Shane Murphy (00:02.062)

Welcome back everybody. Today we're here with David Doty, the owner of Lehi Bakery, which is the home of the famous Square Donut. David has owned Lehi Bakery since 2018 and he's seen them grow from their initial location in Lehi, Utah to a second store. And they have two more in the works at the moment. I'm sure they have other expansion plans, but I've been a customer of theirs for ages and...

David, we're just super excited to have you on today. Thank you for joining us and sharing your story with everyone.

David (00:37.728)

Yeah, absolutely. Happy to be here. We own a couple different food concepts, but of all of them, the bakery is just, it's been my favorite and it's such a joy to operate. So happy to share everything I can.

Shane Murphy (00:50.766)

And I'm sure some of the content that we'll discuss doesn't have to be limited to the bakery. We can talk through many, all your different concepts that you have. But maybe can you tell us a little bit more about your background, how you got started in the restaurant industry and more of the backstory.

David (01:08.768)

Yeah, so I mean I have probably the same background most people have. Actually, it's probably the exact opposite. So I went to college and studied finance, worked on Wall Street for a number of years. I worked at JPMorgan and Goldman Sachs and then a little stint at a private equity firm. And I love numbers. I thought I wanted to do math going into college and just found that I liked math that I could apply. And to me that was finance. So I loved doing that for about 10 years. I got my MBA and law degree at BYU.

I took a job right out of school going, I went to Haynes in North Carolina. You know, come in, makes all the socks and underwear and owned Champion at the time. And I just...

At that point we had bought our first frozen yogurt business, which is probably the easiest business for anyone to operate. It's so easy. If you had a couple of competent 16 year olds, you could run a business, you know, frozen yogurt business. I bought that when I was in grad school, but I was out in North Carolina and I just was sitting there and doing finance work and it was just slow and it wasn't very dynamic. And I just felt this need to get back and just dive all in into food concepts. And it's at that time when another frozen yogurt

came for sale and the Lehi bakery and it allowed it you know the the histories of the company showed that my family would be able to do just fine financially and I said let's just dive in and do it so I think a lot of people thought I was really crazy for leaving corporate finance world to go and and start making donuts at one in the morning but I literally would not

change a single thing about how that all came together. It is literally the joy of a lifetime to be running the local donut shop. We give tours around this building all the time and it's almost like little micro celebrity status, you know, in our little hometown. But I just, I love it, you know, compared to like finance and law and, you know, people get upset with bankers and everything. No one ever gets upset at the donut guy. So.

David (03:11.328)

I can resolve most problems with a box of donuts or a cake or something like that. So it's a very good life. Hard at times, given the hours that we have to work, but it's a very good life.

Shane Murphy (03:24.11)

That's awesome. Yeah, I was gonna say the bakery world is quite a contrast to a frozen yogurt shop, especially when you talk about the hours and the prep and the dough and all of those things. So that must have been a whirlwind.

David (03:37.984)

Yeah, I mean it was the perfect segue. So, I mean, whether they're people from school they went to that are looking for a change or just people looking to buy their first small business, I tell them that my start was really gentle. You know, from an operations standpoint, my first business was in a fine dining restaurant, something that required a lot of expertise and experience. It was super easy. And if you've never done payroll before,

Like set it up, know all the state account numbers you need and workers comp insurance. If you've never done all that, like it's not hard, but you have to. The first time you do it is just a little bit of a learning curve. So that's how we got in. We got to figure out some of this stuff. What margins am I looking for? What am I looking for in a new hire? What insurances do we need? Vendors, what kind of vendor, what do you want your vendor relationship look like?

All that stuff came from this really easy frozen yogurt business that I started to get introduced into. So now as we've kind of progressed and added on other concepts, we've just been able to take some of those lessons and deepen our understanding and learn better. So I'm just grateful for my soft start.

Shane Murphy (04:48.11)

Yeah, that's amazing. So right now there's Lehi Bakery. Do you still operate a frozen yogurt concept? What are the other concepts that you're operating right now?

David (04:57.344)

We sold those frozen yogurt stores to a friend in 2020, right around the start of the pandemic. That allowed us to have extra capital. We bought another brand called Magelbees here in Utah. That's a fine dining and catering company. We also own Summit Pizza Co. Then we have some partnerships and some other ventures as well. All food related, I think it would be very hard, at least for me.

Shane Murphy (05:10.254)

yeah.

David (05:27.25)

me to do a high quality job, stay up on the trends across multiple different industries. It's even hard for me within, even though it's all food, that's hard. I can't imagine trying to do a really good job and have like a daycare center, a tire shop, a gym, and food. That would probably be just even more overwhelming. Even having multiple things within food has been a challenge.

Shane Murphy (05:55.406)

Yeah, and you know, these are different concepts, but like you said, I bet that there are many principles that have cross -pollinated between them and helped you to be successful. Lehi Bakery has a unique experience because it's been around for, I don't know, 50 years or so, probably something like that. And so the locals have known it very, very well.

How have you thought about marketing and growth for like an established brand where awareness is really high and still trying to grow and expand through the most recent years?

David (06:36.8)

Yeah, so I mean the one common trend I have between our three major brands is they're all legacy brands, high respected brands in the state of Utah. Lehi Bakery 55 years, Magelbe's 42 years, Summit Pizza 35 years. We purchased all three of them from the original founding families. The one that we have the most history with the bakery, so I'll touch on there. So, and part of that relates to marketing. So when we first bought the brand, there were just

certain things.

I mean, everybody does it. There's certain things in your life that if you do it long enough, you start to put on some blinders and this is the only way to do it, right? It takes someone with a different perspective coming in to change things up. And that's kind of what we did at first. My low -hanging fruit at the beginning wasn't about marketing. It was literally just saying the word yes when people would call in and ask for orders. So the prior owners, I mean, they were retiring. It had been in their family for 49 years. And they, there's actually a story they told me once. Somebody went on the news and said that their favorite donut was a Lehi Bakery

maple bar and they were so upset because they did that meant more work the next day and they just were ready to be done so

There's just been little stages like little time periods of what the business needed at certain points and at first it was just saying yes It was upgrading the cash registers because they just had like these 1980 Casio cash registers That was just like they were like little ninjas on the keypad, right? And so it was some technology then it was just saying yes to orders then it was building out some operational systems Then it was understanding. Okay, we need better equipment. So there's just all these different periods and as we said today

David (08:15.68)

We're currently in the process of building out some more marketing platforms, but for the most part, my marketing budget's been zero dollars. I don't advertise, we don't discount, and I think that's just...

I call it my little copying Chick -fil -A. You don't thumb through the local newspaper to find your Chick -fil -A coupon. You respect the brand and you respect the product. And it's just, you know when you go, except for that one day a year if you dress like a cow, they charge the price that they require, right? But...

Recently I have also been thinking like, I don't have a formal marketing budget but I do spend a lot of money on our people that work in the front counter. So whenever someone walks in the front door, that's a more powerful marketing experience than any advertisement or video or anything else I can do. So my front of house people, I tell them, you are my marketers. You are the face of the brand. If you give someone a great experience.

they will come back. And I think, so despite not spending a formal dollar on some of these things, that's why our sales have grown 20, 25 % a year for the past five and a half years.

Shane Murphy (09:26.574)

Yeah, I mean, I love that concept of turning the people in the front of the house into the marketers. One experience I've personally had at Lehi Bakery was this was at the Lehi location once and there was a line, big long line out the door. And some one of the staff members walked up and was giving like donut holes to the people in the line. And I

David (09:32.704)

you

David (09:51.072)

Yeah.

Shane Murphy (09:54.926)

I had my kid with me and it was like, they were thrilled and excited and all of a sudden those kids, my kids, wanted to go to Lehi Bakery and every weekend we're asking, can we go get donut holes? And it's like, well, we didn't go there to get donut holes, but we got donut holes. And that was a marketing experience that was kind of not seen as marketing normally.

David (10:06.336)

Yeah.

David (10:17.6)

No, that's, and now often my boys who are nine, 12, and 13, they'll often be doing that job on a Saturday morning. But, I mean, that's another little thing. You just have to remember when five -year -old Shane went to the donut shop, it was like the highlight of the week, right?

And so when these kids come in, every kid gets a donor hole. I mean, there's times I'm out there and I'm just like, I'll walk over there right now. I just be like, if there's a little kid and I say to the parents, like, do you think they want a tour of the back of the bakery? We'll just take them back for five minutes and just show them around. I mean, that creates a massive memory for that child. And so as we're, we may not think of it at market, I just tell people like, we're always planting seeds. Cause eventually that five year old Shane's going to grow up and have his own kids. And,

Shane Murphy (10:57.102)

Yeah.

David (11:06.402)

he'll be able to tell those stories because everything we do here is focused on long -term. How we build and own our real estate, that way we're building the brand, the way that we're hiring, training, paying our people, all of its focus super long -term and so we're always planting seeds.

Shane Murphy (11:23.662)

Love that. That's incredible. And when you think, I guess when you've gone through buying these stable businesses, have there been like shifts in that strategy that you've had to implement? Like I know Magleby's was very stable and Summit,

Summit Pizza Co. They've been around for a long time and had several different units. Were there pieces to the growth strategy that you looked at and said, hey, I can take it from where it is and I know I can elevate this and move it beyond where it's been historically?

David (12:10.912)

Yeah, I think I understand where my strengths are. So I think one of my strengths is being able to look through a P &L and see.

how we can try to make each line item stronger and better. And again, like some of these founders or founding families, they just, they develop some, some blinders on. And so we just, we just try to break some of it, like say, is that true? And why is that true? And we might come to the same conclusion as they did, but in a lot of cases we're finding different and better ways. So, I mean, here at the bakery, I mean, again, it was a multi -stage process. Like how do you go from 800 ,000 in sales to 2 .8 million in sales?

How do you add on $2 million in sales in five years? Well, we can break it into a bunch of different pieces how we do it But some of the scripts are the same some bits technology, you know, I'm not a great marketer like I said we don't really have massive marketing budgets, but We're trying to try to weave that in because what I don't want to do is get complacent and I was actually having some conversations about that today with our people just being like

I love the fact that at Magalweese the phone just rings because we have history and we have connections and there's deeply embedded relationships that exist but I don't want to get complacent. So we're...

constantly trying to think about what are new things we can do to engage our customers more, bring them back more often. And sometimes it's adding a new location four miles away. Sometimes it's setting up a text messaging platform. Sometimes it's offering cookie kits or, you know, in this room that I'm sitting in right now, we do classes that bring in that four and five year old kid and we do cookie and cupcake decorating classes. So yeah, we're always trying to figure out another way to try to engage our fans in a smarter way.

Shane Murphy (13:56.814)

Yeah, because, you know, going and thinking about adding two to 2 .5 million in sales over a five year period is an incredible accomplishment. And what I think is phenomenal is you've done that without just adding a crazy number of incremental locations. Now you are growing, you are expanding. But when you think about the tactical things that you have done,

through the last five years to add those millions of dollars in sales. You mentioned a few like classes and maybe like a text marketing platform and things like that. What do you think have been some of the most impactful strategies that have led to that extra sales growth?

David (14:44.288)

Yeah, and that's all just at this main location. If you add on Saratoga, I mean, Saratoga's, I mean, our Saratoga store is already like the third highest volume donor store in the state. And it's just, it's been open for three months. So, I mean, it's always a multi -pronged approach to doing that. It's saying yes, it's adding a product line, it's being open Mondays, it's...

but the biggest thing was being able, how do we like capacity wise? So at a bakery or I'm sure at a lot of other places, the equipment you buy needs to fit the amount of volume that you're doing, right? A store that's doing $300 ,000 in donut sales is going to just require less sophisticated and less automatic equipment than a place that's doing what we're doing. And so, I mean, it just got to a point.

like a year in where, you know, the way that Brent used to make the donuts and how he would roll them out and cut them all like by hand with the manual cutters, like my carpal tunnel got so bad, I couldn't sleep. And so if you were to walk upstairs in our building here, we probably have half a million to 750 ,000 hours worth of equipment just above my head here.

There is no way in that old building with the limited footprint, the limited equipment that we could have had that we could have ever hit that. So some of that's just continuing to upgrade how big your team is, what equipment they have, and it's all just a response to customer demand and earning back that next visit. So we just try to do that day in and day out for years.

Shane Murphy (16:23.79)

I love that. Like one of the things that I've always seen, and this is probably even been like throughout history for each of these legacy brands is they've been obsessive about the customer relationship and the experience. And that really does set the stage for you to then be able to harness some of that growth and that awareness to say, hey, how do we increase the purchase frequency?

of our raving fans? How do we give them opportunities to implement this more? I love that you mentioned you guys started doing classes. That's a new product line that is a really unique one that not every restaurant is able to pull off that type of class, but this is a very unique one. Can you tell me about how the classes got started and the types of classes that you've offered?

David (17:21.184)

So what I don't want is we grow and people see, you know, our hometown. We've kept the name Lehi on the bakery because that's how people have, while it was officially the country bakery of Lehi, that was the official name for years, everybody knew it was Lehi Bakery. And so as we stand, we're keeping that name. We're hoping it brings people in on day one because they know the brand. But.

What I don't want for it as we grow is to seem cookie cutter in some ways and lose some of the soul and the feel. So.

You know, we have this room I'm sitting in now and I think tomorrow we have a birthday party here for a little kid and stuff. It just, it allows us this little bit to say, this is your hometown bakery. We want you to come in here and do classes alongside our employees. We literally roll out the cookies, we'll bake them upstairs, we'll bring them down, we'll decorate them. I mean, it's just how do you get, like, in terms of like, for lack of a better word, intimacy with your customer, you invite them into your home, you make cookies with them, you decorate with them. I mean, that's how you can deepen that relationship.

relationship just to a different level. But there's so many other things. It's convenience. Again, for the longest time it was walk up, wait in the long line, and finally get your order. They had one credit card terminal in the back. You had to wait for them to take it back, process it and forward. We're trying to focus now on convenience. So on a Saturday morning, if you have your kids' soccer game, you don't have to be like, I can't go to Lehi Bakery because they're going to have a 20 -minute line. It's like...

By Friday of this week, we're gonna have kiosks. So you can walk in, push it, put in your order, and in two or three minutes, you'll be back out the door into your car. So everything is just being about customer -obsessed, customer experience. There are times when some margins got tighter than I wanted where the thought would pass through my mind, like maybe we should...

David (19:16.544)

take off a person on the front of house and then I always come back to this and you got to take care of the customer every single time the best you can. The minute we stop doing that we're going to my people at the front is turned into order takers and is that all today then I think I've failed so we just want a deeper relationship that's cultivated whenever somebody comes in.

Shane Murphy (19:38.798)

That's awesome. Now, these are like the three concepts that you have. These are very different concepts. It's a bakery, like a full service line of like soups, salads, sandwiches, and then a pizza shop. How do you treat...

How are they different? How do you as an operator treat those concepts differently? The fundamentals of what you're talking about of focusing on the customer, the operations, the process, all those things kind of stay the same across them, but how are they different?

David (20:23.904)

Yeah, so part of that's why, see that head of hair you have? That's why I don't have one. Obviously the people are different, the concepts are different. I mean, Magleby's is two thirds of that business is out on the road on wheels, going out to different offices or weddings or venues. And they're all at different points along their trajectories with where we want them to be on service, food quality.

systems and procedures, they're all at different points along that path and that's what makes it really difficult.

But there are core things that, you know, how we treat the customer, that level of service that we want to implement across each of the brands. You know, our servers at Magleby's, you know, everything's still always a work in process, but the way that they, you know, how do they listen to the customer, how well do they do that, are they able to be engaging? We all have different, you know, skill sets.

We all have different skill sets and whatnot. And so what we've developed is, I call it a muse, right? So for the most part, the girls that work out front of the bakery.

We've kind of, we said, who's the best person we ever had work out front? We call her our muse. Her name was Laura Moffitt. She was the perfect girl. And we said, what made her so great? And we literally wrote down all the traits that made her great. And that's almost made the model of what we're trying to, what we look for in an interview to hire. And we're always trying to refine that. And sometimes it's impolite. You can't find a perfect 10 out of 10 every time, but we're trying to match those people and those skills to those different jobs.

David (22:10.37)

So, the server at Magleby's is probably different. They have a different, they're a different muse than the person that works at the bakery. And you know, even your person in the kitchen, like what makes a great line cook? You know, we're still defining what that is and how we find that person. And sometimes, you know, just needs require and necessitate that you need to take an eight out of 10. But we're trying to get better and better with that hiring.

It's really helped to define what we're looking for as detailed as possible.

Shane Murphy (22:35.79)

and I think that's what we're looking for in the future as well. Wonderful. David, thank you for coming and sharing your experiences and your stories and some of the things that you've done to build these brands. As a local customer, I'm grateful that you've built the brands and continued them on in the way that you have.

and there are a lot of golden nuggets in here. So thank you for coming and sharing your story today. How can people follow you and your brands and your concepts?

David (23:14.24)

Yeah, I try to post as I feel inspiration. I post on LinkedIn every now and again about either updates to the business or core business concepts that I think are valuable and worth sharing. So LinkedIn's primarily where I post. I'm not probably cool enough for Snapchat, TikTok, or Instagram. So I stick to LinkedIn.

Shane Murphy (23:37.102)

Well, that's great. Thank you so much for sharing the stories with us and look forward to coming in the next time and seeing you in person.

David (23:47.744)

Hey, you let me know, I'll be there.

Shane Murphy (23:50.638)

Alright, sounds good. Thanks so much, David.

David (23:52.64)

Thanks Shane.