Mmm… doughnuts

Here at China Economic Review, we make every effort to be on top of Shanghai’s dynamic doughnut industry. Well, at least I do.

In fact, we even wrote an article about it that appears in this month’s issue of the magazine. It is, however, available only to subscribers, so for the benefit of China’s doughnut-watching populace, here are some excerpts:

Shanghai could soon be China’s doughnut central. On January 25, Dunkin’ Donuts, the global coffee and donut chain, announced that it would open 11 new stores in the city by the end of 2008. They are to be operated by Mercuries & Associates, which also holds the Dunkin’ franchise in Taiwan. The chain has plans to roll out 100 stores by 2018.

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Its sole competitor in the doughnut realm will be Mr Donut, operated in Shanghai by Japanese firms Marunjin and Duskin, with six stores in the city.

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But Mr Donut is not taking Dunkin’s challenge lying down. It plans to open 30 to 50 new stores in and around Shanghai next year.

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While Dunkin’ and Mr Donut duke it out in Shanghai, the last member of the global doughnut trifecta, Krispy Kreme, is looking to take its heavily-glazed, deep-fried rings to Shenzhen.

“We are negotiating with the franchisor but nothing has materialized yet,” said Jim (Krispy Kreme’s Hong Kong CEO). “Shenzhen is a migrant city, many are from the north, and the people are more receptive to fried products.”

I was spurred to write this post because a colleague had pointed out Shanghaiist’s review of a new doughnut shop in Yu Garden that I had failed to keep informed of. Shanghaiist mentions Dunkin’ Donuts’ mainland expansion plans in its review, and, while I don’t agree with all the points it makes, I hope our article is able to shed some light on Dunkin’ Donuts’ situation, and on Shanghai’s doughnut prospects in general.

On a side note, in the process of researching this story, we also learned that Dunkin’ Donuts and Mr Donut have a long history. Here’s part of the story that didn’t make it into the final version in the magazine:

The two chains have a long, intertwined history. They were both started around the 1950s in New England by two men who were brothers-in-law. William Rosenberg started Dunkin’ Donuts while Harry Winouker created Mr Donut. As time passed and the chains grew, interest in the donut business grew along with it. The companies were bought and split-up by various corporations over the decades.

Dunkin Donuts today operates as a subsidiary of Dunkin’ Brands, which itself is owned by a consortium of private equity heavyweights, including Bain Capital and the Carlyle Group. Mr Donut, meanwhile, also belongs to a corporate owner; Duskin of Osaka, Japan.

We have a corporate brochure from Mr Donut that opens with a large photo of a beaming, mustachioed, Harry Winouker. Could he be the inspiration for Mr Donut’s current logo?