Johnny's Doughnuts Closes Half Its Stores, Lays Off 34 Workers

Johnny's Doughnuts closed three of its six California locations on Monday, laying off 34 employees and halting an expansion that had added two new stores this year alone.

The shuttered units are in San Francisco's Pacific Heights, Santa Rosa and Santana Row in San Jose. The San Jose store opened just four months ago, in August. Locations in San Rafael, Larkspur and Napa will remain open.

"We expanded too quickly," Craig Blum, co-founder and CEO, told the San Francisco Chronicle. "The business couldn't support all these operations going forward."

What does this change for the surviving stores?

The retrenchment concentrates Johnny's footprint in Marin County and Napa, markets Blum said deliver the chain's best foot traffic and strongest sales. "We are a small company, and we're really determined to continue to serve the communities that we've been involved with for so long," he said.

Blum described the decision as emotionally costly, involving "many tears shed and sleepless nights." He added: "This is not something we take lightly."

In an email to customers Monday, the owners placed the blame directly on overleveraged growth. "Over the past couple of years, we took on more financial obligations than our business could carry," they wrote, per the Chronicle. "That's on us." The statement is a rare explicit acknowledgment from an operator that fixed obligations — presumably leases and staffing across six units — outran what revenue could support.

A 13-year arc from food truck to six units

Blum and Kim Diamond launched Johnny's Doughnuts as a food truck in 2012. The first cafe followed in San Rafael in 2013, with outposts in San Francisco's Hayes Valley in 2017 and Marin Country Mart in Larkspur in 2018. Hayes Valley closed in 2022. Santa Rosa opened in 2021, Pacific Heights in 2022, and the newest units — San Jose and Napa — opened in July and August of this year.

The chain had also planned locations in Petaluma and the East Bay. Neither materialized.

The menu centers on classic, handcrafted doughnuts: old fashioned, jelly, apple fritters and cinnamon rolls, plus vegan and wheat-free options and a beverage program spanning espresso, coffee and tea. Sourcing is local and named — flour from Central Milling in Petaluma and dairy from Clover Dairy in Sonoma — an ingredient story that helped earn recognition from Thrillist, Forbes and Food Network, which named Johnny's one of the top 5 doughnut shops in America.

The closures cap a two-year pattern at the small chain: rapid unit growth into 2025, a closed location in Hayes Valley in 2022, stalled expansion plans, and now a contraction to three stores. For a six-unit independent operator, the fixed costs of two new leases opened within roughly six weeks of each other this summer would have added significant labor and occupancy burden before the newer stores matured — a timeline the four-month-old Santana Row unit never reached.

What remains is a chain refocused on its two strongest markets, with management saying the surviving locations will keep operating under the same model that built the brand.