethnic inspired dishes. So, we’ve been looking at Middle Eastern concepts and barbecue and others,” said D’Aquila, who estimated that his group evaluated nearly 90 FDDs and attended 40 observation days in the past year.