Voodoo Doughnut to shake things up
Oregon institution enters crowded market with first Houston store
Lizzie Upchurch strode up to the doughnut shop and peered through the front window. Inside, contractors were busy putting the finishing touches on the new shop, installing white stone countertops, fixing the linoleum floor and installing a buffalo head on the back wall. Upchurch, 20, was about to walk away disappointed when a store manager rushed to the door, holding out a pink box filled with a dozen fresh doughnuts. The Houston resident’s eyes lit up, and she broke out smiling. “I’m so excited,” Upchurch said. “I’ve never been, but they do the craziest things. It just caught my eye.”
Voodoo Doughnut, a Portland, Ore., institution known for its zany confections and cult-like following, will open its first Houston store on Wednesday, entering a crowded doughnut market long dominated by hometown favorite Shipley Do-Nuts. If Voodoo’s 2015 debut in Austin is any indication, throngs of local doughnut fans are expected to swarm the Buffalo Heights store this week to try the company’s signature doughnuts, such as the Ma
ple Bacon Bar and Portland Cream.
The 2,400-square-foot shop, at 3715 Washington, marks Voodoo’s first market expansion since San Francisco private equity firm Fundamental Capital acquired a majority stake in the company in 2017 and laid plans for major expansion. The chain, aided by new leadership and capital infusion, has targeted Houston as its launchpad to take a bigger bite out of the $8.3 billion U.S. doughnut market.
“We’re in growth mode right now,” Voodoo CEO Chris Schultz said. “We’re excited about coming to Houston and starting our growth here.”
Voodoo was founded in 2003 by Kenneth “Cat Daddy” Pogson and Tres Shannon who saw a need for a doughnut shop in downtown Portland. The two longtime friends rented a hole-in-the-wall storefront between two nightclubs, and began making and selling unconventional confections using unusual ingredients such crispy bacon, Tang and Cap’n Crunch and Fruit Loops cereals. Voodoo once even offered Nyquil, Pepto-Bismol and Tums-topped doughnuts before local health officials forced the company to take them off the menu.
The late Anthony Bourdain put Voodoo on the culinary map in 2007 when he featured the shop and its iconic Bacon Maple Bar — a raised yeast doughnut topped with maple frosting and bacon — on his popular Travel Channel show, “No Reservations.” Since then, Voodoo has been all over the media from “Today” to “The Tonight Show,” and has become one of Portland’s top tourist destinations.
Despite its popularity, Voodoo has grown slowly, expanding to Eugene, Ore., in 2010; Denver in 2013; and Austin in 2015. The company in 2017 and 2018 partnered with Universal Studios to open shops in its Citywalk tourist attractions in Hollywood and Orlando. The company will have nine locations nationally after opening its Houston shop Wednesday.
By comparison, Krispy
Kreme has more than 1,200 locations worldwide, and Dunkin’ Donuts has more than 11,300 locations globally. Shipley, the Houstonbased company in operation for more than 80 years, has 325 stores in nine states, including 120 locations in the Houston area. Texas is home to about 5.6 percent of the nearly 10,000 doughnut shops nationally, the third highest after California and New York, according to IBISWorld, a market research firm.
David Littwitz, a Houston restaurant consultant and broker who has not worked with Shipley or Voodoo, said Houston is a large enough market for several doughnut companies to compete. He said Shipley’s should have little to worry about Voodoo. “Shipley won’t lose any sleep,” Littwitz said. “Shipley is ubiquitous. They’re in every neighborhood. At the end of the day, Voodoo isn’t going to change the market much.”
Schultz, who was recruited by Fundamental Capital two years ago to helm Voodoo, has been tasked with growing the doughnut shop into a national brand. The California native, who started his career as a dishwasher at a Mexican restaurant in Los Angeles, has plenty of experience. He spent 14 years at Starbucks, helping to grow the Seattle-based coffee giant from 300 stores to 20,000 during his time there. He was seniot vice president for operations at Seattle-based MOD Pizza for about a decade, helping grow the company from one store to 325.
“That’s all I’ve ever done: growth,” Schultz said. “If you’re not growing, you’re not giving your people an opportunity to develop into managers and district supervisors and be the best they can be.”
Hole in the market
Voodoo is poised for growth. Surging consumer confidence amid the economic boom has boosted spending on small luxuries, such as premium coffee and pastries. As a result, the U.S. doughnut market has grown 3.1 percent annually between 2014 and 2019, according to IBISWorld.
Industry growth in recent years has been propelled by the rise of wildly popular innovations to the staid doughnut, such as the cronut, a doughnutshaped pastry made from a croissant-like dough. These and other high-end offerings made with ingredients such as s’mores, peanut butter and jelly and even alcohol have helped push profit margins to an average of 7.7 percent, according to IBISWorld.
Voodoo, which invented the bacon maple bar and helped popularize cerealtopped doughnuts, serves more than 50 varieties of handmade yeast and cake doughnuts, including new offerings such as the Cannolo, a cannoli-shaped doughnut, and Hi Tea, a doughnut with an Earl Grey tea frosting and hibiscus drizzle. Doughnuts are handmade three times a day.
Voodoo’s doughnuts start at 95 cents for a plain cake doughnut to as much as $5 for a more elaborate one. A box containing a baker’s dozen, which includes Bacon Maple Bar, costs about $20. Voodoo also sells drip coffee, bottled beverages and branded merchandise such as Tshirts and hoodies.
These new offerings have pushed doughnuts beyond the domain of breakfast. Doughnuts are now served as dessert at restaurants and at wedding parties. Voodoo’s shops, which operate 24/7 and are closed only for Thanksgiving, Christmas and New Years, are a popular late-night hangout for the bar crowd. Most of Voodoo’s business occurs between 10 a.m. and 10 p.m.
“It’s a misnomer that you can only get doughnuts in the morning,” Schultz said. “We’re the traditional doughnut in the morning, a midday snack to treat the kids and we’re also this crazy late night event.”
Schultz, who brought MOD Pizza to Houston in 2014, said he chose the city to launch Voodoo’s national expansion because of its large population, diversity and growing reputation as a food destination. Although Houston may not be as “weird” as Portland or Austin, it’s got an “electric, cool vibe,” he added.
“We’re not bringing hip to Houston,” Schultz said. “We’re here to magnify what’s already here.”
Indeed, Voodoo brings an eclectic aesthetic to Houston’s doughnut scene. The pink, yellow and brown-colored shop features tables wrapped in newspaper obituaries, crystal chandeliers from New Orleans and a buffalo head on a wall, a nod to nearby Buffalo Park. Music, curated by store employees, will play overhead.
The shop, which features Voodoo’s first drivethru, employs 70 workers whose pay will start at $11.50 an hour with health insurance, paid time off, pet insurance and a flexible work schedule.
The store manager is an ordained minister, and can officiate weddings — both real and fake — inside the shop. Sales will be halted for about five minutes while couples get married under a “spirit channeler” painting of Houston native Patrick Swayze hung in the corner. Voodoo conducted 100 wedding ceremonies last year, Schultz said.
“When you come to Voodoo, it’s not just coming to a doughnut shop,” Schultz said. “It’s truly an experience.”
Voodoo plans to open as many as five shops nationwide this year, nearly doubling its store footprint. Ultimately, Schultz said he could see 15 Voodoo shops in Houston, where the company will have a bigger presence than in its hometown of Portland. It is planning stores in Montrose, Rice Village and the Heights, and eventually envisions stores in Katy, Sugar Land and The Woodlands.
However, Schultz is adamant he is not building a doughnut chain with stores on every street corner. Voodoo, he maintains, is a specialty shop and has to remain exclusive and authentic to its quirky Portland roots, where the original shop conducted legal weddings, hosting concerts and held weekly Swahili lessons.
“Sometimes brands grow so fast, they lose what made them special,” Schultz said. “We don’t want to lose that. It’s important for me to be respectful of what the brand is as we grow, and not become this ubiquitous brand with name tags.”
“We’re in growth mode right now,” Voodoo Doughnut CEO Chris Schultz said. “We’re excited about coming to Houston and starting our growth here. … We’re here to magnify what’s already here.”
Voodoo Doughnut, which is known for its zany confections, will open its first Houston store on Wednesday in Buffalo Heights.
Hunter Travis drops cake doughnut dough in the fryer during a test run at the new Voodoo Doughnut in Houston. The chain is planning stores in Montrose, Rice Village and the Heights.
Luis Cervantes dips a doughnut in chocolate at Voodoo Doughnut in Houston.