Project D remains “optimistic about the future” as it marks a return to profitability following a loss-making quarter and the closure of one of its retail outlets.
The Derby-based doughnut specialist appeared unstoppable last year, leveraging its Online Bakery Business of the Year win in 2022 and a storming social media presence to raise a crowdfunding total of £524k in June – almost a third more than its original target.
Upon receiving the amount from crowdfunding platform CrowdCube, Project D set about ‘turbocharging’ its growth through product innovation, retail expansion, digital marketing, e-commerce, and new hires. It opened its flagship store in York city centre in October, and then a shop in Sheffield’s Meadowhall Shopping Centre, a kiosk in Nottingham’s Victoria Centre, and an outlet at Terminal 2 of Heathrow airport.
However, a significant downturn in customer spending towards the end of the year resulted in a 20% decrease across its business lines. Unexpected shop fit-out expenditures meant budgets were exceeded, and delays to openings saw Project D miss out on some peak sales times over the festive period. With the cost of cocoa soaring, these factors all combined to have the company suffering losses in December, January, and February.
“This was a challenging period, and we had to adapt swiftly to mitigate its impact,” Project D co-founder and marketing director Max Poynton told British Baker.
“The surge in cocoa prices certainly posed a challenge for us, as it directly affected our production costs. However, through strategic measures such as sourcing alternative suppliers and optimising our production processes, we have been able to alleviate some of the cost pressures,” he added.
To streamline operations and focus on more profitable ventures, Project D made the “difficult decision” to close its Nottingham kiosk.
“Going forward we won’t be using the same property agents that sourced the Nottingham and York stores,” revealed Poynton, adding that more rigorous budgetary controls and project management strategies were now in place to ensure such occurrences are minimised in the future.
Finding skilled team members had been “a hurdle” for Project D, according to Poynton. “We have been actively addressing this by investing in training programs, enhancing employee benefits, and refining our recruitment strategies to attract top talent,” he assured.
The business was also left disappointed after a promising candidate for the new CEO position fell through. The individual had been expected to inject £250k as proof of commitment to the brand.
“The unforeseen withdrawal of the chief executive candidate and the associated investment pledge was disappointing for us,” commented Poynton. “Unfortunately, despite us completing a detailed background check, it turns out he wasn’t who we believed him to be. Nevertheless, we remain resilient and are exploring alternative avenues for strategic partnerships and investments to support our growth trajectory.”
Poynton, who co-founded the company with Matthew Bond and Jacob Watts in 2018, said they were “optimistic about the future of Project D” moving forward.
“We have implemented rigorous cost-cutting measures and operational efficiencies, which have contributed to our return to profitability in March. In conclusion, while we have encountered challenges, we are confident in our ability to navigate through them and emerge stronger.”
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