Nothing good happens after 2am, they say. For Kenneth “Cat Daddy” Pogson and Tres Shannon, however, a middle of the night idea to open a doughnut shop in downtown Portland would turn out to be the best decision they ever made. Here’s the story of two guys with a good eye for business, an iconic pink box, and a little voodoo magic.
Before fate dealt Cat Daddy and Tres a future full of sugary treats and 18-hour days, Cat Daddy was working in hospitality while taking on side gigs as an announcer; he was the voice of local Portland wrestling, boxing, and roller derby. Tres was in a band, booking clubs in Portland’s Old Town district, and making connections with locals from all walks of life. Whenever the two old friends met up for late night brews, the business ideas started flowing.
“We had talked about business ideas forever,” says Cat Daddy. “Part of the drinking between two and four in the morning was to talk about crazy business ideas. We’d say, ‘Let’s do this! Let’s make a million dollars!’ We both thought we would open a bar; doughnuts didn’t come into it at first. Then we realized that there were no doughnut shops downtown.”
“Neither of us wanted to be up all hours of the night,” says Tres. “We didn’t want to deal with all of the licensing and trouble that come with dealing with alcohol, so we didn’t end up going with a bar.”
While the idea to open up a downtown doughnut shop was noble, there was one problem—neither Cat Daddy nor Tres had ever made a doughnut. So, the pair took themselves to a course they’ve called “doughnut camp” in Pico Rivera, California, where they learned the traditional way to make doughnuts. Upon their return to Portland, they found a spot in the heart of downtown, and decided to set up shop.
The do’s and dough’s of starting up
Armed with doughnut-making know-how, and a place to do it, Cat Daddy and Tres set upon creating a brand. They chose “voodoo” because they liked the number of O’s in the word, and the spelling of “doughnut”? Well, that was never up for discussion.
“From the beginning, there was no argument about spelling doughnut correctly,” says Tres. “Everyone started spelling it ‘doooo-nut’, and we felt like we had to educate the customer and the world about the proper spelling of ‘dough-nut’.”
“They’re made out of dough; not out of doo,” says Cat Daddy.
When it came time to create a menu, Cat Daddy and Tres used their “doughnut camp” training to create their staple cake and crueller items. To set themselves apart from the standard doughnut shops of the world, the pair decided to create toppings in an entirely new way.
“We reinvented the doughnut shop,” says Tres. “Everyone can say what they want, but no one was putting strips of bacon on a maple doughnut before us. No one was using cereal!”
The line to success
Voodoo Doughnut opened its doors on May 30, 2003, and it didn’t take long for locals and tourists alike to start paying attention. Within four or five weeks, a regular line was forming out the door, which was both a sign of things to come and not entirely surprising given the store only had room for four people inside, and just one cash register.
Outside of work hours, both Cat Daddy and Tres would use their time behind a microphone (at sports games and rock shows) to promote the shop. During shop hours, the pair experimented with new ingredients that began to turn heads.
“The NyQuil doughnut really built up the hype around us,” says Cat Daddy. “All of a sudden, we were on wacky morning radio talk shows all around the country. They talked about us on The Wire, Jay Leno mentioned us; it was madness, especially for our first few months in business.”
Never one to shy away from publicity, Cat Daddy stoked the fire when the authorities decided to look them up. “We got a phone call from the health department saying, ‘You probably shouldn’t put NyQuil in your doughnuts’, and right away, I called The Portland Mercury and said that we were going to be shut down. Shut down by the feds!”
Most business startups take months—or even years—to see growth and profit, but Voodoo was so successful, they had to expand their space within the first year. By 2008, the store had grown to needing four registers and crowd control barriers outside to help staff pump out more than 10,000 doughnuts per day, which were flying off the shelves as fast as they could cook them. Thankfully, an opportunity to lease a second building presented itself, and Voodoo Too was born. Since then, Cat Daddy and Tres have set up shops in Eugene, Denver, Austin, and Taipei.
“We were pretty cautious about going crazy, so we made sure that we could expand without things getting out of hand,” says Tres. “First, we wanted to see if we could operate a store outside of downtown, then outside of Portland, then out of state, then out of the country. I stand behind us being cautious, too, because the worst thing that could happen is Cat Daddy and I put our necks on the line, only to have something fail.”
“There’s also the cool factor,” says Cat Daddy. “It’s hard to remain cool when you open ten stores in a town in two years. At that point, you’re Jimmy John’s or Chili’s.”
Voodoo has experienced unprecedented success with almost all of its stores, which has been a blessing for Cat Daddy and Tres. The downside of having it so easy, however, is having no experience with tough times, which is something the pair experienced after opening a store in Austin.
“When we moved to Austin, we made the move to 6th Street, where all the tourists go,” says Tres. “This was a move that we made because we didn’t want to try and pretend to be locals; we know Voodoo can be a tourist trap, so why not just own it? But 6th is weird because the locals hate it—they can’t park, it’s full of bars, and the tourists are everywhere.”
“Austin was over-budget by a good chunk of change, and around Christmas, we began to get a bit worried, and weren’t used to that feeling,” Tres says. “We were worried that we weren’t going to make it, but slowly and surely things, started coming around. We know that most businesses take 3-5 years to be profitable, and we’re definitely profitable in Austin. We’re just not experiencing the levels we’re used to. We know we’re fortunate in a lot of ways that we haven’t had to tighten our belts, and are thankful for that.”
After a baker’s dozen worth of years in the business, Cat Daddy and Tres have learned a lot about managing money and being successful. They shared their tips for staying afloat, doing good business, and not giving a damn what anyone else thinks.
Hire the right people
Cat Daddy believes in rewarding loyalty, and says that having staff who work their way up through the business has been one of their secrets to success. “With the exception of specialized jobs, all of our staff work their way through the business: from cleaning up, to the kitchen, to management. Everyone from assistant manager up has been with us for at least eight years. By then, they know how everything operates within the business; they see the big picture.”
As for specialized jobs, Cat Daddy laughs when he thinks back to being the company accountant for seven years. “It was just me; I ran the checkbook,” he says. “We had a tax guy, who helped, but once the business got too big, we added an accountant to our staff. Accountancy isn’t the fun part of running a business—if you’re not good at it, there are better things you should be worrying about.”
“My advice for anyone starting up a business is to have a lawyer,” says Tres. “When you become successful, the target on your back gets bigger and bigger. If you’re going to be a successful business that grows really quickly, you’ve gotta have your ducks in a row.”
While you’re lawyering up, Cat Daddy recommends that businesses protect their assets, too. “We own the brand, and we have 30-something trademarks,” says Cat Daddy. “The sign is copyrighted, the name, the box, the phrase ‘good things come in pink boxes’; everything. “We own our name as much as we can anywhere in the world, except for Europe.”
“I have been in hospitality forever, which makes running the day-to-day business easy, but doesn’t help when it comes to the big picture side of things,” says Cat Daddy. “We’ve been winging that part, and learning as we go. To do this, we’ve enlisted so much help. I always say, take people out to lunch. It’s cheap and easy, and you’ve got that person’s attention for an hour. Pick their brain as best you can. Just recently, we took our landlord out to lunch, and he told us an idea that saved us $100,000; all it cost us was lunch!”
Invest your own time (and money)
“When we started this whole thing, it was just Tres and I,” says Cat Daddy. “We didn’t borrow any money, and we only answered to the health department and the landlord.”
“Of course, it also meant that we had no idea what was going to happen,” says Tres. “We had literally hundreds of dollars in the bank after we opened. If it didn’t work, we had no plan—we were going back to the drawing board, and I didn’t have too many more tricks up my sleeve!”
“It was a little bit scary doing it all on our own, but it meant we had a level of freedom that having investors and lines of credit doesn’t,” says Cat Daddy. “Doing it on your own means you can do things on your own terms.”
Believe in your product
If you’re going to go into business, both Cat Daddy and Tres say you’ve got to have thick skin. Voodoo has recently copped flak for announcing that a new Voodoo Doughnut location is opening at Universal Studios, something that the pair prepared for, and easily brush off.
“Nationally we’re still somehow the darling child of the travel industry, but locally we get a bit of flak,” says Cat Daddy. “I try not to let it bother me, because part of surviving as a business is not caring what people think.”
Waving his flip phone in the air, Tres says, “I don’t do internet, so I miss out on a lot of the vitriol. Instead, I get to see happy people leave Voodoo with smiles on their faces, taking pictures and enjoying themselves. That makes me believe in what we do, and feel lucky that we’ve found that thing we love.”
“I don’t take any of this for granted, and feel like one of the luckiest guys in the world,” says Tres. “Even on the worst day, this is the best job ever.”
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