Donald's Bagels & Bites, The Bakery close

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Donald’s Bagels & Bites reopening - Sept. 1, 2008

Two well-known bakery restaurants in Lynchburg shut down on Friday due to cash flow problems, their owner said.

Although The Bakery on Timberlake Road and Donald’s Bagels & Bites had strong sales, their revenue could not keep up with interest charges, said Jyl VanDusen, owner. Although the shops could have stayed open, VanDusen said it would have been unfair to her suppliers and 21 employees to operate and risk not being able to pay them.

“Once you know that it’s time to close, it’s just time to do it,” VanDusen said. By staying open, “You could make more money, but you also incur more debt.”

VanDusen hopes to sell both businesses to someone with enough capital to operate them with fewer cash flow issues.

She bought both businesses because circumstances came together so that she felt it was what God wanted her to do: Soon after she decided that she wanted to run an eatery, she heard that The Bakery was for sale; When Donald’s Bagels closed almost exactly one year ago, everything came together for her to buy it and re-open it.

The Bakery became popular with Liberty University students last year when two students led an effort to patronize the business and donate money to help pay medical bills for VanDusen’s husband.

Her husband died in May this year, VanDusen said.

The businesses did well. In four years, The Bakery’s sales increased from $575 per day to about $1,100 per day, Van-Dusen said. She didn’t own Donald’s Bagels long enough to judge its progress, she said.

Although sales were up, so were the interest rates on the credit cards VanDusen used to finance her operations.

Small businesses that don’t own real estate can have trouble getting secured credit, such as a loan or a credit line, Van-Dusen said. She bankrolled the business with credit cards, which usually have higher interest rates than secured credit.

One of VanDusen’s cards increased her interest rate to about 37 percent, and she paid $22,000 in interest in 2008, she said. “I was making over $5,000 in payments (a month) with 53 percent of it going to interest,” she said. “You can’t do that and have enough cash flow.”

“Had it not been for that we would have been in the black.”

VanDusen had hoped to sell the businesses without closing them. She finally decided on Thursday night to go ahead and close.

Jackie Cofer, an employee at Urgent Money Service next door to The Bakery, said she was surprised to find the shop’s doors locked on Saturday. “I know they missed out on a lot of money on Saturday, because there were a lot of people in the parking lot,” Cofer said.

Donald Nugent, the founder of Donald’s Bagels, said it was sad to hear about the businesses closing. “Business is rather unforgiving, in light of today’s economic environment,” he said.

VanDusen said she wants to sell the businesses to someone so she can repay two investors “who believed in me” and try paying her suppliers.

As for her decision to buy the businesses in the first place, she believes it may have been a “pop quiz” from God. She had the faith to keep trying, but she couldn’t ask her employees to do the same.

“It’s one thing for me to walk by faith,” she said. “But for other people who have trusted me to pay them, … they shouldn’t have to walk by mine.”