The Holy Donut, Portland
7 Exchange St. and 194 Park Ave., Portland
Owner: Leigh Kellis
Revenue: $1 million
Contact: 775-7776 www.theholydonut.com
Five years ago, Leigh Kellis was a single mom living in her parents' attic, bartending at Enzo Wine Bar and on the verge of becoming a Spanish teacher.
But she had a craving that she just couldn't shake. She hungered for the comfort of a doughnut — without the regret that goes along with indulging in an artificially flavored treat from a package or a chain store.
That craving ultimately led to the creation of The Holy Donut, which now has two locations, 35 employees, sales in excess of $1 million and a national reputation for providing intensely delicious treats for anyone who covets a "goodie" but dreads the guilt.
With vegan and gluten-free varieties, flavors like dark chocolate sea salt and mango glazed and a vow to stick with Maine ingredients, The Holy Donut has earned the praise of the Boston Globe, Elle, the Cooking Channel, Travel & Leisure and "CBS This Morning." In April, Fodor's Travel named The Holy Donut one of "America's top donut shops."
Kellis' success is an object lesson in what can happen when you trust your gut and never stop searching for room to improve.
"You have to be open to mistakes," says Kellis, 40, a Portland native. "That's how innovation happens. Opening a business requires patience and receptivity to learning and a lot of faith. But it doesn't require that you know it all. "
Kellis didn't know anything about baking or starting a business when she feverishly began making doughnuts in her parents' kitchen.
But creating a decadent but wholesome treat "was like a mission from God," she says. "I love doughnuts and the idea of bringing it to Portland was exciting."
Once she hit on a winning potato-based recipe, she brought six doughnuts to Coffee By Design's Washington Avenue store to see if they'd sell. They did and she brought back a dozen the next day. Soon she got orders from Whole Foods Market and Lois' Natural Marketplace and rented commercial kitchen space. Forty dozen doughnuts a week became 100 dozen. After eight months, she was yearning for a doughnut shop of her own.
She asked five investors for the $30,000 she needed to get started. They all turned her down and tried to talk her out of it. So she borrowed money from her family and moved into Park Avenue space vacated by Terroni's Market, which left behind a refrigerator, cooler, a hood and other key appliances. Kellis and her family built a funky space where even fussy foodies could sit and savor the sweet smells and sneak a peek at doughnuts being made by hand.
"It's not coming off a conveyor belt," she says. "There's something about the experience of seeing how good food is made that people love. And there's something that excites people about hand-made high quality food that's unusual and creative."
Kellis opened a second location in the Old Port in October 2013, and assembled a team of staffers willing to embrace her mission, and show up for shifts that began at 11 p.m.
"I'm just so grateful for all these things," says Kellis. "I pinch myself all the time. We're like the little doughnut shop that could."
The secret ingredient to Kellis' success may be in her willingness to take risks and make mistakes.
Accurately forecasting doughnut demand was a major matter of trial and error.
At first, Kellis adjusted production on the fly. But too often she would sell out before closing or end up with dozens of extras that she would have to donate.
So she started tracking the factors that impacted consumer appetites.
There were seasonal fluctuations. And some trends defied logic. Sales dropped by 20% the week after Labor Day, but the next week they jumped by 10%. Any radical weather change dampened demand by 25%. Sales slowed on game days at Hadlock Field, which is near the Park Avenue store.
In October 2013, Kellis made a bold change. She began dictating daily doughnut production each morning and closing up shop when she sold out. Though she has disappointed some customers, the move has paid dividends.
"We're not throwing away bags and bags of donuts like we used to," she says. Plus, staff is less stressed, as they no longer have to ramp up production as traffic fluctuates.
She continues to fine-tune her forecasts. Her brother-in-law, Jeff Buckwalter, became general manager this year and they began tracking sales on an hourly basis.
"We can be prepared before the day," she says. "And our profitability has gone up."
They continue to look for ways to trim costs. Recently, they started sourcing buttermilk, a key ingredient, from Casco Bay Butter. Prior to that, Kellis was buying buttermilk wholesale. The change saves The Holy Donut $1 per carton. "It's reducing waste for everyone," Kellis says.
These kinds of improvements are critical for the business to grow long term. Additional locations and a central production facility may be in the future, Kellis says. After all, her brand is defined by premium ingredients and hand-made production. If she's going to use Callebaut dark chocolate and pay staff to zest lemons, peel sweet potatoes and puree berries from scratch, there will be tradeoffs.
"My standards are so high, I would not tolerate low-quality ingredients," Kellis says. "That's something we could never compromise."