He Grow This 90-Year-Old Texas Donut Brand Towards 750 Stores by 2030

Kerry Leo, VP of Technology at Shipley Donuts, discusses the brand's impressive growth and technological transformation. Shipley Donuts, a 90-year-old family-owned business based in Houston, Texas, started in 1938, originally selling a dozen donuts for a nickel. The company has expanded significantly, now boasting approximately 385 locations and aiming to reach 400 by the end of the year, with plans to double in size to around 750 locations by 2030. The brand operates primarily on a franchise model, with only 12 corporate stores, which serve as testing grounds for new technology. Leo joined Shipley in 2021, finding a company with a minimal tech presence, primarily relying on cash registers and QuickBooks. His role has involved a comprehensive overhaul, implementing systems such as POS, back-office solutions, online ordering, and a mobile app to modernize the brand. He was drawn to Shipley by its nostalgic appeal, delicious product, and the rare opportunity to build a technology infrastructure from the ground up. The focus has been on creating a cloud-first, mobile-first, and secure platform that allows operators to manage operations efficiently from their phones or tablets, minimizing the need for on-site server maintenance. Shipley is actively expanding eastward, with locations in Maryland, Virginia, North Carolina, Alabama, and Georgia, and is exploring opportunities in Nevada and New Mexico. The typical store layout often includes a drive-thru, a crucial element for customer convenience, especially in established markets like Houston. The brand emphasizes its old-school approach of making products fresh daily from scratch, with bakers preparing everything in the back. Visually appealing displays of colorful donuts and kolaches are designed to attract customers, appealing to their sense of sight. When evaluating technology, Leo prioritizes understanding the pain points of franchisees and cashiers by visiting stores and engaging in conversations. Internally, the operations and marketing teams collaborate to identify problems that technology can solve, avoiding the adoption of new tech simply for its own sake. Leo also attends industry conferences like Murtec and FSTech to connect with partners and assess their roadmaps, particularly focusing on investments in automation. Shipley has recently partnered with Savory to enhance its online ordering experience. Previously, customers had to manually select each donut for a dozen, but the new system allows for simply adding donuts to a basket, automatically calculating discounts for a dozen and suggesting upsells. AI is also being integrated to personalize the donut ordering process. For instance, an AI bot, originally named something with "dough" in it, learns popular donut selections. For large orders, a user can specify a party size, and the AI can generate a custom order of donuts and kolaches within seconds, leading to larger average check sizes. Internally, AI is being used to support Franchise Business Coaches (FBCs). Shipley sends out a monthly "donut dashboard" to each franchisee, analyzing data from their data lake. This dashboard highlights opportunities for sales growth, cost reduction, and improved labor management, essentially acting as a digital coach to facilitate more productive conversations between FBCs and franchisees. The origin story of Shipley Donuts is rooted in Lawrence Shipley's entrepreneurial spirit in 1938. The family remains involved in the business, with many still operating shops and sharing their experiences. For those who grew up in Houston, Shipley is a beloved, generational staple, with customers often sharing fond memories of visiting the shops with their parents and now bringing their own children. This generational connection is considered one of the most rewarding aspects of the business. In terms of personal tech preferences, Leo is an iPhone user, currently on an iPhone 11, and prefers Microsoft. He receives around 150 emails daily, enjoying reading positive reports and communications. He uses Microsoft Teams as his primary communication tool, including for remote meetings. He favors Claude among AI language models and is setting up an internal system using Copilot with their Snowflake data lake, enabling internal teams to access and analyze data for insights. Leo prefers phone calls over text messages for clearer communication and enjoys both taking photos and videos. He uses Google Maps and is currently working on a facelift for the Shipley mobile app, integrating AI and voice capabilities for hands-free ordering.