If you live in the Midwest, Dairy Queen is something of a summertime tradition. Dairy Queen was one of the few businesses open in my hometown exclusively from May – September. When I visit my parents during the summer, we take my wife and kids there too. Everyone has their favorite treats too. Mine is the large Oreo Blizzard. My mom always gets the medium vanilla cone.
How much does it cost to open a Dairy Queen? You’re in for a sweet treat because Dairy Queen is available to franchise. To become a franchise operator, the financial requirements are to have a liquid capital of $400,000 and a net worth of $750,000. The investment range is estimated to be $1,151,155 to $1,936,655 and the franchise fee is $45,000. Take our franchise quiz to find out if Dairy Queen matches your business goals.
Interested in learning more about this longstanding soft-serve franchise? Read on to view my investigation into the companies annual revenue, advantages, disadvantages, and if franchising Dairy Queen is the right business for you.
- Financial Requirements and Fees
- Average Sales / Revenue per Year
- Dairy Queen Franchise Facts
- How Much Does Dairy Queen Make in Profit?
- Advantages of a Dairy Queen Franchise
- Challenges of a Dairy Queen Franchise
- Is the Dairy Queen Franchise Right For You?
Financial Requirements and Fees
Here is a summary of Dairy Queen’s financial requirements for United States locations:
|Fees / Expenses||Financial Amount|
|Total Investment||$1,151,155 to $1,936,655|
One must also note that the net worth indicated above is for a single-unit franchise only. Multi-units will involve a higher net worth and startup costs.
Aside from these expenses, Dairy Queen also requires a royalty fee of 4% and a marketing fee between 5% – 6%. The term to franchise a Dairy Queen is 20 years.
For Canada locations, the same requirements are listed down except for the investment range which Dairy Queen states on their website as $800,000 to $1.2 million or more.
Dairy Queen does not offer financing. However, they will be able to refer you to a 3rd party financing should you need it.
If you’d like to know more specific details about Dairy Queen’s financial requirements, it’s best to contact them so that they can discuss with you your inquiries as well as provide you an updated copy of their Franchise Disclosure Document with all the necessary details you need to know when it comes to the fees and expenses to franchise one of their stores.
Average Sales / Revenue per Year
Dairy Queen has a steady sales growth that’s reached into the billions. For 2020, systemwide revenue hit $3.978 billion. This shows a 5.8% growth from their previous year’s revenue of $3.760 billion. But even if you trace it back to 2017, Dairy Queen’s revenue shows year over year growth. This is extremely impressive financial performance considering the company has been in business for 80+ years.
Dairy Queen Franchise Facts
|Total Units||More than 6,000|
|Incorporated Name||International Dairy Queen, Inc.|
|Subsector||Ice Cream, Food, and Beverage|
It was in 1938 when J.F. McCullough and his son Alex created what would be Dairy Queen’s famous soft-serve ice cream. They were able to offer it in Kankakee, Illinois at an “All You Can Eat for 10 Cents” ice cream event hosted and owned by Sherb Noble. The event was a hit with more than 1,600 people lining up to try their ice cream. What followed was a successful business venture that is now known as Dairy Queen.
Dairy Queen has a record of a quick and successful expansion. By the 1950s, Dairy Queen had over 3,000 stores. International Dairy Queen, Inc. was formed in 1962 to lead and develop the brand’s advertising needs in foreign countries. By 1976, Dairy Queen locations opened in Canada, Japan, Panama, Iceland, Guatemala, and Barbados.
Soft-serve cones and sundaes were the first items Dairy Queen served when the business started. Later the company added shakes and malts to the menu. The Dilly Bar was introduced next in 1955 along with flavored sundaes, ice cream sandwiches, and banana splits.
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Dairy Queen’s Brazier concept was introduced in 1957 which saw the addition of burgers, French fries, and hot dogs on the menu. Blizzard treats were served in 1985 and it was so popular that they were able to sell more than 175 million of these treats in its first year run. As mentioned earlier, the Blizzard is my personal go-to at DQ.
Dairy Queen was known as the 3rd largest fast-food chain in America in 1970. Today, the brand is known for more than just that. They were awarded Best Oversea Franchise by the Thailand Franchise Award in 2020. They also rank number 17 on Restaurant Business Online’s Top 500 Chains of 2021. Entrepreneur Magazine ranked them as number 16 on their Franchise 500 in 2020. Dairy Queen can be found all over the world from the United States to Latin America and the Caribbean, the Middle East and Africa, and Asia and the Pacific.
Not all Dairy Queen stores are the same. Some only offer their ice cream line while some will have food items such as burgers, fries, chicken, and hot dogs. This is due to some franchise operators not participating in the food program upon signing up. Many of the old DQ locations didn’t have the right kitchen equipment installed. But what is common among all Dairy Queen stores is the swirl or curl on top of the ice cream. That curl is called the “Q” by employees and it is a trademark. Employees claim it’s not easy to achieve and takes practice.
Upon submitting your franchise application, Dairy Queen will assess whether or not you are granted a store to operate. When you’re chosen, you can expect that Dairy Queen will assist you with the construction of your store and training your crew as well as management in running the business. Dairy Queen’s franchise support team will also provide you with advertising and marketing assistance. Once everything is set, you can expect your Dairy Queen to be built in an average of 12 months.
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There are a lot of Dairy Queen stores found all over the United States and around the world so you might wonder, do franchise operators sell their existing Dairy Queen stores as well? They do! A quick search on Bizquest will show you the latest stores that are up for sale. These stores range from kiosks found in malls to full stores with a drive-thru set up. Prices will have to be discussed with the store’s respective owners. Buying an existing store with a built-in fan base can be easier than opening a new location for a variety of reasons. Most importantly the location is already setup with equipment, permits, and has an existing customer base.
It’s broadly believed that Buffet has made strong returns with the quick-service restaurant and proof is the 6,000+ locations they’ve opened around the globe.
How Much Does Dairy Queen Make in Profit?
It is not known exactly how much Dairy Queen makes in profit but a breakdown shows that owner-operated franchises have an average annual profit of $194,000. Absentee managed franchises on the other hand make $117,000. These are fantastic profit numbers for a food franchise, especially if you’re planning to invest in multiple locations.
Advantages of a Dairy Queen Franchise
Businesses will have its advantages and challenges and we’re here to list them down for you so you know what to expect when you sign up to become a franchise operator. Below are some of the advantages that Dairy Queen delivers.
It’s obvious that Dairy Queen is a popular brand. You don’t just reach more than 6,000 locations if your company wasn’t doing well.
With that said, you won’t have a difficult time in marketing your Dairy Queen location should you open a unit in your community. The famous Blizzard treats, Orange Julius, sundaes, and ice cream sandwiches will surely get many to come to your location.
Non Dairy Future
Dairy Queen is paying attention to trends and change in taste of consumers. Last year, Dairy Queen released their Non-dairy Dilly Bar, a plant-based, gluten-free, and vegan ice cream bar for their health-conscious customers. With this kind of release, it just makes one who is investing in Dairy Queen feel proud and hopeful that the company is looking into healthier alternatives for their ice cream line-up in the future so they can cater to more customers with different diets in the future.
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Dairy Queen serves their soft-serve ice cream in a variety of ways. They have them in cones, in sandwiches, banana splits, shakes, or mixed in with your favorite chocolates, candies, and cookies. If you take the food program, you’ll also get burgers, hot dogs, and fries.
Dairy Queen may have started as an ice cream shop but the variety of items on their menu is plenty that customers will always have something new and exciting to try if they choose.
Challenges of a Dairy Queen Franchise
Running a Dairy Queen still comes with its own set of unique challenges. Here are a few of the things you need to be aware of.
Not Everyone Is Qualified
Just because you have the financial capabilities doesn’t mean it’s that easy to get accepted as a franchise operator. Dairy Queen states on their website that they require restaurant management experience for their franchise operators. If the person applying doesn’t have the required experience, the investor can hire someone who has or partner up with someone. So you’ll either have to get that experience if you want the business or split the managerial roles with a partner that’s qualified.
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No Healthy Items
Dairy Queen has been around for more than 80 years and yet there are no healthy items on the menu to this date. Their Blizzard treats range from 310 to 1,510 calories. Even the salads range from 280 to 400 calories. There are currently no fat-free and sugar-free options.
But the emergence of the vegan non-dairy Dilly Bar last year gives us hope Dairy Queen can start producing healthier items so that they can cater to different customers’ preferences. DQ will need to continue their menu innovation to appeal to future generations.
Unappetizing Hot Foods
It’s no secret that Dairy Queen’s hot food is not as well-received as their ice cream. Some claim their burgers, fries, chicken, and hot dogs aren’t delicious. Maybe that’s the reason why some franchise operators opt out of the food program when they submit an application to Dairy Queen. But if you’re about to sign up, maybe it’s best you should just get the ice cream deal rather than involve burgers in your menu knowing they won’t taste as good as the ones from other big burger chains.
Even I have to admit, the burgers are pretty average at Dairy Queen. If I am going to be eating a meal there, I go with the chicken strip basket that includes French fries, Texas toast, and a side of ranch dressing to dip. While the chicken strip basket doesn’t rival Raising Cane’s, it’s a solid option if you’re hungry.
Past Legal Disagreements
Back in 2008, Dairy Queen was involved in a legal disagreement against some of their franchise operators. The disagreement involved franchise operators in 10 states suing Dairy Queen for their demands of investing $275,000 and $450,000 to remodel their stores or lose the franchise. If that wasn’t enough, franchisee’s would need to spend on operation costs and increase hiring staff.
Though the suit was dismissed since both parties were able to settle on a resolution, it should help interested franchise operations understand that sometimes business deals can get messy. At the end of the day this is a serious business.
Is the Dairy Queen Franchise Right For You?
If it has always been your dream to own an ice cream shop, particularly Dairy Queen, and if you have the financial requirements and a passion for the brand then go for it! Dairy Queen is globally recognized brand that’s been able to stay relevant and grow in spite of changing trends and consumer tastes.
What is an alternative Dairy Queen franchise?
Still looking for another ice cream shop to run? Try Baskin Robbins. This chain has over 7,000 locations around the world with a wide variety of ice cream flavors. They also have healthy options such as low-calorie ice cream, frozen yogurt, and no sugar added flavors.
To franchise Baskin Robbins, you’ll need to have a net worth of $250,000 and the franchise fee is $12,500 to $25,000.