Doughnuts: the new cupcakes

The latest food craze sweeping the city is hitting the sweet spot. While cupcakes and macarons satisfy after-dinner cravings, bakers are discovering that the doughnut—a treat good from morning till night—can provide the most profit.

"I know people think it's just breakfast, but our business is throughout the whole day," said Mark Israel, owner of Doughnut Plant, which has a recently expanded headquarters on the Lower East Side, as well as a 17-month-old outpost in Chelsea and, coming soon, a site in the Grand Central Terminal neighborhood.

But these doughnuts are more sophisticated concoctions than the garden-variety glazed or cruller. They sell for up to $3.25 a pop. They come in a variety of shapes and exotic flavors, such as pistachio-encrusted with lemon curd or square peanut butter filled with banana cream. Local or organic ingredients are typically touted.

Bakers like Doughnut Plant, as well as Dough in Brooklyn's Bedford-Stuyvesant neighborhood, aren't the only ones taking advantage of the surge in popularity. So too are restaurants, such as Pies 'n' Thighs in Williamsburg, Brooklyn, and the Brindle Room in the East Village, which are boosting their breakfast business by piling on the fried dough.

"We saw we were selling out of all these flavors and realized there's a hole we can fill—no pun intended," said Sarah Sanneh, co-owner of Pies 'n' Thighs, a popular spot also known for its chicken biscuit sandwiches. "We just let our imaginations run wild."

The cost of making a doughnut is relatively low compared with other sweets—and profits are high. Experts say the core ingredients—mostly flour, water, sugar and salt—are relatively cheap, and production doesn't require a lot of heavy-duty equipment or skilled labor, leading to profits of 15% to 30% per doughnut. "They're not expensive to make and not hard to learn how to make; they can be created in great quantities; they have every opportunity to be a success," said Stephen Zagor, director of culinary management at the Institute of Culinary Education.

Of course, doughnut fads have cooled in the past. A decade ago, Krispy Kreme made headlines for its rapid expansion—and subsequent collapse as customers grew tired of its gooey wares. At one time, Krispy had nine Big Apple stores. Today it boasts only one.

Even Dunkin' Donuts, the largest New York City chain store, with 466 locations in the five boroughs, did not add any outposts last year after opening 37 in 2010, according to a study of local franchising trends by the Center for an Urban Future.