Posted: February 27, 2013
Best of CoBiz: Duffeyrolls same as they ever were
Sweet taste of successBy Mike Cote
Nick Ault says he didn't know much about running a business when he and his short-time business partner Jim Duffey founded Duffeyrolls. He only knew they had a great recipe for cinnamon buns and that it was something he could get passionate about.
Over the next 25 years, Ault found out just how much he didn't know, and he's happy he can talk about it from the perspective of someone who has been to the brink and found his way back.
And the way back was the Duffeyroll. Ault just had to wander away from it for a while to discover the secret to his success was flour, butter, cinnamon and homespun appeal.
On a recent fall morning outside the Duffeyroll Café on South Pearl Street in Denver, Ault was excited to talk about his latest business addition. He just tricked up an air-cooled Volkswagen van to sell Duffeyrolls on the 16th Street Mall, a new twist on the company's flagship pushcart business. But he's just as enthusiastic talking about his misfires.
"When I first started Duffey's I really wasn't a businessman at all, and I didn't really understand food costs and labor costs," said Ault, who lives several blocks away from the café. "I thought the bottom line was that we had a great recipe, and if we just made people happy, we'd build a business that way. It was a very important foundation but also naiveté that almost cost me the business."
Over time, that naiveté prompted Ault to expand the business in many directions: door-to-door sales, wholesale accounts, catering, gift baskets and two additional retail locations beyond the flagship store on East Hampden Avenue.
"I couldn't figure out how we could have all this stuff shaking in the business and why we weren't making money," said Ault, who bought out his namesake partner a year after they started the business. "I just wasn't sophisticated enough at the time to understand that side."
It wasn't so difficult for Ault's accountant to decipher: Ault was selling the large Duffey Rolls for $1 each - about half of what he needed to charge if he wanted to stay in business.
"I was faced with whether people would pay $2 for a cinnamon roll," said Ault, who was about to learn an important lesson about branding. "My accountant made an interesting point: Is it a cinnamon roll or is it a Duffeyroll?"
The first customer to confront sticker shock was an attorney who came in to buy his usual dozen to celebrate a legal victory.
"When he came in, I chickened out and went into the bathroom and told my baker to handle it. I turned the fan off, and I could literally feel my heart beat," said Ault, 51. "This was a defining moment. I had been doing Duffey's for three years, and we had a real, real issue with our costs."
Although the attorney had to use his credit card rather than cash to pay the $47 bill, he didn't balk and took to heart the story the baker told him about Ault's accountant and the need to increase prices.
Ault has learned other lessons over the years. To chase the latest trends, he greatly expanded his menu, at one point selling 18 varieties of coffee and a large selection of muffins and bagels.
"The store looked fantastic with all these offerings. But rotation and freshness became an issue," Ault said.
A visit to McDonald's inspired him to rethink his menu. "They're known for their hamburgers, and they're known for their other things, but basically it was the simplicity of their menu that was a great lesson for Duffey's. We really pared it all back."
These days, Ault's business includes three Duffeyroll Café stores and a take-and-bake product that he distributes in large part through fundraisers for schools, sports groups and other organizations.
"It's the combination of focusing on quality and community and customer service," he said. "That's been the nuts and bolts of building a business, and it's pretty fundamental."
Mike Cote is the former editor of ColoradoBiz. E-mail him at email@example.com.