Mmm... Immigration Doughnuts
By Bryan Caplan
Before blogging, there were listservs. I ran one for Armchair Economists. (Technically, it’s still up, but competition from blogging has all but killed it. That’s Creative Destruction for you…) One of our liveliest debates revolved around the doughnut industry. In D.C. and New Jersey, big chains and stale doughnuts predominate. In L.A., independent shops with fresh doughnuts are the rule. What gives?
After learning a bit about the industry, I advanced a simple explanation: Los Angeles has Cambodian immigrants to thank for its happy situation. There are lots of Cambodians in L.A., and they’ve developed an amazing and self-sustaining network of doughnut entrepreneurship. In D.C. and New Jersey, there aren’t many Cambodians, and for whatever reason, no other group of immigrants has what it takes to fill their shoes. That was my story, anyway.
Years later, the Los Angeles Daily News has vindicated my hypothesis:
Independent doughnut sellers in the Valley are so good at streamlining that they have kept the chains from invading.
Krispy Kreme shuttered half its stores in Southern California after the buzz about its hot doughnuts cooled off. Dunkin’ Donuts doesn’t have a single shop in the Valley and isn’t looking to expand in the Golden State, according to its Web site.
Winchell’s, the largest West Coast chain, has just 17 of the roughly 400 doughnut shops in the Valley.
“The small independent doughnut shop operators are able to run a lower overhead,” said Lincoln Watase, president of Yum Yum Donut Shops, which owns Winchell’s. The mom and pop stores don’t have to pay managers, administrators and other support staffers like the chains do.
The article then reveals the Cambodian roots of this distinctive market structure:
Cambodians created a niche business out of doughnuts beginning with a La Habra store in 1977, according to James Allen and Eugene Turner in “The Ethnic Quilt.”
“The business was successful, relatives trained with the owner and opened their own shops, and word of these opportunities spread widely within the community,” the authors write.
But nobody eats doughnuts in Cambodia. The shops are just about economic survival, according to Allen and Turner. Not much English is required to run one, and loans through the Cambodian community made it possible for immigrants to open their own shops.
It’s easy to give immigrants the credit for the explosion of ethnic dining. But it takes more insight to notice the role of immigrants in less exotic industries. In fact, I doubt I’d have to linger in an L.A. doughnut shop for long to overhear an elderly customer denounce the unmitigated evils of immigration while devouring a delicious Cambodian-made cruller.