“So, Lil, what have you been up to the last few days?”
Lily McDonald, 24, glanced back toward her mother filming from behind the camera before pausing to answer.
“Yeah,” she said, laughing, “I’d say the last few days my life has totally changed on me once again.”
Then came the announcement, delivered with a nervous grin as if she was only beginning to appreciate what she had just done.
“I actually just bought a bakery in Muskoka.”
In the Instagram video posted May 12, McDonald described quitting her job, buying a car and incorporating a company in preparation to reopen Bala’s long-running Don’s Bakery within weeks.
“And do I know how to bake?” her mother asked from off camera.
“Nope,” McDonald replied, shaking her head with a smirk. “Do I have a baker? No. Do I have employees? Probably, but I haven’t met them yet… this is going to go great!”
Over the following days, McDonald posted videos documenting the rush to prepare for opening day — meeting staff, cleaning the kitchen, organizing equipment and preparing recipes — while online viewers flooded the comments celebrating what many saw as the revival of one of Bala’s most recognizable seasonal businesses.
“This (owning the bakery) is surreal, and it means a lot to me for a lot of reasons. My parents met in the bakery. My cousins worked here. My mom worked here,” McDonald later told the online news outlet Muskoka Region. “So to say that I own it just really makes me feel proud.”
Documents and interviews reviewed by Muskoka411 show the proposed sale agreement for Don’s Bakery included the transfer of equipment, recipes, goodwill, branding and other business assets to McDonald. The deal never closed. On May 15, the bakery reopened under the “Don’s Bakery” name, with public-facing branding that linked the new operation to the bakery’s history, including references to “Don’s way,” “original recipes,” and McDonald as the bakery’s “sixth owner.”
“Nothing was ever purchased, no money changed hands, nothing. They just signed a lease with the landlord and opened the doors,” said a source familiar with the negotiations.
The proposed sale had evolved quickly from an informal inquiry to what Don’s Bakery owners Jana and Bryan Foster believed was an imminent transition.
The Fosters said McDonald, a former Don’s Bakery employee, first contacted them April 17 about purchasing the business ahead of the summer season. McDonald had worked at the bakery in various roles from 2013 to 2021, according to the Fosters, and was already familiar with its operations.
With Victoria Day weekend approaching and the bakery’s seasonal reopening only weeks away, the parties began preparing for a fast handover. A non-disclosure agreement was signed. Lawyers exchanged draft asset purchase agreements. The Fosters provided operational information, equipment lists and recipe materials, and began introducing McDonald to the people she would need if the bakery was going to open on time.
They connected McDonald with the bakery’s landlord, staff and vendors. On April 22, before the sale had closed, Jana Foster sent an email to staff and applicants announcing McDonald as Don’s Bakery’s new owner for the 2026 season.
The transaction, however, was not complete.
By late April, negotiations had become strained amid discussions about the bakery’s liabilities, including tax and lease issues. In a statement to Muskoka411, McDonald’s lawyer later said the proposed transaction failed after it became apparent that “the former owner’s business debts exceeded the representations that had been made.”
On May 8, McDonald texted Foster saying she would “not be proceeding” with the deal on the advice of her lawyer.
Four days later, McDonald posted an Instagram video announcing she had bought a bakery.
Don’s Bakery reopened under McDonald’s operation May 15.
“It felt like a punch in the stomach,” said Jana Foster, who told Muskoka411 she felt blindsided by the news.
Founded in 1947 by Don Lloyd, Don’s Bakery has long been one of Muskoka’s best-known seasonal institutions, drawing generations of tourists and cottagers to Bala for its butter tarts, doughnuts and longstanding place in cottage country culture.
Both the Fosters and McDonald described the bakery as something larger than a business — a community tradition worth preserving.
Jana and Bryan Foster took over Don’s Bakery in 2010 and raised their family around the operation, which they described as central to both their livelihood and family identity.
But in February 2024, the family’s lives changed permanently.
Jana Foster said she was driving behind her husband and children after their son’s hockey game near Vaughan when she watched a pickup truck run a red light, strike their vehicle and push it across the intersection into a hydro pole.
“I witnessed it right in front of me, my whole family getting hit,” Foster said. “I was the first person on the scene.”
Their 12-year-old son was rushed to SickKids Hospital for emergency brain surgery following a brain bleed and facial fractures. Months later, he required a second brain surgery.
Bryan Foster suffered a serious concussion, broken ribs and ongoing psychological trauma. According to Jana, he remembers little of the crash beyond waking up in an ambulance. Their daughter, who was eight years old at the time, escaped with relatively minor physical injuries and remained conscious throughout the collision.
“From that moment on, everything fell onto my shoulders,” Jana Foster wrote in a statement provided to Muskoka411.
Bryan was unable to drive for six months following the crash, while Jana attempted to balance her family’s medical needs with operating both Don’s Bakery in Bala and the family’s wholesale bakery business in Barrie largely on her own.
The family said the bakery’s financial struggles intensified after the collision as staffing shortages, debt and the lingering effects of the COVID-19 pandemic mounted. Jana said Bryan had previously handled much of the bakery’s sales work and that business began to decline sharply after the accident.
Eventually, the family decided they could no longer continue operating the business.
Jana Foster said their daughter, who worked behind the counter at Don’s Bakery last summer, was devastated when the family told their children they would need to let the bakery go.
“We hoped this tradition could at least continue in Bala,” Foster said.
That desire to preserve the bakery’s legacy was part of what initially made the proposed sale to McDonald feel hopeful to the family.
“We opened our books, shared our operations and invested thousands in legal fees, all under the belief that we were working toward a legitimate and respectful transition,” the Fosters wrote.
“To then witness the bakery reopen under the Don’s Bakery name, using our recipes, equipment, goodwill and decades-long reputation, without any completed purchase or legal transfer of assets, has been heartbreaking beyond words.”
In a statement to Muskoka411, McDonald’s lawyer confirmed the proposed purchase transaction did not proceed, but said McDonald later entered into a new lease directly with the landlord.
That lease gave McDonald a path to reopen and operate inside the former Don’s Bakery premises, but the bakery’s name, goodwill, equipment, recipes and business identity had been part of the proposed asset purchase agreement that ultimately never closed.
Muskoka411 asked McDonald’s lawyer whether his client maintains she acquired rights to operate under the Don’s Bakery name and identity. We did not receive a response to that question.
After the proposed transaction failed, Don’s Bakery entered bankruptcy. McDonald’s lawyer said she intends to negotiate with the bankruptcy trustee regarding business assets. He said reopening the bakery this summer helped preserve local employment that might otherwise have been lost.
McDonald declined multiple requests for an interview.
