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The donut business is booming, and continues to grow year after year. According to a March 2018 report by IBIS World, the donut industry brings in about 16 billion (with a capital B) dollars each year, with large franchise chains like Dunkin Donuts, Krispy Kreme, Winchells and Tim Hortons dominating the marketplace. Its easy to see why; the margins on donut production and sales are off the charts, with ingredients costing just a few pennies on a product that can be sold for $2 or more. Customer buying trends also show an increase in small-scale luxury purchases like donuts, and the industry trends toward creativity and gluten-free offerings continue to drive growth in the donut sector. Factor in coffee sales, another ridiculously high-margin item, and the donut business may start to make a lot of sense.

But how can smaller-scale food business entrepreneurs, who may not have hundreds of thousands of dollars laying around for franchise fees, buy into the extremely lucrative and ever-expanding donut biz? Heres our complete guide to getting your donut operation, large or small, off and running:

CONSIDER THE LOCATION FOR STARTING YOUR DONUT BUSINESS.

Unlike outfitting a full-scale commercial kitchen, outfitting a retail store for donut-making requires much less space, though it does have its own equipment considerations (more on this later). For now, the biggest question is where you plan to put your donut business. Youll need a few hundred square feet, to accommodate both the production area, and the sales area. Donuts sell best when they are artfully displayed, so plan on a large counter area for customers to see what you have available that day. A few tables for customers to sit and eat are nice, but not something you need to devote a lot of square footage to; most customers will take their orders to go.

Focus on one of two niches for your donut shops location: Do you want to be a charming/hipster donut shop, nestled in the heart of Main Street, where casual passers-by happen upon your shop and make an impulse buy? Or would a strip mall location make more sense, where customers short on time can pop in and grab a quick dozen while theyre running other errands? The type of shop you want to create will help dictate a lot of these decisions.

Donut shops are also a perfect fit for mobile concessionaires interested in jumping into the food truck game. With the right equipment, most of your initial donut production can be handled right on the truck, with expansion to a commissary kitchen a means for increasing the amount of product you create each day, as demand for your donuts grows. Staying mobile also allows you to bring the donuts to the people, where they need them the most; consider locations around large office complexes, public parks or waterfront locations, or near hospitals or universities. Remember that in a food truck or trailer, space is going to be at a premium, and this may have an impact on the variety and types of donuts you plan to create.

TO FRANCHISE, OR NOT TO FRANCHISE.

One of the easiest ways to get started in the donut business, is by buying into a franchise such as Dunkin Donuts or Krispy Kreme. The franchise fees can be steep, often costing hundreds of thousands of dollars to get started. In exchange for paying this premium price, youll be working with an established brand who will handle much of your marketing for you, serving product shipped from a central supplier that you finish cooking in-house. Some franchises even help with real estate and construction questions and requirements. Many franchise opportunities offer a balance between the benefits of the support of the franchise system with the pride and freedom of independent ownership. If you have a background in entrepreneurship, baking or pastry (and youre looking for limitless freedom in terms of the type and variety of products you sell), striking out with an independent venture may be more appropriate for your particular dreams and desires.

Figure out what kind of donuts you plan to make, and let that define your equipment list. Different types of donuts require different kinds of equipment, and the kind of donuts you plan to sell will dictate a lot of these purchases and decisions. If you plan to sell strictly cake-style donuts, your initial equipment needs will be much simpler (and less expensive): a shallow fryer, a glazing table, and a batter dispenser are practically all you need to get rolling. If you plan to sell fancy donuts (or what we in the business refer to as raised yeast donuts), youll need a little bit more: a shallow fryer, a glazing table, a large mixer, work surfaces for rolling out and cutting dough, rolling racks for storing donuts while in production, and a proofing box for letting the dough rise before frying. Of course, no matter what kind of donuts you make, youll also need refrigeration for your topping and filling ingredients, a hood or ventilation system over your fryers, and plenty of space for dry ingredient storage.

Your equipment purchases will also be dictated in part by the volume you think youll need to produce. If you plan to make a few dozen donuts each morning and call it a day, youll need smaller-scale countertop or freestanding floor fryers. If youre going to be running your donut business full-bore, with round the clock production, a donut frying robot that can produce hundreds of donuts per hour may make the most sense.

Heres a quick checklist of your initial equipment needs, with pricing from Webstaurantstore. Remember, you dont need to purchase all of your equipment new; scouring local classified ads or Craigslist can help you unearth secondhand treasures at a huge savings. This is by no means an exhaustive list, but it may help you start to ballpark some figures: