Small-Business Success Story: Cops & Doughnuts

Kiplinger's spoke with Alan "Bubba" White, 54, former police officer and co-owner and vice president of Cops & Doughnuts, a doughnut shop and bakery based in Clare, Michigan. He explains why and how he and the eight other members of the local police department saved the historic business from closing—and went on to expand the enterprise. Here's an excerpt from our interview:

You're both policemen? Retired. Ryno and I grew up together and served in Clare, our hometown of 3,100 people in central Michigan.

And you bought a bakery? We did, with seven other Clare cops. The joke around town is that we were having lunch one day and heard that the doughnut shop was closing, so the police department sprang into action. But the truth is, we were worried about what would happen to our little town when the bakery closed. At the time, in 2009, our downtown already had 11 empty storefronts. Ryno said, “Why don't we buy the bakery?” Everyone laughed. Then we realized we had an opportunity to play up the stereotype of cops and doughnuts.

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How did you finance the business? The first year, we leased the bakery for $12,000. Each owner put in $1,500. We had an option to buy the building, equipment, inventory and recipes for $160,000. By year-end, it was obvious we should buy, so we took a loan from a local bank.

Word spread quickly? A reporter with AP interviewed us. The story went national, then international. Our web hits went from seven to 70,000 in one day. Pretty soon, the phone rang off the hook. You couldn't find a place to park downtown, and we couldn't make product fast enough.

What do you make? Doughnuts and other baked goods, made from scratch with the best ingredients. We make them big. Our apple fritters are the size of a puppy, and our Long Johns have twice the usual amount of filling. Plus, the Clare location serves breakfast and lunch.

How do you manage the business? We are all equal partners, and we have a monthly owners meeting. It's like nine brothers working together—sometimes sniping but always looking out for one another. Two people were elected managing members to make decisions for the group. And we hired a chief operating officer, who hires general managers for the bakeries.

You've expanded? We've bought five other bakeries in Michigan and Indiana. To buy three of the locations, we borrowed $400,000. We paid for the next two from cash flow. We have 167 year-round employees. In 2016, we had gross sales of more than $4.3 million. We expect gross sales of $5.7 million in 2017, with a payroll of $1.9 million.

Your marketing is fun. Yeah, our best ideas come from sitting around a fire with a six-pack. Ryno and I do videos, and we've learned that goofy and funny works.

How's Clare doing? For the first time in my life, Clare has no empty storefronts.

Do you think you'll ever retire again? Driving around, making appearances, giving talks, shaking hands, giving out free Bubba hugs—I can do it forever.