Donut Wars

Tobie's

In 1966, the Shrade family took over Tobie's in Hinckley from Mr. and Mrs. 'Tobie' Lackner, moving the cafe from downtown Hinckley to the current location on Interstate 35.  They added a gas station, took over the fast food across the street, and sold thousands of 'carmel rolls' plus oodles of other bakery.  Some of their recipes are from our friend Jim's family--including his family's world famous fruit cake, cardamom bread, and more.

Kwik Trip

In 1965, Kwik Trip opened their first store in Eau Claire, Wisconsin.   Since then, they have grown to 475 stores in WI, MN, and IA.  They sell gas, have a convenience store model, and sell vast quantities of baked goods at bargain prices.  Last week they opened a store in Hinckley, MN, a block east of Tobie's.

We believe that donut wars have begun.

The world is changing.  Family-owned businesses have to grow and adapt in a world of big box stores.  Both of these companies are family-owned businesses.  One stayed in Hinckley.  The other built stores across 3 states.  Both make many of their own products.

Now, they are going to start a head-to-head competition for that category that has all but disappeared.....bakery.  Most family-owned bakeries are gone.   They fell victim to grocery stores who first expanded their in-store bakeries and then outsourced most of that baking or brought in frozen products from other corporations and thawed and baked them at the store (like all of those cheap pumpkin pies for Thanksgiving).  People started buying their bread and treats while picking up their hamburger and milk at the grocery store....even if the quality wasn't as good.  A small family bakery is a rare business today.

How will this play out?
Tobie's advantages--they serve breakfast, lunch, and dinner.  They bake items that aren't available at Kwik Trip--like Jim's family's fruitcake, they have a huge bakery display case where you can pick and choose.  They ship 'carmel rolls'. 

Tobie's disadvantages--their bakery products are more expensive, their staff has not received quality/customer service training, they don't have a system for who's next in line at the bakery.  They don't have self-service coffee or any grab-and-go bakery items.

Kwik Trip's advantages--they have lots of 'pick up and run' food items (like breakfast sandwiches and hamburgers (2 for $1 this week)--you can grab these plus basic food items (cheap eggs and butter, bananas, bacon....), get gas at the same location, and have mounds of really inexpensive baked goods pre-packaged and ready to go.  The staff has clearly been trained on customer service.  They have lots of self-service coffee and drink choices.

Kwik Trip's disadvantages--this is not the place you'd go for a sit down meal.  The bakery items are created elsewhere in a Kwik Trip baking facility.  There are fewer bakery item choices (Tobie's has the advantage for sure on breads).  The grab and go food is pretty standard, much like you'd find at Holiday, SA, PDQ, etc.

Both have nice bathrooms (something you think about when you're on the road).  Both have good locations.  Tobie's has the high-visibility location next to the north-bound exit. Kwik-Trip can be seen from the top of the exit and it's a bit closer to the casino.  

Kwik Trip states that they follow a low mark-up model; Tobie's follows a traditional pricing model.  Qwik Trip glazed donuts are $2.99 for a box of six.  During the grand opening they were priced at $4.99 for two boxes of six.  The Kwik Trip website has numerous in-store and coupon bakery (and food) specials.  Donuts at Tobie's are $1.75 each.  The Tobie's website has been updated and contains many appealing photos of their in-house bakery items.

We'll be watching with interest how this change in the' Hinckley doughnut economy' plays out.  As a statistician and researcher, I believe there will be a lot of 'indicators' from this doughnut war that will have predictive value.  To phrase it as I would have when I was still a research nerd, "the salient factors attracting retail customers, affecting pricing models, and providing competitive advantage will emerge through this natural experiment". 

In other words, we'll see what happens--and maybe learn from it : )