(Ambrosio’s note: Dairy Queen is an example of a classic, old school brand that has managed to stay relevant by combining all time favorite treats, with new menu items and formats. Frozen yogurt may be the flavor of the moment, but Dairy Queen is a constant.
In Vancouver (where I live), frozen yogurt chains have yet to make their mark, but Dairy Queen is a local favorite, with 3 downtown locations within a few blocks’ radius. I grew up with Dairy Queen and Orange Julius in Manila, so whenever I get the chance t0 indulge in a Reese’s Blizzard or an Orange Julius, I always feel like a kid back at home again. I think that’s a huge part of Dairy Queen’s appeal.
I’m also a big fan of Warren Buffet, the legendary investor who runs Berkshire Hathway, the owner of Dairy Queen. Buffet believes in investing in companies with long term competitive advantages, and holding them “forever” (or at least, for a very long period of time). Having an owner with deep pockets who believes in the long term prospects of the business can’t be a bad thing, especially when he is the second richest man in the country!
I would like to thank Mike Mettler, Director of National Franchise Sales for American Dairy Queen Corporation, for this very informative exclusive interview.)
Franchise Chatter (FC): Can you give us an update on how your two concepts, DQ Grill & Chill and DQ/Orange Julius, are faring in today’s economic environment?
Mike Mettler (MM): Dairy Queen has been steadily increasing the number of new store builds over the past few years, including both the DQ Grill & Chill and DQ/Orange Julius stores. Dairy Queen is very disciplined in how we evaluate and approve new opportunities and this is working because franchisees are having good experiences and coming back to build additional restaurants.
The DQ Grill & Chill is especially exciting because we are taking our 70 year old brand, adding menu items and day parts in an attractive and relevant setting to compete for a larger share of the quick service restaurant business. This provides opportunities for the growth of our brand and our franchisees. A recent Money Magazine article rated DQ as a “Top Ten Franchise Bet”.
FC: What are your thoughts on the growing popularity of self-serve frozen yogurt franchises and has this affected ice cream sales at DQ?
MM: People love our Blizzard Flavor Treats, Banana Splits, Waffle Treats, and Peanut Buster Parfaits which simply cannot be made on a self-serve basis. What differentiates Dairy Queen is our scale, our products, our connection with our customers and our 70 year track record of success.
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MM: Because of the many choices that consumers have in today’s market, they demand a great image, great food and great service. Dairy Queen delivers all of these things in our DQ Grill & Chill restaurants and by expanding the number of these stores, we are reconnecting with customers and building our brand.
FC: Do you have a social media strategy to better communicate with your franchisees and their customers? Please tell us about it.
MM: Yes, DQ has a social media strategy. We have a dedicated resource that manages social media and content that includes our website, Facebook, blogs, Blizzard Fan Club, etc.
FC: How easy or challenging has it been to obtain financing for a DQ Grill & Chill or DQ/Orange Julius franchise? Do you provide any kind support to help your franchisees navigate through this process?
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MM: DQ has a number of lenders that are very active in our system providing loans for equipment, remodels, new builds and acquisitions. Because of our strong brand presence and long, successful track record, we have many lenders who approach us to support the growth of the system.
MM: In this economy, many people who evaluate franchising come from different industry and work experiences. The biggest mistake I see is people who want to jump to a new opportunity that they are not prepared for or know very little about. At DQ, we spend a lot of time educating potential candidates about the opportunity and making sure they have both the financial and operational knowledge and capabilities to execute the business.
FC: What’s the secret to maintaining a steady year-round business with frozen treats, especially in areas that experience harsh winters?
MM: Our worldwide headquarters are in Minneapolis, Minnesota and the DQ system was started in Illinois and we have stores located in Alaska, so we have always operated our business in areas with harsh winters. As a brand, we have a well established food and treat menu. We are expanding the menu and day parts, and reducing seasonality through the DQ Grill & Chill restaurants.
MM: Even though DQ is large, we have many open, high quality trade areas where our brand is not represented. By focusing our development efforts on the best trade areas, we have been very successful growing our brand. Market opportunities include California, Oklahoma, New York and North Carolina.
FC: Can you share with us your growth plans for the next few years and how you plan to achieve them?
MM: Because we are a privately held company, Dairy Queen does not provide public growth information. DQ is a wholly owned subsidiary of Berkshire Hathaway Inc., a publicly traded company owned by Warren Buffett, the legendary investor and CEO of Berkshire Hathaway, so we do not provide this forward looking information to the public. However, in our Franchise Disclosure Documents, prospective franchise candidates can review our specific store count, growth and forecast information.
MM: There are many great reasons:
- our strong brand recognition and connection with our customers
- 70 year history of success and a proven business model
- DQ Grill & Chill and the impact this concept will have on the growth and positioning of the brand
- availability of Dairy Queen franchises in some of the largest markets in the country
- strong management, guidance, integrity, financial strength and stability