The doughnut shop is an American institution.
Before gas stations became convenience stores, these establishments were one of the few places a consumer could purchase a cup of coffee without going to a full-service restaurant. National brands like Dunkin’ Donuts and Krispy Kreme spread like wildfire over the second half of the 20th century, sometimes coexisting with successful mom-and-pop doughnut shops.
In the Capital Region, Krispy Kreme and Dunkin’ Donuts indeed have a presence, as do several local doughnut purveyors. But one name in particular dominates the sector.
Mary Lee Donuts claims 16 locations in greater Baton Rouge and another two on the Northshore.
The brain behind this successful local franchise is Wyman “Vic” Dunlap Jr., whose father, Wyman Dunlap Sr., opened the first Mary Lee in Baton Rouge in 1969 at 9833 Florida Blvd. near Sharp Road. That location remains open today.
The elder Dunlap had been in the doughnut business in New Orleans and had moved his family to Baton Rouge to open a new franchise location.
However, when he didn’t get the support he needed from the franchiser—namely, the timely procurement of baking ingredients—Dunlap severed ties and began looking for a new business partner. He found one in Don Welge, an LSU graduate who had taken over operations of his family food manufacturing business, the Gilster Milling Co., back home in Chester, Illinois.
The company, renamed Gilster-Mary Lee (a dual homage to Welge’s wife, Mary Alice, and his hero, Robert E. Lee), became a leading private label food manufacturer under Welge’s leadership. Today it produces more than 8,000 different items under 500 private labels.
“People really don’t know where the ‘Mary Lee’ reference comes from,” Vic Dunlap says. “Sometimes they think it’s associated with the franchise owners.”
Over time, the elder Dunlap and Welge opened additional locations. By 1985, when Vic Dunlap Jr. took over, there were five Mary Lee stores in Baton Rouge. The company also developed a franchise mechanism through a central hub, Chef Products, to help the brand spread farther.
Today, none of the Mary Lee units is company-owned. All are owned and operated by franchisees. Dunlap has deployed a very clear sense of what is required of his franchisees: namely, that each owner works on-site.
“We’ve tried the off-site owner and store manager in the past, and it has not been effective,” he says. “It’s hard work, and it requires dependability.”
It’s also a cash business, Dunlap adds, increasing the possibility of theft if an owner is not present.
Dunlap is a hands-on franchisor, checking in frequently with franchisees—most of whom are immigrant families—and helping them with everything from deciphering U.S. tax laws to fixing fryers in the middle of the night.
“When something breaks at two in the morning, there aren’t a lot of people you can call,” he says. “By now, I pretty much know how to fix anything that breaks.”
The franchise fee for a Mary Lee unit is $15,000, a reasonable sum in the food and beverage franchise world, says Bob Justis, Ourso Professor of Entrepreneurial Studies at LSU’s E. J. Ourso College of Business. Moreover, the units pay a 4.5% royalty fee on gross sales, which is around the average for food franchises, Justice says.
Chef Products also grants a protected, two-mile radius from other units and sells franchisees wholesale baking mix produced by Gilster-Mary Lee. Unlike most food retailers, Chef Products does not charge an advertising fee to its franchisees. In fact, other than occasional Valpak direct mail coupons, the company does not advertise.
Justis says that Baton Rouge is a community where franchises can succeed.
“We’re open to franchise systems,” says Justis, who has advised Raising Cane’s. “We see a company like Merry Maids doing well and major expansions for local eateries like Raising Cane’s and Walk-On’s. Ruth’s Chris Steak House opened its first franchise in Baton Rouge.”
Justis says the franchisor-franchisee relationship can be incredibly effective if set up right. “Franchising provides opportunities for both parties to grow,” he says. “The biggest concern is that the franchisee understand the attitude of the business.”
Both parties benefit when the franchisor provides added value, as Dunlap does with his hands-on technical assistance, says Justis.
On Highland Road at Kenilworth Parkway, Mary Lee owner/operator Mija Kang starts her day in the middle of the night. Dunlap has trained her and other operators in the company’s specific method of doughnut making, which has been virtually the same since 1969.
That year, Gilster-Mary Lee invested about $1 million in producing a dry mix formula for the doughnuts, which are made in each store largely by hand. The dry mix is combined with water and yeast, then allowed to rise.
After this “bowl time” the dough rests on the bench, where it’s rolled and cut into doughnuts. Then the pastries are fried and staged for sale.
Frying happens throughout peak hours, so that customers have access to warm, gossamer-like doughnuts all morning long. Many Mary Lee stores used to feature signs with flashing lights that read “hot product when flashing.”
Kang says she enjoys the business and the regular stream of customers who come into her store, which is one of the company’s largest.
Dunlap says Mary Lee will likely continue to expand. He’s considering locations in Hammond, LaPlace, Amite and possibly New Orleans; and he’s also considering getting into the Subway franchise business.
Dunlap says his perspective was shaped by his father’s early experiences as a businessman who got little in return from the franchisor.
“The concept is that you help make these units successful,” he says. “Otherwise, anybody would resent the royalty check.”
