Top 250 Franchise by Entrepreneur – Rank no.45 – American Dairy Queen – US
Products & Services: Ice cream, hamburgers, chicken, sandwiches
Number of Locations: 6,231
Total Investment: $763.22K – 1.74M
Began Franchising: 1944
About American Dairy Queen
Ice cream manufacturer J.F. McCullough was experimenting with a recipe for a new frozen dairy product, stemming from his belief that ice cream tasted better when it was soft and served fresh from the freezer, not frozen solid. With his recipe perfected, McCullough and his son, Alex, convinced one of their customers to hold an introductory sale of the new soft ice cream, and more than 1,600 people showed up to try it.
Based on that initial success, the McCulloughs opened the first Dairy Queen location in 1940 in Joliet, Illinois. The first stores sold only soft-serve ice cream–in sundaes, take-home pints and quarts, and cones–but over the years, a variety of ice cream treats were added to the menu, such as banana splits and Dilly Bars.
In the 1950s, some Dairy Queens began serving hot food items. Today, stores system wide have menus that include hot dogs, hamburgers and chicken strips through Dairy Queen’s Grill & Chill concept. The company also offers a DQ Orange Julius concept that offers both Dairy Queen’s frozen treats and the sister company’s fruit drinks and smoothies.
Startup Costs, Ongoing Fees and Financing
Franchise Fee: $35,000
Ongoing Royalty Fee: 4%
Term of Franchise Agreement: Varies, renewable
Net Worth: $750,000
Liquid Cash Available: $400,000
Number of employees needed to run franchised unit: 20 – 40. Absentee ownership of franchise is allowed..
|FINANCING TYPE||IN-HOUSE||THIRD PARTY|
How This Franchise Supports Franchisees
Franchise Ranking History
|Type||Wholly owned subsidiary|
|Founded||Joliet, Illinois, United States(June 22, 1940)|
|Founder(s)||John Fremont McCullough|
|Headquarters||Edina, Minnesota, United States|
|Number of locations||5,700 (2008)|
|Key people||Warren Buffett
Clayton Lundine , John Gainor,CEO
Charles J. Chapman III, COO
Mark Vinton, CFO
Michael Keller, CBO
|Revenue||US$2.5 billion (2008)|
Dairy Queen, often abbreviated DQ, is a chain of soft serve and fast food restaurants owned by International Dairy Queen, Inc, which also owns Orange Julius and Karmelkorn. The first Dairy Queen store opened in 1940 in Joliet, Illinois. The company’s corporate offices are located in Edina, Minnesota.
The hard serve formula was first developed in 1938 by John Fremont “Grandpa" McCullough, (1871‒1963), and his son Bradley. They convinced friend and customer Sheb Noble to offer the product in his ice cream store in Kankakee, Illinois. On the first day of sales, Noble dished out more than 1,600 servings of the new dessert within two hours. Noble and the McCulloughs went on to open the first Dairy Queen store in 1940 in Joliet, Illinois. While this Dairy Queen has not been in operation since the 1950s, the building still stands at 501 N Chicago St. as a city-designated landmark. Since 1940, DQ has used a franchise system to expand its operations globally. The state with the most Dairy Queen restaurants is Texas. The Texas Dairy Queen Operators’ Council facilitates marketing and the food system in Texas. Dairy Queen International is the parent company of Dairy Queen. In the US, it operates under American Dairy Queen. It is a wholly owned subsidiary of Berkshire Hathaway. At the end of its fiscal year 2006, Dairy Queen reported over 5,600 stores in more than a dozen countries; about 4,600 of its stores (approximately 85%) were located in the United States.
DQ was an early pioneer of food franchising, expanding its 10 stores in 1941 to 100 by 1947, 1,446 in 1950, and 2,600 in 1955. The first store in Canada opened in Estevan, Saskatchewan, in 1953. The red Dairy Queen symbol was introduced in 1959. The company became International Dairy Queen, Inc. (IDQ) in 1962. In 1987, IDQ bought the Orange Julius chain. It was acquired byBerkshire Hathaway in 1998. Dairy Queens were a fixture of social life in small towns of the Midwestern and Southern United States during the 1950s and 1960s. In that role, they have often come to be referenced as a symbol of life in small-town America, as in Walter Benjamin at the Dairy Queen: Reflections at Sixty and Beyond by Larry McMurtry, Dairy Queen Days by Robert Inman, and Chevrolet Summers, Dairy Queen Nights by Bob Greene.
As of 2010, Dairy Queen had more than 5,700 stores in 19 countries, including 652 locations outside the United States and Canada. With Dairy Queen being one of the largest soft serve franchises in the world, their main competition includes: Baskin-Robbins, Ben & Jerry’s,Braum’s, Carvel, Culver’s, Foster’s Freeze, Good Times Burgers & Frozen Custard, McDonald’s, Sonic Drive-In, Tastee Freez, and TCBY.
The largest Dairy Queen in the United States is located in Bloomington, Illinois. The busiest store in the US is in Rosedale, Maryland. The largest store in the world was built in Riyadh, Saudi Arabia. The busiest store in the world is located in Charlottetown, Prince Edward Island, Canada.
The company’s stores are operated under several brands, all bearing the distinctive Dairy Queen logo and carrying the company’s signature soft-serve ice cream (along with the trademark “curl"). In the 1970s, most Dairy Queen restaurants were “Brazier" locations with a second floor for storage, recognizable for their red gambrel-shaped roofs.
Stores which serve a very abbreviated menu primarily feature DQ frozen treats. These locations may be open only during spring and summer; many year-round locations are located in shopping malls.
So-called “Limited Brazier" locations may additionally offer hot dogs, barbecue beef (or pork) sandwiches, and in some cases french fries and chicken, but not hamburgers.
DQ / Orange Julius
Also known as the “Treat Center" concept, an enhanced version of the original DQ also serves drinks and foods from the Orange Julius menu. This is the company’s preferred concept for new, small-scale locations, primarily in shopping mall food courts. Some early Treat Centers also included Karmelkorn.
Dairy Queen Brazier
Stores serve a normal fast-food menu featuring burgers, french fries, and processed fried chicken products in addition to frozen treats and hot dogs. Due to the protracted rollout of the Grill & Chill concept, Brazier restaurants have been allowed to sell certain products originally restricted to G&C, including GrillBurgers.
The name “Brazier" originated in 1957, when one of the company’s franchisee Clayton Lundine worked to develop a food system, the first drive through, that would work for all Dairy Queen restaurants. He built a Brazier 12″ from his Dariy Queen building and created the first drive through. Customers could then get a hoy burger or dog and French fries then pull up for their ice cream. A brazier is a cooking device consisting of a charcoal or electric heating source over which food is grilled. The term “Brazier" was the result of a brainstorming session with the franchisee’s advertising agency.
The “Brazier" name has been slowly phased out of signage and advertising since 1993, although it has not been removed from all existing signage. Since the early 2000s, new or renovated locations which are similar to Brazier restaurants in terms of size and menu selection, but have been updated with the current DQ logo and/or exterior, usually carry the name “DQ Restaurant", although the DQ website’s Store Locator still lists the non-G&C stores as “Dairy Queen Brazier" and the smaller stores “Dairy Queen Ltd Brazier".
However, the DQ website still considers their burger and hot dog lines as “Brazier Foods", according to the History section of the DQ website and some FAQ listed topics in the DQ website.
DQ Grill & Chill
This is DQ’s preferred concept for new and renovated full-service restaurants. Stores are larger than older-style DQ Brazier locations and feature a completely new store design. In most cases, they offer an expanded menu including breakfast, GrillBurgers, and grilled sandwiches, as well as limited table service (customers still place orders at the counter). They also contain self-serve soft drink fountains. Some of the DQ Brazier stores have upgraded to the DQ G&C stores. However, there are still DQ Brazier stores and DQ Ltd.-Brazier stores that have not upgraded to the DQ G&C stores. In December 2001, Chattanooga, Tennessee was the site of the first two Dairy Queen Grill and Chill restaurants in the United States. The nation’s largest Grill & Chill is located in Bloomington, Illinois.
Texas Country Foods
Most locations in Texas, including those which otherwise resemble the Brazier or Grill & Chill formats, use a separate hot food menu branded as Texas Country Foods. Among other differences, “Hungr-Buster" burgers are available in place of the Brazier and GrillBurger offerings. Other food offerings not found outside Texas include the “Dude" chicken fried steak sandwich, grilled chicken sandwich, country Baskets (steak fingers and chicken strips), T-Brand tacos, and a one-half pound double meat hamburger, the “BeltBuster.".
Texas is home to the largest number of Dairy Queens in the U.S. All Texas Dairy Queen restaurants are owned and operated by franchisees. The Texas Dairy Queen Operators’ Council (TDQOC) runs a separate marketing website from the national website, located atwww.dqtexas.com. Bob Phillips, host of the popular Texas syndicated television series Texas Country Reporter, was for many years the DQ spokesman in Texas, as the restaurant was a co-sponsor of the program at the time.
The company’s products expanded to include malts and milkshakes in 1949, banana splits in 1951, Dilly Bars in 1955, Mr. Misty slush treats in 1961 (later renamed Misty Slush, then again to Arctic Rush), and a range of hamburgers and other cooked foods under the Brazier banner in 1958. In 1971 the Peanut Buster Parfait, consisting of peanuts, hot fudge, and vanilla soft serve, was introduced. Other items include sundaes and the blended coffee drink, the MooLatte, controversial because of its resemblance to the racial descriptor Mulatto.
The majority of Dairy Queen locations serve Coca-Cola products, but unlike most other restaurants such contracts are not mandated onto the franchisee, and as a result some locations serve Pepsi products instead. Wendy’s (until 1998), Subway (until 2003), Arby’s (until 2006), IHOP (until 2012) and Applebee’s (until 2012) also allowed such leniency on beverage choice before signing exclusive soft drink deals with Coca-Cola and Pepsi, respectively, making Dairy Queen the last major restaurant chain without an exclusive soft drink contract.
A popular Dairy Queen item is the Blizzard, which is soft-serve mechanically blended with mix-in ingredients such as sundae toppings and/or pieces of cookies, brownies, or candy. It has been a staple on the menu since its introduction in 1985, a year in which Dairy Queen sold more than 175 million Blizzards. Popular Blizzard flavors include Oreo Cookies,mint Oreo, chocolate chip cookie dough, M&M’s, Reese’s Peanut Butter Cup, Heath bar, and Butterfinger. Seasonal flavors are also available such as October’s Pumpkin Pie. It has been argued that Dairy Queen drew its inspiration from the concrete served by the St. Louis based Ted Drewes. On July 26, 2010, Dairy Queen introduced a new “mini" size Blizzard, served in 6 oz. cups….
Prior to the introduction of the Blizzard in 1985, Dairy Queen served conventional “thick" milk shakes, in traditional flavors such as vanilla, chocolate, and strawberry, with or without added malt on request.
In addition, Dairy Queen is marketing its new Blizzard Cake which includes flavors such as strawberry cheesecake and Reese’s. Much like the restaurant’s conventional ice cream cake, this variation is aimed toward celebrations and birthdays.
In 1990, Dairy Queen began offering frozen yogurt as a lower-calorie alternative to its soft serve ice cream. According to a company representative, Dairy Queen’s regular soft serve has 35 calories per ounce and is 95% fat free, whereas the frozen yogurt was 25 calories per ounce. However, in 2001, the company phased out the frozen yogurt option in all its stores citing a lack of demand, the low sales of which made it difficult to keep the product fresh.
In 2010, International Dairy Queen Inc filed a request for a preliminary injunction to stop Yogubliz Inc, a small California-based frozen yogurt chain, from selling “Blizzberry" and “Blizz Frozen Yogurt", alleging that the names could confuse consumers due to their similarity to Dairy Queen’s Blizzard. U.S. District Judge R. Gary Klausner denied Dairy Queen’s request.
For many years the franchise’s slogan was “We treat you right." During the early and mid 1990s, the slogan “Hot Eats, Cool Treats" came into use and preceded the aforementioned line in the Dairy Queen jingle. In recent years, it has been changed to “DQ: Something Different." A recent tagline, featured in early 2011, was “So Good It’s RiDQulous," with Dairy Queen’s current logo infused in the word ‘ridiculous’. Now, their new tagline reads, “Fan Food not Fast Food".
In Texas, at the end of the advertisement, there is a Texas flag waving, and the Texas state with the new DQ logo and slogan below saying, “That’s What I Like About Texas."
The advertising recently focused on a mouth licking its large lips, which later transforms into the present Dairy Queen logo.
In 2011, Grey New York produced outlandish spots featuring a dapper man, played by John Behlmann, sporting a moustache, performing crazy feats for Dairy Queen. After announcing tasty menu offers, he would do something outrageous, like blow bubbles with kittens in them, water ski while boxing, and break a piñata where Olympic gymnastics great Mary Lou Retton tumbles out. Recently, the same firm was making commercials, even more outlandish than before. They started with odd situation titles, which had the DQ logo placed somewhere in them, like Gary DQlones Himself, Now That’s A Lunchtime DQuandary! and After The DQonquest. All of them were narrated by a man who is British, or by an American who sounds that way.
The original Dairy Queen logo was simply a stylized text sign with a soft serve cone at one end. In the late 1950s, the widely recognized red ovoid design was adopted. The initial shape was asymmetrical, with one of the side points having a greater extension than the other, especially when matched with the Brazier sign—a similarly sized yellow ovoid, tucked diagonally below its companion. By the 1970s, both sides were more closely matched, becoming symmetrical with the 2006 update [see Yahoo! images for comparison]. Some of the new 1950s signs continued to display a soft serve cone jutting from the right side. “Little Miss Dairy Queen" began appearing in Pennsylvania signage in 1961. She had a Dutch bonnet, resembling the ovoid logo, with a pinafore apron over her dress and wooden shoes. A yellow trapezoid Brazier sign, placed below the red Dairy Queen logo, was developed in the late 1960s. It matched the roofline of the new store design of the era.
Although it had been used interchangeably with the Dairy Queen name for many decades, “DQ" became the company’s official name in 2001. The font remained the same as the original signage introduced 60 years prior. Throughout this period, the company placed the registered mark symbol immediately to the right, on the bottom side of the logo. When the company modernized its signage and logos in late 2006, it modified the font and italicized the letters, as well as adding arced lines, an orange to represent its hot foods above and a blue one below to represent its ice cream products. Additionally, in the new design the registered mark symbol was moved to be adjacent to the letter “Q". The first overhaul of its logo in almost 70 years, the company claimed that the new logo would show brand growth and reflect the “fun and enjoyment" associated with its products. Advertising industry observers have noted that the new logo was an unneeded update of known and trusted industry brand and that its new features were distracting.
The original signage is still in use in older locations or in locations that use a “retro" design motif in the property’s design. One example was the sign used at the Dairy Queen inOttawa, Ontario, Canada.
Countries currently with Dairy Queen locations:
Countries formerly with Dairy Queen locations: