Apr 7, 2022 - Business

Federal Donuts eyes expansion across Mid-Atlantic

A fried chicken sandwich, coffee, and doughnut

Photo courtesy of Michael Persico

Philly-based Federal Donuts is aiming to add scores of new stores throughout the Mid-Atlantic region following a capital infusion from a Pennsylvania investment firm.

Driving the news: NewSpring Franchise and Federal Donuts completed a deal last week that will fuel the doughnut and fried chicken chain's expansion to potentially 150 stores.

  • The new locations would be run through a combination of corporate-owned, franchised and licensed stores.

State of play: The chain currently has 11 locations — seven brick-and-mortar spots, two in Whole Foods and one each in Citizens Bank Park and the Wells Fargo Center.

  • The company was founded in 2011 by Steven Cook and Mike Solomonov — the co-owners of the hospitality group behind Zahav, Goldie and Dizengoff — as well as Tom Henneman, Felicia D'Ambrosio and Bob Logue.

Between the lines: Talks between Federal Donuts and NewSpring Franchise — whose parent company is NewSpring Capital — began two years ago, before the pandemic, Cook said.

  • The deal will add three new members, two of which are NewSpring partners, to Federal Donuts' board.
  • Both sides declined to detail additional terms of the investment.

What they're saying: "It's about growth and trying to get us from the next level from being a local, mini-chain to something that's got a bigger reach," Cook tells Axios.

  • Satya Ponnuru, NewSpring Franchise general partner, said the firm made the investment because Federal Donuts' brand, products and consumer experience are "translatable across a wide variety of both consumer demographics segments and geographic markets," among other things.

What's next: Expect to see new Federal Donuts stores "in the very near term," Cook says.


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