Doughnuts So Good They Make Starbucks 'Jealous' The lines trailing around the corner of a small doughnut chain in Seattle caught the eye of Starbucks bigwigs. Soon the husband-and-wife team was in doughnut "boot camp," boxing hundreds of treats to sell nationwide for the coffee company.
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Doughnuts So Good They Make Starbucks 'Jealous'

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Doughnuts So Good They Make Starbucks 'Jealous'

Doughnuts So Good They Make Starbucks 'Jealous'

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ALEX COHEN, host:

Even though it's closing down a number of stores, Starbucks is still the behemoth of the coffee industry, the kind of corporation that often instills fear in the hearts of the small business owners who sell breakfast, beverages and goodies. Unless, that is, you are Mark Klebeck. He's the founder of Top Pot Donuts and, earlier this year, he struck a deal with Starbucks. Mark Klebeck joins us now from Seattle. Thanks for joining us and, first of all, tell us a little bit about your business. How did you get into the donut industry?

Mr. MARK KLEBECK (Founder, Top Pot Donuts): Well, my brother Michael and I were general contractors, and we decided that we could build and own and operate our own coffee houses in the Seattle area. And one day we decided that we were going to try and put a spin on this and do something with donuts, and it just kind of took off.

COHEN: And I think you're understating it a bit. What I have heard is that your store was so popular you had lines coming right out the door, and I heard that Starbucks CEO Howard Schultz would walk by and he was jealous.

Mr. KLEBECK: He was spying.

(Soundbite of laughter)

Mr. KLEBECK: We opened our first store in the Capitol Hill neighborhood of Seattle in February 2002. There were lines coming out the door. And we noticed that there were a lot of people from outside of the neighborhood. And we knew we had something special on our hands. So we opened up our Fifth Avenue store. This is in September of 2003. And about a week after we opened, Howard would come in and pick up a dozen donuts and then, all of a sudden, he came back again, picked up another dozen donuts. The third time he sat down with one of our managers and asked, you know, what it would take to get our donuts in their stores.

COHEN: And so how do you adjust to something like that? You start off as this small business in a couple of locations. The next thing you know you're making donuts for thousands of Starbucks all over the country. What did that mean for your business?

Mr. CLEBECK: It meant that my wife, Libby, and I were, like, in boot camp, making donuts and putting them in boxes every day.

(Soundbite of laughter)

Mr. KLEBECK: It was intense. And, you know, we just really went to town with trying to accommodate the request. And it worked out.

COHEN: And Mark, there are lots of other kinds of pastries that Starbucks sells in its store, but as I understand it, you're the only one that really has your branding, the Top Pot branding, in the Starbucks store. That must have gotten your name out all across the country.

Mr. KLEBECK: It did, and it's been, you know, wonderful exposure for us. It allows people, you know, who see our brand in their stores to actually then travel to Seattle and just, kind of, see where all this is coming from, where it originated.

COHEN: A lot of people love Starbucks, obviously, but a lot of people also see it as kind of this giant, omnipresent business, with a very corporate feel to it. And some people criticize it for putting other, smaller, independent coffee shops potentially out of business. Did you get criticized at all for partnering up with this big company?

Mr. KLEBECK: Uh, yeah, I got a sticker on my - back of my car says you sold out.

(Soundbite of laughter)

COHEN: Ouch!

Mr. KLEBECK: I didn't. No, just kidding. You know, there are always to place to go for coffee, and they grew just like a good business would grow.I think it's really helped a lot of the independent coffee, you know, shops. I think Starbucks made it known to the public that it's OK to pay so much for a latte, or for a coffee drink. If you've got a special niche in the market, whether you're Starbucks or another, you know, independent coffee shop, you're always going to do well.

COHEN: Well, now Starbucks is closing down a number of its stores across the country. Now that you've amped up your business, how is this going to affect you and your company?

Mr. KLEBECK: Well, we've found that it has not affected us in any way. I mean, it's something that our orders have not gone down, they've held steady. We haven't seen any really odd dips in anything. Things have been consolidated, and so if it means that, you know, we have so many donuts are being sold in 10 stores within a given area and two of those stores are gone, then it just means that the other eight stores are making up for that volume with increased donut sales.

COHEN: Do you think now that times might be changing, and that with Starbucks closing up some of its stores, people might not be willing to pay as much for coffee and donuts and things like that any more?

Mr. KLEBECK: People are just making different choices as far as how flexible they're going to be, as far as getting around on foot and frequenting different locations. But I think it all starts to, kind of, settle back in, and I don't think we're going to see anything just fall completely off.

COHEN: Mark Klebeck is the founder of Top Pot Doughnuts in Seattle. Thanks for talking with us.

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