Donuts for Development

In a small, concrete house in the middle of Honduras, in a town named Las Vegas, the idea to create a business to sustain youth projects was born from a single batch of donuts. Sidney Slover 03BBA, a Peace Corps volunteer in the area of business in Las Vegas, has dedicated his service to promote income generating activities. Working with the local youth group (La Casa de la Juventud), formed to create and run projects for local youth, he was requested by the members to develop an income generating activity that would provide money for their youth projects. They knew that the project had to be something that could be made using local resources and not too complex. Hondurans have a noticeable sweet tooth and love bread products, donuts just seemed a like a logical direction, so one day, before a meeting Sid made a batch of glazed, yeast raised donuts. As the members of the youth group tried the finished product, a general consensus was made that donuts were the way to go to raise money.

Donuts are not foreign to Honduras. In the larger cities, Dunkin Donuts and other donut chains can be found though are not widely known throughout the country due to the premium cost of the product. Also, donuts can be purchased in local bakeries, however the process used to make the donuts does not equal the quality of a “Deca” donut.

After the first trial batch the youth group gathered in Sid’s house to make the first donuts to sell. Working on a basic electric countertop stove, and cooking them in a pot 3 at a time, it took 8 hours to make around 200 donuts. However, the end result was great, and selling the donuts from large plastic buckets (normally used for washing clothes) on the street, all were sold within 2 hours. People in town began to ask when they were going to make the donuts again, and even put in orders ahead of time to make sure they would get some! Each subsequent trial went as well as the first and they wanted to take the idea out of the kitchen and to the next level.

The first step was aesthetics and image; they needed a name and a logo. After much deliberating, they chose the name by a strange set of happenings. They had to cancel out the obvious choices (Dunkin Donuts was suggested) and go with something creative and original. They wanted something with alliteration and took Deca from decadent, wanting their name and slogan to be Deca Donas (“Que Decadente!” or, “So Decadent!”). Upon presentation the reaction by the Hondurans was clear, they were confused and did not like the name. Apparently, the common meaning here for decadent is similar to “almost rotten,” or “one foot in the grave.” Obviously, this name would not work! Just then, one of the members of the group spoke up and suggested casually “de calidad,” or “from quality. Using the first part of DE CAlidad, DECA, and using “De Calidad” as our slogan, their name was decided. The logo came about from a similar cooperation. One of the group members is a skilled artist and created several sketches of possible logos. After a vote, one was chosen, and using a scan of the sketch as a guideline Sid formed the current logo with graphic designing software.

The next step was funding. They created a business plan to present to the local powers that be and donor agencies. For a Peace Corps volunteer, one of the best ways to acquire funding is a Small Project Assistance grant (SPA) funded by USAID and the Honduran government, which requires a community contribution to the project of at least 25%. While they had some profits from the sales of the first donuts, they requested more than $5,000 to start up and were far from the $1,250 that was required. Fortunately, after presenting the project to the local mine, they were guaranteed the necessary funds to get the project started. In June 2006, the grant was approved, the money arrived, and they started to set up shop to get production and local sales under way.

The project really has been a community effort, with many different organizations involving themselves. The Las Vegas Red Cross donated some space in their building to serve as the factory, and the local municipality transported the equipment purchased in the large nearby city.

Like in any business, the first few months were the most difficult. Tasks included getting all the necessary equipment, creating the right connections with suppliers, training the workers, setting up the books, finding the best way to sell, etc.. The first week, a group from the weekend school interned in production and sales to satisfy requirements for their class, and Deca Donas was finally producing. One of the women from this class stayed on as an employee and within two weeks they had added on two more women in production.

Sales are run by having glass and aluminum cases made to fit the trays of donuts that they distribute and then they are placed in local stores. Currently, they have 12 cases placed in and around the Las Vegas area and they deliver fresh donuts about every other day. The donuts stay fresh for 2-3 days. Any that are left after this time period are replaced with fresh product and the older donuts are sold in other markets at half price. The sales price for the donut is 4 lempira (or $ .20), they sell wholesale to the stores at 3.2 lempira (or $ .16). The deliveries are made with a bicycle fitted with an iron box on the front which holds the trays of donuts. There is a permanent employee who manages the bicycle and deliveries in town.

After all volunteers leave the big issue for Deca Donas will be sustainability. How will it go on to prosper without the assistance of Sid or other external help? The first method is through training. All of the staff will be trained on how to carry out every aspect of each job so they will be able to teach others in case of a vacancy or need for additional worker. They quickly hope to achieve a sufficient scale so that they will be able to hire managers to run the different administrational functions, thereby, effectively turning over the day to day running of the business to Hondurans. Additionally, there are five community leaders, each involved in different aspects of business or social work, which make up the Deca Donas board of directors. Each lends their expertise and support to the project and have committed themselves to helping direct the enterprise to be a flourishing business. For example, the Casa de la Juventud president is one of the board members and assists with youth aspects of the project. Also on the board is the director of a local radio station (with 50% coverage in Honduras) who has given a large subsidy to their advertising, allowing them to have 2 radio ads played several times daily. Most importantly, the board of directors will approve and oversee the management of Deca Donas putting in the most qualified people to run the business for the community. In this manner the project will be self sustainable and not fall under unproductive or poor administration.

In the future, they hope to expand their product line (cinnamon rolls, éclairs, banana bread, etc.) as well as integrating other small producer’s products into their distribution chain so that they have the capacity to sell their products in larger markets. For instance, there is a local jelly company that has the facilities to produce and sell their strawberry and blackberry jelly in large volumes, yet do not have the know how to reach the market efficiently. Deca Donas hopes to be a full service business resource in the community, helping develop a higher quality product, more efficiency, and better run administration for small producer groups.

This project is more than just a small business endeavor deep in the mountains of Honduras. It is a model of inspiration for the entire country and elsewhere. For everyone who do not believe the expansion of original ideas possible. They created jobs. They will be providing money to youth projects. Most importantly, this project serves as a teaching model and support for those with similar interests. That is their main goal.