12:10 PM CST on Sunday, February 19, 2006

Associated Press

Since its creation 70 years ago, family-owned Shipley Do-nuts has grown from a small wholesaler to a chain of 200 stores in six southern states, which company officials like to call the doughnut belt.

Shipley Do-nuts

Shipley, which is run today by founder’s grandson, has survived low-carbohydrate diet fads and outlasted bigger rivals — Krispy Kreme Doughnuts Inc. is quitting the Houston market after eight years.

The local company has endured by sticking to nearly the same recipe that Arkansas native Lawrence Shipley Sr. devised in the 1930s, and by catering to its franchisees.

“They continue to do one thing right all these years,” said Michael Shine, president of the Texas Food Group, a restaurant consultant. “In this industry you get in trouble when you try to be too many things to too many people. They’ve been able to keep it simple and concentrate on one thing and make sure they do it well.”

Shipley Do-nuts Flour and Supply Co. ships mix, icings, fillings and other supplies to all its stores. Franchisees handle most of their own advertising.

Lawrence Shipley sold hand-cut doughnuts to grocers and opened his first retail store in the 1940s. His son, Lawrence “Bud” Shipley Jr., opened the company’s 140,000 square foot warehouse in Houston.

When Bud Shipley died last year, his son, Lawrence W. Shipley III, 38, became president. He plans to stick to the chain’s formula for success.

“We have a loyal following, so as justice to our customers who love our product, we don’t let the market and fads dictate what we do next,” Shipley told the Houston Chronicle.

Krispy Kreme blamed disappointing earnings on the low-carb trend, and Dunkin’ Donuts added specialty drinks to compete with Starbucks.

But Shipley Do-nuts has stuck to doughnuts and kolaches and hasn’t tinkered with its coffee offerings. Its best-seller is still the hot, glazed doughnut.

“We’re not a coffee shop or a bagel shop. We sell doughnuts,” Shipley said.

The company gets about 100 applications a year for new franchises, and it scouts locations with good visibility on morning commute routes.

Harold Longhofer bought his first franchise in 1976 in Kerrville, then operated one in San Antonio before moving to Houston and opening another. He said the family has responded quickly to his needs for technicians, supplies or extra help. He said it still feels like a small company.

“The company is family owned. It’s not on the stock market, and they open stores very slowly,” Longhofer said. “The Shipley family has always wanted all the stores to do good and spaced them accordingly, so everybody does well.”