FDD Talk 2016: The DQ Grill & Chill Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

In this FDD Talk 2016 post, you’ll learn the following:

• Section I – Background information on the DQ Grill & Chill franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a DQ Grill & Chill franchise, based on Item 7 of the company’s 2016 FDD

• Section III – Presentation and analysis of DQ Grill & Chill’s financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:

• 2015 average, high, and low net sales for the 56 DQ Grill & Chill restaurants that were newly constructed freestanding restaurants; were developed and first opened for business between January 1, 2013 and December 31, 2014; were operated for the full year 2015; and are franchisee owned and operated

• 2015 average total net sales, total product cost, total labor cost, total restaurant controllables, and total manageable profit for DQ Grill & Chill’s GC Core 72 (25 units) and GC Core 47 (12 units) restaurants, respectively, that were newly constructed freestanding restaurants; were developed and first opened for business between January 1, 2013 and December 31, 2014; were operated for the full year 2015; are franchisee owned and operated; and submitted usable profit and loss statements to ADQ

• 2015 average, high, and low net sales for the 19 DQ Grill & Chill restaurants that were newly constructed freestanding restaurants; were developed and first opened for business between January 1, 2013 and December 31, 2014; were operated for the full year 2015; are franchisee owned and operated; and submitted sales reports, but not usable P&L’s, to ADQ

Section I – Background Information

DQ Grill and Chill Blends Sweet and Savory

Dairy Queen may be the home of soft-serve ice cream treats, but it’s well-established as a place to sit down and eat a meal as well, with offerings from burgers to chicken at DQ Grill and Chill locations.

The combination of sweet and savory is working well for Dairy Queen, which rose from No. 56 to No. 34 on Entrepreneur’s 2016 Franchise 500 list, a gain of nearly 20 positions from 2015.

‘Grill’ and ‘Chill’ Sections in Kitchen

DQ Grill and Chill locations have modern open-air grills, with separate kitchen sections called “Grill” and “Chill.” The restaurants feature stylish decor, large wood tables, warm lights and music. They seat 48 diners indoors and 12 outdoors in patio seating.

Most DQ Grill and Chill restaurants are free-standing buildings, but some are found in dual-use buildings, end caps of strip malls, on streetfront locations and in other venues.

From Burgers to Blizzards

Highlighting the grill menu are DQ’s Grillburgers, Iron Grilled Sandwiches and Chicken Strip Baskets. Cool favorites like soft-serve cones, Blizzard Treats, MooLattes, DQ Cakes and Orange Julius beverages are also on the menu.

Grill and Chill menus also offer meal combos, including the popular $5 Buck Lunch, where customers can choose from a Crispy Chicken Wraps Lunch, a 3-pc. Chicken Strip Lunch and a Deluxe Cheeseburger Lunch. Sides include french fries, onion rings and cheese curds. Customers can also buy a variety of wraps and smaller snack wraps.

DQ Turned 75 in 2015

Dairy Queen celebrated 75 years in 2015. The first DQ was opened in 1940 in Joliet, Illinois, but the soft-serve ice cream treat was first served in 1938 in Sherb Noble’s ice cream store in Kankakee, Illinois. John Fremont “Grandpa” McCullough and his son, Alex, had developed the recipe and asked Noble to sell the treat. It was so popular that the three men went into business together.

DQ, now owned by International Dairy Queen and franchised in the U.S. by American Dairy Queen Corporation, is based in Edina, Minnesota, a suburb of Minneapolis. ADQ is part of the Berkshire Hathaway family of companies led by well-known investor Warren Buffett.

Dairy Queen has more than 6,600 DQ locations in the U.S., Canada and 25 other countries. At the end of 2015, the chain had 4,451 locations in the United States and 2,218 international locations, along with two corporate restaurants. DQ reached 2,000 international locations in 2014.

Thirteen States Are Hot Spots for Development

Dairy Queen is currently seeking franchisees in these hot-spot states: Alabama, Arkansas, California, Florida, Georgia, Louisiana, Massachusetts, Mississippi, North Carolina, New York, Oklahoma, South Carolina and Tennessee. Opportunities are also available in other locations in the U.S. and other countries.

Chain Enters Jordan, Poland

The chain expanded its reach in the Middle East in April with a multi-unit agreement that will bring a minimum of 10 Grill and Chill and DQ Treat restaurants to Jordan within the next five years of the long-term agreement. These will be the first Dairy Queens in Jordan.

Also in April, Dairy Queen announced a multi-unit agreement to bring the chain to Poland. Twenty-six locations are planned in the first five years of the agreement. The chain, which has not been in Europe for two decades, is strategically planning development in Western Europe.

Section II – Estimated Costs

• Please click here for detailed estimates of DQ Grill & Chill franchise costs, based on Item 7 of the company’s 2016 FDD (updated).

Section III – Financial Performance Representations (Item 19, 2016 FDD) and Analysis