Dave Cain: Welcome to unsuitable on Rea Radio, the award-winning financial services and business advisory podcast that challenges your old school business practices and the traditional business suit culture. Our guests are industry professionals and experts who will challenge you to think beyond the suit and tie, while offering you meaningful modern solutions to help enhance your company’s growth. I’m your host, Dave Cain.
On November one, Rea and Associates and the Walthall CPA Group, located in Cleveland, Mentor, Amherst, and Wooster, Ohio, announced that the two firms have merged. I’d like to issue a warm welcome to the Walthall team, to your family, friends, advisors, and clients.
Welcome to unsuitable on Rea Radio. If you are listening to our podcast today, then chances are you’re a business owner, so while a lot of what we’re going to be talking about today isn’t news to you, I would like to encourage you to share this episode with your family and friends and talk to them about how important it is to support the many locally owned businesses in our communities, not just on Small Business Saturday, but every day of the year.
Local businesses are critical to the success of our communities. They drive our economies, support our infrastructure, our schools, parks, and promote the entrepreneurial spirit, among many other things. And we are honored to have one of these incredible small business owners on the show with us today. Tom Warne, of Donald’s Donuts from Zanesville, Ohio is here to talk about the role his business plays in the local community and why it’s so important to keep these companies alive and well. While you’re listening, I encourage you to check out Donald’s Donuts Facebook page to see some of the treats. They look simply amazing. Welcome to unsuitable, Tom.
Tom Warne: Thanks, Dave. Thanks for having me here.
Dave: Appreciate you getting up and making the long drive over to Dublin, Ohio from Zanesville.
Tom: I’m a little sleepy, but I made it all right, I think.
Dave: I understand we’re going to talk a little bit about donuts, but I understand you start production about 1 a.m. in the morning.
Tom: That’s correct. Yeah. That’s the a.m. we use, the 1. It starts early, but we’ve got a product that’s made fresh every single day, so we have to get up that early so the customers can have the freshest product available.
Dave: And we appreciate you bringing in some treats to us. We’re going to try to describe. In front of me, I’ve got, this is a chocolate cream stick. It’s about as large as my hand.
Tom: It was a condition of me coming. They wouldn’t let me in the door if I didn’t bring donuts.
Dave: This cream inside is kind of a homemade. You guys do everything.
Tom: Everything, every day. The icing, the cream filling, the donut itself, it was made this morning.
Dave: For listeners, just picture this cream stick with frosting, chocolate frosting. It was beside a maple cream stick, so I got a little maple frosting on there, and it’s all over the microphone.
Tom: Well, I’m not going to charge you extra for that maple.
Dave: How about the milk? Do we get any milk with this?
Tom: You came with coffee, didn’t you?
Dave: I did.
Tom: All right. That’s my drink of choice.
Dave: That’s pretty good.
Tom: All right.
Dave: Tell us a little bit about Donald’s Donuts. Before we started, you’d mentioned this is a family business, been in the family since 1960.
Tom: 1960. Yeah. Strictly family members. My father started it. Mom was home taking care of all of us. Started in Zanesville. We’ve had four, no five. We’re on our fifth location so far. Dad started off in a little house with a walk up window. He needed a little bit of help, so his mother started helping him. And then we moved onto the next location with a little bit bigger commercial property, then a little bit bigger commercial property. And then we moved to the North end of town, and we’ve been there since … Let’s see. 1970 Dad moved to North end, and then our current location, we’ve been there since 1984.
Dave: So you’ve been making donuts as soon as you were out of the crib.
Tom: I was 13. Yeah. Dad got in trouble with the state because I was too young. But he told me just to hide in the restroom when the inspectors came, so we got away with it.
Dave: When you’re talking donuts, we may be the only podcast in the nation today producing a podcast on donuts.
Tom: Yeah.
Dave: That feels pretty good. Doesn’t it?
Tom: Well, yeah. I feel pretty special anyway just being here with you guys.
Dave: Let’s get some facts on the table. What is the most important or the most popular donut that you guys make?
Tom: It kind of varies from day to day, but that chocolate iced cream filled you have in front of you, that is a mainstay for sure. Everybody knows the glazed donut is popular. The sweeter the better is basically what it comes down to. People love as much sugar as you can pack into it. I’ve always said that the donut is a tool to get sugar into your mouth, and that’s what it kind of is.
Dave: Perfect. Perfect. How many dozen donuts do you guys make a day? I guess I’m going to refer to you as a manufacturer because you’re producing, manufacturing donuts and cream sticks.
Tom: Sure. Yeah. It varies. There’s a broad variance from day to day. Monday is always the slowest day of the week and then it kind of crescendos to the weekends. We may start off with 250 or so dozen on earlier days of the week. And then it maybe crescendo to maybe 5,000, 6,000 dozen by the end of the week.
Dave: What happens at the end of the day when, maybe it’s a slow day or whatever, with the leftover donuts?
Tom: They go to the local food pantry. The goal is to not give them very many. We want to time the sell out with the clock, so we don’t have a whole lot left over, but whatever we have left over goes to the food pantry.
Dave: Yeah. You know the old saying, the CPA doesn’t balance their checkbook and the cobbler doesn’t fix his own shoes. But do you eat your own donuts?
Tom: I love them.
Dave: Do they?
Tom: I love them. Yeah. I haven’t got a cardiologist just yet, but I assume I will be, and he’s going to yell at me. But yeah, I eat the donuts every day. I really do. I don’t get tired of them.
Dave: That noise you hear is our staff outside the door. They’re waiting for these leftover donuts that you brought. They’re kind of waiting around. They knew you were coming in and they wanted me to ask a question on behalf of the team at Rea & Associates. They watch an awful lot of TV. When you see a police show, you know the precinct, they’re always talking about policemen eating donuts, or there’s always donuts in the precinct. Do you see that with Donald’s Donuts?
Tom: Everybody loves donuts. Yes, we do see a lot of cops. We also see a lot of firemen and we see a lot of nurses. We see a lot of teachers. We’ll accept anybody, honestly Dave.
Dave: We love the first responders.
Tom: Yeah.
Dave: You got it. Today, obviously we wanted to find a little bit more about Donald’s Donuts because it’s an icon in the Zanesville community. I’ve spent some time in the Zanesville community and it’s a wonderful, wonderful community. Off the air as we were kind of talking, you guys do give back to the community and you participate in the community. Can you talk a little bit about: What are some of the activities or ideas that your team does within the community?
Tom: Well, yeah. Just recently, and this kind of goes along with the last cop joke, but the United Way had a fundraiser and they had a tug of war between the police department and the fire department, and they asked us to sponsor the police department. It was kind of their yearly kickoff fundraiser, so we sponsored the police force tug of war team. A lot of it is just smaller donations. You look at some of the big box stores and you hear some of the big numbers that they donate to communities. Percentage wise, I give a lot more. I don’t give huge numbers here and there, but there are a lot of small organizations that rely on the local businesses. And we get calls every single day, and I rarely say no to any of them. If it’s a nonprofit organization and they need something, I’m going to help them out one way or another.
Dave: And I think that’s one of the traits that is often overlooked with local businesses and community business. We’re talking about Saturday, the Saturday after Thanksgiving as a special day to recognize businesses like yours that put back into the community. I think we were talking about, without businesses like you … Communities need businesses like you and your support.
Tom: Absolutely. Yeah. You feel that responsibility all the time. When I look at the donut business, I look at the partnership I have with the customers that come in every single day. I don’t feel like I’m in this alone. I don’t feel like I own this company. I feel like Zanesville owns this company. There is so much pride. There’s a pride for the local pizza shop and ice cream shop, a car dealership in town, and they love us also. And I feel like that this is a community effort to make these donuts and to sell this product. They’re getting something out of it and I’m getting something out of it.
Dave: How does shopping locally reinforce the local economy?
Tom: There’s no magic formula. It’s just simply, I do business personally with the people that come in and buy donuts from me, so the local jeweler, the local car dealership. We trade money essentially is what happens. Obviously with the employees, the money’s not going out of town. They get paid and they’re going to buy their stuff locally as well, because that’s a big part of … We talk about this all the time at the donut shop. My philosophy kind of gets ingrained in them whether they even know it or not. They kind of see. They feel that sense of responsibility to support the local businesses. We know everybody that comes in on a first name basis. We get to know these people, so you just feel like it’s the right thing to do. You don’t really give it a second thought. It’s just like, well, I’ve got to go get some ice cream. I’m going to go down and see Bill Sullivan, who sells ice cream.
Dave: Really, your shop, Donald’s Donuts is where it’s happening. If you want to find out what the weather is, you go to your shop.
Tom: Absolutely.
Dave: If you want to find out what the sports scores, who’s playing tough, you go there. You guys ever talk politics over donuts?
Tom: Oh, yeah. Yeah. Yeah. We’ve had people. Yeah. Yeah. There’s arguments. There are friendly conversations, Republican, Democrat, doesn’t matter. I’ve seen people … After the election, there was a guy who had a conversation with a Trump supporter, and he was not a Trump supporter, and he ran out of the donut shop. Slammed the door open and the door came back and hit him in the face. He was just so mad. Regardless of who won, it was just fun to watch.
Dave: Did he drop his donut?
Tom: He sat and ate there, and I don’t think he paid. I think he forgot to pay. He was so mad. He came back and paid the next day.
Dave: There you go. We talk about supporting the local economy. One of the statistics we have, according the research firm Civic Economics, for every $100 you spend in a local small business, 68% or 68 bucks stays in the community. Have you ever heard that percentage before and does that resonate with you?
Tom: It completely resonates. I’ve never heard that before, but it completely makes sense because, like I say, I don’t go to the big box stores. The local guy is the guy that I know. That’s the one I want to stay with.
Dave: So it sounds like you’ve created kind of an underground culture, if you will, entrepreneur to entrepreneur, business to business within the community and that’s pretty special in a community like Zanesville.
Tom: Sure. Yeah. Yeah. It’s what kind of binds it together I think. One of my friends is in the promotional products business. You can go online and you could get T-shirts for whatever amount. But I don’t know what the quality is. I can’t talk to anybody. I have to just click online and hope for the best. Where, I talk to this buddy of mine and he brings me a sample and he says, “This is what the ink is going to look like on this shirt, Tom.” It’s just, I know exactly what I’m getting into by dealing with this. I don’t know what the prices are with these guys, but I know what it is with Scott, for sure.
Dave: And you got it.
Tom: Yeah. It’s perfect.
Dave: You mentioned quality, and I want to talk about the quality of this cream stick. How do you … In the business you’re in, you have to make sure the quality is there in your product each and every day. Now take a long time to answer the question about the quality because I’m going to have a couple bites of this cream stick. You want a bite, or you want one?
Tom: Not right now. I see a couple there I might have here before I leave. Yeah. This is one of my favorite subjects. I went into a store one time and there was a display case of donuts from a major chain. I was just looking at them. I was like, “Well, those look pretty nice.” Looking at the glaze. Looking at it like a professional would, looking at the competition’s product. I saw expiration date on there and it was like five days ahead of whatever that day was. I’m like, “How in the heck are they doing this?” Five days. I don’t have the expiration date on my product because my product is made today. It’s made to be eaten today. They’ve got preservatives in them. I don’t have any kind of preservatives in it. This is something that you buy it and you enjoy it.
The reason that we are still around is because Dad always said … He didn’t like advertising. He didn’t like to spend money on that stuff. He just said, “It doesn’t matter what in heck you do.” He probably said it a little differently than that. It doesn’t matter what in the heck you do, make sure you get up and you make the best daggone donut you could possibly make because the guy who buys that donut, that might be his first Donald’s donut and you want to impress that guy. So every single morning, that’s what I think. I have got to make the very best icing, filling, the dough. We’ve got to fry it just right. Everything has to be perfect every single day.
Dave: I’m a fan. This is pretty good. I have to apologize to the listeners that I’m talking with my mouth full.
Tom: You have icing right here. Yeah.
Dave: All right. Well, that’s pretty good. But to your point quality, and sometimes when you go into competing against bigger competitors, you’re beating them on the quality.
Tom: I don’t really look at it as a competition, Dave, honestly. It’s just simple. I just go in every single day and I try my hardest, and I’ll leave it up to everybody else to rank me. Put me wherever they want to put me. But to me it’s just a matter of just getting in there every single day and just working your hardest.
Dave: You love what you do. Don’t you?
Tom: Yeah. Well, there’s just so many aspects of it. I love making it. I love the hanging out with the people. I love going out front and talking to the customers. Yeah. I do.
Dave: How many hours a week do you work?
Tom: I don’t know. It depends. I work too many. I’m 50 years old and I’m still doing about that many hours a week, probably.
Dave: When do you sleep?
Tom: I don’t sleep very much. I’ve got some problems I’ve got to deal with. I really do, Dave. I probably sleep like three or four hours at night, and then probably about three to five hours during the day.
Dave: Yeah. But that’s what entrepreneurs do. This is what you guys do. This is what makes you tick.
Tom: Yeah. There’s no other way to do it other than being there and making sure that donut quality is there.
Dave: How do you work to promote such a unique business within your community? I think you’ve hit on it again, but I want to reemphasize some of the things that you do to promote your uniqueness within the community.
Tom: Well, I always talk about my dad. Dad, he hated advertising. He didn’t like to promote anything. He just thought, if you can’t make a good enough donut for people to talk about, then you’ve got a problem. So we just started doing … Not just started, but when we bought the company from Mom and Dad in 2007, we started doing the cheapest promoting you could possibly do, which is free stuff, which is Facebook, and we’d start sponsoring a local softball team to get our name on the back of the jersey, buying ads in yearbooks and stuff like that. And just through these small dollar advertisement plans, we were able to double the company from 2007 to 2015. I don’t know how much the advertising had to do with that. Maybe people just started loving donuts. I have no idea. But that is one thing that changed, along with the ownership, is we did start to pursue getting our name out other than just word of mouth.
Dave: What is the hardest business issue that you face on a daily basis?
Tom: Well, it’s staffing primarily. Old adage is old for a reason. It’s hard to find good help. We’ve got probably 60% of our staffing is reliable, always there. And 40% is rotating, and that’s the tricky part. Recently, the other things that have added a little bit of stress to my life is, it’s been mandated now that we have to use trans-fat free oils, so we’ve had to adjust some of our formulas. Like that donut you’ve got right now, evidently you didn’t notice it, but it’s a trans-fat free product. And that’s something I was really worried about a long time ago when they started talking about all this. But they’ve got all these products down now to where I can still maintain the quality, even though the shortenings are different than they used to be.
Dave: Again, excuse me for asking this, but I’m not an expert in donut making. But are these donut formulas protected?
Tom: No.
Dave: They’re not, but they’re under lock and key.
Tom: Yeah. I don’t use any products that’s not available to everybody else. I think the only difference is we just pay attention to every single aspect of the direction process.
Dave: Are these formulas written down or are they in your head?
Tom: You can’t see this, but I’m just pointing to my temple right now. They’re all locked in right here.
Dave: Yeah. There’s some noise going on in there. As you look towards 2018, what do you see as some of your business challenges?
Tom: Planning for the future right now, and that’s where Rea & Associates have are really helping me out a lot. We’re starting a 401k program. I’m worried about, not myself, but I’m worried about my son. I want my son, who is in the company now, he’s now my partner. My cousin’s out of the company. My son is my partner and I want to make sure Daniel has a good financial future where he’s not working as hard as I am right now. So that’s one of the main things I’m thinking about. Like I said before, as long as I keep making the good quality product, the company’s going to be just fine, so I’m not really worried about that part of it. I just want to plan for the future for the next generation of the company.
Dave: Right. Now you obviously oversee the production on a daily basis. Do you oversee the Facebook and social media?
Tom: Yeah. I generally do that. Daniel, he’s 25, so he’s obviously a lot more tech savvy than I am. 24. Sorry. So he helps me with it, but I like to do the … I just take the pictures on my phone. But I like to oversee that. I like the way the words flow from me better than anybody else, so I like to do the writing on the Facebook page. Yeah. I kind of oversee it.
Dave: What about the accounting? Do you do your own accounting, write your own checks?
Tom: Nope. Daniel does all that. Daniel, and he works closely with Katie Brown from Rea. She’s one of my best friends. And we use Quick Books. Daniel, the computer is his. The computer is not mine. The less I can touch that thing, the better.
Dave: You apparently have learned the art of delegation.
Tom: Yeah. I just know my limitations. Yeah.
Dave: Yeah. How does that discussion go when your son comes to you and says, “Dad, I need a raise”?
Tom: That hasn’t happened just yet, but I’m sure his wife has probably said, “Nudge your dad. Let’s see what we can do here.”
Dave: Our guest today has been Tom Warne from Donald’s Donuts in Zanesville, Ohio, talking about certainly the community and the impact that Donald’s Donuts has on the community and all local business have on the community. A lot of good information. What we’d like to do is just kind of finish up with one last item as you look to 2018. What are one of the goals that you want to accomplish in 2018 for Donald’s Donuts?
Tom: Maintain our consistent, steady growth. We’ve never had a year in the red. We’ve always been in the black. I want to maintain that record, so just security for the future of the company, and that’s what I’ve got Rea & Associates for.
Dave: Perfect. Tom, thanks so much for joining us today on unsuitable. Great presentation. Enjoyed the last few minutes. Listeners, I hope you found a few tasty little tidbits in today’s episode that you will pass onto others who may not be fully aware of the impact of buying local has on the community. Support those local businesses. You can also check out this episode on Rea’s YouTube channel. And as always, don’t forget to subscribe to unsuitable on iTunes and never miss an episode again. Until next time, I’m Dave Cain encouraging you to loosen up your tie, think outside the box, and eat a cream stick.
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