Voodoo Doughnuts grew up among the indie music, progressive government, microbrewery scene and “weird” culture of Portland, Oregon to become a global tourist attraction. But while the company‘s flamboyant founders Tres and Cat Daddy seem like unlikely entrepreneurs, the pair have tackled business challenges that any business owner will find familiar.
My Business has never heard an entrepreneur say anything quite like it.
Founded ten years ago, Voodoo Doughnut is an iconic element of Portland’s famously weird culture, ranking alongside The Dandy Warhols, a flourishing arts scene, microbreweries and a certain obsessiveness about coffee culture as one of the city’s prime attractions for tourists and new residents.
Voodoo Doughnuts’ place in that culture is so important that local websites offer advice about the length of the queues that form outside it's doors every day, to help native Portlanders, who compete for sweet treats with tourists lured by the cafe’s many mentions in travel guides, in-flight magazines and even Time.
Many visitors come for the cock and balls, one of a range of novelty doughnuts that made the cafe famous. A Voodoo Doll doughnut filled with jam “blood” is the signature menu item, but a bacon and maple syrup bar also has plenty of fans. Doughnuts topped with various brands of breakfast cereal are a staple, while the cafe has also dabbled in doughnuts filled with cough syrup. The anatomically correct cock and balls is filled with cream and often makes for hijacks in the shop, says, the business’ other founder Kenneth "Cat Daddy" Pogson, who says Tres takes a certain delight in repeating orders for the product as loudly as possible.
Things get a bit tricky when children ask for the doughnut.
|A cock and balls doughnut|
“Kids come in and point at it and ask ‘What’s that?’” When that happens, Tres and Cat Daddy (as the pair introduce themselves) have occasionally found themselves stifling giggles as they try to convince underage patrons and their petrified parents that the risqué treat is actually a badly-drawn spaceship.
Incidents of that type may sound like a nightmare for most retailers, but being risqué and creating a spectacle are integral to the Voodoo Doughnut brand, which has its roots in a brainstorming session with a difference Cat Daddy and Tres conducted after deciding to go into business together.
“We were floating down the river on an inner tube after about 900 beers,” Tres recalls. “We were talking about bars or a travel thing. Doughnuts appealed because they are comforting and they are cheap.”
Cat Daddy says the pair also liked the fact that everyone buys doughnuts.
“People asked us what’s your target market and we said ‘everybody’ because everybody loves doughnuts.” The pair had a location in mind and “just sat on the corner across the street and asked ourselves who would be our customers. For everyone we saw we said ‘those people are our customers!’”
Tres chimes in: “We looked at the big pink office building near the shop and said if we only got one per cent of the people who work there we would be great.”
Once the pair took the decision to get into the doughnut business, the next stop was the kitchen of master doughnut-makers in Los Angeles. The old pros they sought out had more than 150 years’ combined doughnut-making experience and happily imparted the secrets of doughnut chemistry and shaping.
“We were always going to do crazy doughnuts and normal doughnuts,” Cat Daddy says. “And we had the name too so the voodoo doll doughnut was a big thing. During our education we asked how to make it and one of the guys just went cut, cut, cut and there it was.”
After this education the pair had a car full of doughnuts, a name, chutzpah galore and lots of experience creating a spectacle. Tres had run a punk rock club and had worked in circuses. Cat Daddy spent his pre-doughnut career in the hospitality industry. So when the pair learned that a beloved basketball announcer had died and that a service in his memory was being conducted in Los Angeles, they rolled up and started giving away doughnuts they suggested had been among the departed’s favourite foods.
As luck would have it, a Japanese television crew was present and the pair found themselves making news even though they had not yet fitted out their premises or made a single doughnut in anger.
It took another eight months to do so as the pair fitted out their own cafe, cadged building materials from friends in the trade, dumped waste in other building sites’ skips, used second-hand nails, promised a lot of doughnuts to a lot of people and leaned heavily on a friendly landlord who gave them a rent holiday during the construction period.
On opening night – the pair decided on opening hours of 10:00 PM to 10:00 AM – the pair sold $300 of doughnuts. The next night they sold $13.
The circus comes to town
But then the pair’s genius for promotion kicked in, thanks in part to the opening of a rival.
“Half way through our planning I opened the paper and saw that Krispy Kreme was coming to town,” Cat Daddy recalls. For many entrepreneurs the arrival of a national rival with plenty of marketing muscle would spell trouble, but Cat Daddy saw opportunity. “I thought for a moment and realised everyone will be talking doughnuts. Then we found out they would be doing a giveaway, so we put on a doughnut suit and made a sign that said ‘support your local doughnut’.”
When the pair arrived at the giveaway they struck another problem: the giveaway was helping a charity.
“We said this is a fine charity but it’s all coming from corporate America and from other cities so why not support your local doughnut?”
Television again found the pair irresistible and Voodoo got its own bite out of Krispy Kreme’s hype.
The cafe's launch also gathered media attention, with media focussing on the store’s odd hours and odder menus, culminating in a small business profile that was syndicated across the NBC television network.
Since then, as Cat Daddy says “We’ve kept the circus running. One of the simple concepts in our business is that we run a Circus and provide quality. For us the circus is easy – drawing people in is easy. We have eating contests, world records. We had the caffeinated doughnut and the cough syrup doughnut, which got on Jay Leno. It was a stupid joke but the phone rang off the hook for radio interviews.”
“PR people ask us how much did you spend to get those interviews and on those 32 travel shows? It cost us nothing. And they get repeated over and over and over.”
Publicity alone is not enough, Tres says. “The hard part is to make sure they leave with a positive experience. To do that, you must have a great doughnut.”
For several years, Tres and Cat Daddy made most of the company’s product, but as the business grew they pulled back.
“After couple of years we started being a hindrance in the kitchen,” Cat Daddy says. “I stayed longer and worked harder because I needed to be the King of Doughnuts. I could roll doughnuts and work the counter and make change and I was the King.”
But that kind of work – and Voodoo Doughnuts' opening times – means Tres says working in the store is a job for a young man. Cat Daddy and Tres also noticed that their presence in the kitchen distracted other workers.
Today, neither has made a doughnut for over two years. The company even has a CEO, albeit one who in true Portland style gave up a job as a computer programmer to become Voodoo Doughnuts’ Janitor, the volunteered for the night shift and worked his way up to the big chair.
Tres and Cat Daddy now have floating roles as brand ambassadors, general fix-it men (Tres says something is always going wrong or breaking somewhere) and – two or three times a week– media spokespeople.
The company now employs more than 130 people, which also keeps the founders busy, in part because they find it hard to recruit staff.
“In Portland people have their job, their band and a side project and they say they don’t want to work full time,” Cat Daddy says. “They only want two or three days a week. Or they say they are about to go on tour for three months. It was really hard to convince people to work here full time. We’ve combated that by making it more attractive to work here, offering health insurance and other benefits.”
Tres interjects as Cat Daddy tackles this topic.
“We are paying people what sous chefs make at fancy restaurants,” he says, incredulous. “This used to be a minimum wage job!”
Another thing that keeps the founders busy is a third store – the first outside of Portland. Located in the nearby town of Beaverton, the third store is profitable and is helping Tres and Cat Daddy to understand how to grow Voodoo Doughnut, while preserving its culture and ability to keep a promotional circus running.
That may mean export. The pair recently went on a “scouting” tour to the Netherlands and have been approached by potential Japanese licensees. Tres also says he’s keen on more products, as he has always wanted to combine ice cream and doughnuts in a “stoner’s delight” but has been restricted by the small size of the company’s Portland stores and a desire to stick to its knitting.
In conversation with My Business, the pair seem interested in expansion but also content with their achievements.
"Visiting us is one of the things you do when you come to America or Portland," Tres says, adding that "It seems to be a pretty good story – we’re still friends."
“The world is our oyster … doughnut,” Cat Daddy adds.
“In fact we once made an oyster doughnut. You could order it and our guy would run down the street to a store where they would shuck a fresh oyster and put it on the doughnut.”
“It was gross, but people would talk about it.”
Forget how big you are: always have a start-up mentality
By Simon Larcey
Bad hosting is a silent rankings killer for SMEs
By Jim Stewart
Attention brands: How to make friends and influence people
By Steven Fitzjohn