Cronut Economics: Why Dominique Ansel Won't Cash In
You'd think by now Dominique Ansel, the creator of the super trendy donut-croissant hybrid called the "cronut," would have huge ambitions for taking his cronut business global.
But the Soho bakery owner says he's content staying right where he is.
Last week, Kevin Roose argued the cronut has a scaling problem because Ansel isn't doing enough to get his pastry to market. Rather than sell out for $100 million as Bay Bread did to Starbucks, or, say, license his super-secret recipe for mass production, Ansel--who wisely trademarked the word cronut--insists on expanding his staff and baking cronuts the old-fashioned way, in a bricks-and-mortar store.
Ansel has also refused to raise the price on his pastry, which emboldened scalpers to keep raising theirs. The cronut craze has sparked a black market on Craigslist, where the creation sells for far more than $5, sometimes 800 percent higher.
Roose says this makes the cronut ripe for a cash infusion since like many tech start-ups, it's affordable but still hard to get. But Ansel contends it's because, like Mario Batali, he refuses to slap his name on any old product.
We sent Ansel a set of questions to gain some insight into his cronut madness. Here's what he wrote, slightly edited for clarity and style.
Some critics argue that your keeping the price of cronuts at $5 has only encouraged black market activity. Would you agree?
Well, supply-and-demand charts determine market prices in the economic textbooks. But as any business owner knows, real-world situations are so much more complex than that. It's simple: I wouldn't want to go to a bakery that takes advantage of me and has a large mark-up on a hot item. I don't want to be that bakery. If I have to raise prices, it would be because my costs of goods went up, not because more people are lining up. The laws of ethics trump those of economics for me.
Has the black market for cronuts upset you?
Upset? No. Just worried at the folks who do buy from scalpers because there's no telling if it's been mishandled or if it's three days old. Food requires proper handling and hygiene. This is the equivalent of taking candy from a stranger. Hopefully as we increase production, less and less people will feel the need to buy a $30 cronut when there are plenty of $5 ones. It takes time to staff up, that's all.
Flickr image via ccho
You've mentioned you'd prefer expand your business in an authentic way. What would that look like?
Well, I think true long-term growth requires thought, hard work, and time. In the long run, really I believe that's the only way. Building a career that lasts a lifetime is different from one that shined bright for a few years and then just fizzled. I'm a chef at heart--trained since I was 16 back in France--and so I always feel like there's more I can do in the world of pastry, especially in a place like New York with such a sophisticated clientele. Imagine all the ideas and concepts that no one has done! I already have a few ideas in mind that I'd love to do someday--I'd hope to challenge myself to explore those.
Have companies approached you asking to buy cronuts?
Yes, of course. But everyone who's run a successful shop in New York has at one point been approached. Just to make it in New York is such a sign of triumph that the rest of the world respects that. It's what happened when we first opened in 2011, and it's happening again.
Photo by Thomas Schauer
Would you consider mass-producing cronuts?
One of my most frequently asked questions is: "Why don't you just make more?" If it were only that easy. It's like me asking a doctor, "Why can't you just do more surgeries?" or asking you guys, "Why can't you just make the magazine twice as long?" We can't just go from zero cronuts to hundreds of them within one week (and cronuts did not exist a little more than two weeks ago). I need staff, and equipment, and space. If I can find a way to produce more and it can be just as good, I don't see a reason why I wouldn't. But to compromise quality over quantity is not something I'd like to do.
JILL KRASNY | Staff Writer
Jill Krasny is a staff writer for Inc. magazine, where she covers the intersection of entertainment and startups. Prior to Inc., she was a writer for MTV and Esquire and an editor at TheStreet. She is a graduate of the University of Southern California with a degree in communication. She lives in New York City.