Dairy Queen, or as most of the population refer to it, DQ is a renowned and popular brand worldwide. It is where one can find ice cream, sweets and even burgers and fries. The fact you own one is not just beginning a business, but you are becoming a colossal family that people have adored over the years.
However, being a franchisee, as you become when you become a Dairy Queen, is a big leap. A franchise is similar to the payment of using a company name, recipes, and business plan. You are made the boss, but you need to obey their rules.
The most important question that the majority of people ask is: How much does it cost? In this article, all the Dairy Queen Franchise costs will be disaggregated to start and operate a Dairy Queen Franchise price. We shall consider the large up-front charges and the minor regular charges. We will discuss the amount of money you must have saved. We shall also take you through the application procedure.
We will keep things simple. No difficult language or incomprehensible business. It is a quick tutorial to make you know whether you have the right dream of owning a DQ.
About Dairy Queen
We are going to discuss money but first the reasons why Dairy Queen is so special.
History and Background
The Dairy Queen legend begins way back in 1938. J.F.McCullough and his son, Alex, had a new idea. They invented a novel type of soft-serve ice cream. It was more creamy and abundant as compared to ordinary ice cream. They were interested in knowing whether people would enjoy it. So they asked their friend, Sherb Noble, whether they might sell it in his ice-cream salon at Kankakee, Illinois. They had an All You Can Eat Sale at only 10 cents. They had served more than 1,600 cones in two hours! They knew they had a hit.
In 1940, two years later the first official Dairy Queen store was opened in Joliet, Illinois. The rest is history. That mere soft serve cone was to become a large brand.
Menu offerings and Brand Ethos
When you hear Dairy Queen, what comes to your mind is the Blizzard. It is their most popular snack, on which they combine candy, cookies, or fruit in thick soft-serve. They go so far as to serve you upside down to demonstrate the thickness of it.
However, DQ is not only Blizzards. They also created:
- The Dilly Bar: A traditional round ice-cream bar on a stick, dipped in a hard shell of chocolate.
- Soft- Serve Cones: The plain, standard cone with the tiny twist on the top.
- Sundaes: Topped with hot fudge, strawberry or other toppings.
Hot food was later introduced in many Dairy Queen outlets. These outlets are referred to as DQ Grill & Chill. They are selling burgers, chicken strips, fries and onion rings. This was the reason why DQ became a place you could go to have lunch or dinner and not only dessert.
The central concept, or ethos, of the brand is this: Happy Tastes Good. They desire to be the location where families and friends will celebrate, feel good or simply get a sweet treat on an ordinary day. All that they are concerned with is smiles and putting people in a good mood.
Global and U.K. Presence
Dairy Queen is not a company located exclusively in America. It’s a global one. Nowadays, the number of Dairy Queen stores exceeds 7700 and are located in more than 20 countries. DQ is available in such locations as Canada, Mexico, China, and Thailand.
In America alone, it has more than 4,100 outlets. It is one of the largest and well-established fast-food chains in the country.
What About the UK?
Dairy Queen is not operating or franchising in the UK.
The brand is very large in North America and Asia but it has not established stores in the United Kingdom. That is to say that you cannot make an application to open a DQ in London, Manchester, Birmingham, or any other part of the UK at the moment. The company that you may find in the UK is a different company; it is a milk delivery company, not the ice-cream shop.
This could change one day! Big brands never give up on growing. However, in the meantime, we will discuss all the expenses and regulations that we will incur when opening a business in the United States or Canada where the company is currently seeking new owners.
Number of Locations and Expansion
There are more than 7,700 DQs as we say. The company is still growing.
Dairy Queen Franchise Business Model
When making a purchase of a franchise, you purchase an established system.
Imagine it in the following way: You are not attempting to construct a new burger shop, but rather a kit. This kit has the brand name (Dairy Queen), all the secret recipes (how to make a Blizzard), the store design (the red logo and the building form), and the instruction manual on how to operate the business.
This kit is paid by you, the franchisee, based on the Dairy Queen franchise cost. You are supported by the main company Dairy Queen (the franchisor). They assist you to locate somewhere, train your employees and provide you with all the food and supplies. They also fund the giant TV advertisements and advertising that every one would wish to visit your store.
You in turn promise to abide by all their rules. You are not to leave the store untidy, prepare the food in the proper way, and use only what they permit. You are also required to make them a percentage of your sales on a monthly basis. Those fees will be discussed further.
DQ has 2 broad categories of stores that can be opened:
1. DQ Grill & Chill:
It is the large, flagship model. It’s a full restaurant. It offers the entire menu of the Grill (burgers, chicken) and the Chill (ice cream, Blizzards). These tend to be new constructions that are erected on a ground level. They also possess a drive-thru and a dining room. It is the type of model DQ would like most new owners to build.
2. DQ Treat:
It is a smaller, more basic store. It does not look beyond the menu of Chill. You will see no burgers and fries but you will find cones, sundaes, Blizzards and DQ cakes. They can be located in smaller areas such as in a shopping mall, within a small strip mall or as a small standalone store. These are cheaper to open and also have a smaller menu.
Requirements for Prospective Franchisees
Anyone does not simply open a store in Dairy Queen. They are highly cautious of the partners they engage in. They would like to guard their renowned brand.
You must demonstrate to them a few things to be considered:
- You have enough money. The specific numbers will be discussed in the following section. There must be some money saved that you have, and you must demonstrate that you are banking stable.
- You have good business sense. Have you ever managed a team? Have any experience in food industry? You need not necessarily have managed a restaurant before, but they would like to know that you are a good leader and can run a business.
- You love the brand. They desire individuals who are passionate about Dairy Queen and individuals who will strive in a bid to provide customers with a wonderful experience.
- You are willing to be hands-on. It is not a purchase and leave it business. DQ wants its owners present in the store working with the team and running the daily operations.
Dairy Queen Franchise Cost Breakdown
Okay, now to the large numbers. This is the fourth most significant part. How much money really do you need to open the doors?
The two models in the United States are the one that we will be concentrating on since this is the most widespread route. These costs are initially divided into two items namely the one-time franchise fee and the total investment.
Initial Franchise Fee: Typical Range
The first franchise fee is a single payment which you make to Dairy Queen at the time of inception. Just imagine it is the cost to join the family. This fee leaves you at liberty to use the Dairy Queen name and system.
- In the case of a DQ Grill and Chill, the franchise fee is $45,000.
- DQ Treat: There is a franchise fee of $25, 200.
Such a fee is but the initial cheque you write. It will not finance the construction, the ice cream machines or your staff members. It just gets you in the door.
Cumulative Estimated Investment: The Great One
It is the entire amount to bring your restaurant out of an idea to Open for Business. This figure is a range since the prices vary at all locations. The construction of a store in a large city will be costlier than in a small town.
This is the sum of money invested in it:
- The franchise fee (which we have just discussed).
- Purchase of land and construction of the restaurant (this is the most expensive one).
- Kitchen equipments, including the soft-serve machines, freezers, grills, cash registers.
- The signs, tables, chairs and trash cans.
First order food and supply (ice cream mix, cone, cups, burgers).
- Finances to train your new team.
- Funds to do Grand Opening advertisements in your city.
- Additional cash (the so-called working capital) to cover the first few months of your bills until you can even make a profit.
The official estimated ranges of Dairy Queen are as follows:
- DQ Grill and Chill (Full Restaurant): Total Investment: $1,516,200 to $2,543,050
- DQ Treat (Treats-Only Store): Total Investment: $549,100 to $1,604,700
Yes, big numbers. The primary cause of the high price of the “Grill and Chill” is that you are commonly constructing a brand new, freestanding facility with a drive-through which is very costly. The cheaper one would be the Treat store when you are locating it in an already existing building such as a mall.
Regional Variations
The vacancy enquired about London-Birmingham prices. As we learned, DQ isn’t in the UK. But the idea is correct. Location changes costs a lot.
Let’s use a US example. In case you would like to construct a DQ Grill and Chill in downtown Los Angeles, California, the price of land and construction will be very high. You will be right on that $2.5 million spectrum, or even above.
A land and a building are going to be significantly cheaper in a small-town and rural town in Ohio when you construct the very same shop. You are perhaps nearer to the end of the range of 1.5million. The same is true for labor. It will be more expensive to pay your workers in a metropolis than in a town. All this has an impact on your ultimate cost.
Cost Comparison: Canada, US
The currency-based changes occur as the costs are similar in other countries.
These are:
- United States (Grill and Chill): 1.5 million to 2.5 million (USD).
- Canada (Grill & Chill): 1.37 million to 2.34 million (CAD).
As you would observe, the figures resemble only that they are Canadian Dollars (CAD). In contrast to the two, the price of construction is roughly equal. DQ has a very robust market in Canada where it has more than 690 locations.
Ongoing Fees and Royalties
These expenses do not end when you open your doors. Being a franchisee means that you will pay some fees on a regular basis to the parent DQ company. Such fees are normally deducted on your sales each month.
Consider it in the following manner: To make the house was the original cost. These recurring fees are such as renting and utility payments on being on it.
Two ongoing fees exist:
- Royalty Fee: This is the primary fee that one pays to be allowed to use the DQ name and market their products. It amounts to a percentage of your gross sales (the sum of money you receive before you pay any of your own bills).
- DQ Grill & Chill Royalty: 4% of gross sales.
- DQ Treat Royalty: 5% gross sales.
Example: In your case, your Grill & Chill store is selling 50,000 worth of food and treats in a single month, then you would be paying Dairy Queen 2,000 the same month (4% of 50,000).
- Advertising Fee (or Marketing Fee): This is not the fee of your local adverts. This is funds that you and all the other franchisees are contributing to a single huge fund. Dairy Queen corporate relies on this huge fund to finance the national television commercials, social media campaigns, and new product concepts that everyone is hungry for.
- Advertising Fee (both models): 5-6 per cent. of gross sales. Examples: With the same sales of $50,000 per month, you would deposit another $2,500-3000 in a fund of advertisements.
Therefore, you should also pay back between 9 percent and 10 percent of your total sales to the Dairy Queen corporation every month. That is following you have paid your food, your employees, your rent and your electric bill.
Profitability of Dairy Queen Franchises
The second-largest question is this one: If I put up all this money, what money can I get?
This is a very perilous question. Main DQ company cannot guarantee you to earn a specific amount of money. It’s against the law. Profit is a matter of a lot:
- How good is your location?
- What is the quality of your team management?
- Do you manage your food expenses and do not squander anything?
- Does your customer service make people come back?
But we may examine averages. Dairy Queen must disclose some of this information in such a large legal document, as the Franchise Disclosure Document (FDD).
According to recent FDD data:
- Meanwhile, the average DQ Grill & Chill (which operated not less than a year) sold about 1.4 million on average annually.
- Now, this is not your profit. Here is the number of gross sales. This is the amount of money that got into the cash register.
Out of that $1.4 million, you will have to pay:
- Food and Paper: All the ice cream blend, burger patties, buns, and cups and wrappers. (This is an enormous price, perhaps 30 per cent. or more).
- Labor: Your wages on all your employees. (Another huge cost, maybe 25-30%).
- Royalties: Your 4% fee to DQ.
- Advertising: Your 5-6% fee to DQ.
- Rent/Mortgage: The payment of your building.
- Utilities Electricity (those freezers consume a lot!), water, gas.
Insurance, maintenance, local advertisements and so on.When you have all those bills paid, you are left with the remaining money, and that is your profit (or, to be more precise, the amount that you can manage or EBITDA).
So, how much is that? It has been reported that a properly run DQ Grill & Chill can make a profit of about $330,000 per year that is manageable. Again, this is an average. There are those stores which do far better and those which do far worse. The lesser “Treat” stores will record lower sales and less profits.
Even in cases where a new owner breaks even in two or three years, it may take the new owner some time to begin earning a substantial profit. The initial two years will be spent paying off the huge loans you borrowed to construct the store.
Step-by-step Application Process of a Dairy Queen Franchise
Suppose, then, that you have read all this, and that you have the money, and that you are excited. What’s next? It is a seriously long process. Your first “hello” to your “Grand Opening” can require between 6 and 18 months. Here are the basic steps.
The Process of Application in Steps:
- Question (The first “Hello”): You visit the official site of Dairy Queen franchising. You complete a brief form that mentions that you are interested. This is a mere information request.
- Research and the FDD: DQ team will provide additional information to you. Their most valuable correspondence is the Franchise Disclosure Document (FDD). It is a very large, very serious legal document. It contains all the information: all the prices, all regulations, the history of the business, etc.
- Application and Approval: You fill the actual application in case you like what you see in the FDD. This is an introspective account of your life. You are forced to present all your financials (bank accounts, property, debts) to confirm that you possess the money.
- Find a place and Build: When you are accepted, the interesting (and costly) part starts. Finding a good location will be facilitated by the DQ real estate team. It will need them to approve the location.
- Training: On the day that your store is being built, you and your managers will visit the official training program of Dairy Queen. You will spend numerous hours in a classroom and another numerous hours in an existing DQ store.
- Open Your Store! That being said, you are all set. You will also enjoy a Grand Opening, and begin your new life as a Dairy Queen franchisee.
Tips for Approval
- Tell the Truth: Do not attempt to conceal something in your financial application. They will find out.
- Do Your Homework: It is not enough to just talk to them without demonstrating that you have done your homework. Do not ask the simple questions found in their site.The reason is, you should demonstrate your passion: communicate to them why you love DQ.
- Have a Business Plan: Begin to consider what and where you would prefer to locate a store (even though it may be a general vicinity) and why you believe it will be successful.
Top Dairy Queen Franchise Locations
The location of the store you build is likely to be the most crucial choice that you will ever make.You can be profitable because of a good location. Even the best Blizzards in the world can be a failure because of a bad location.
So, what makes a “top location”?
- High Visibility: The individuals must view your store. An ideal place is on a busy major highway or just by a highway exit. A shop in a back street is highly dangerous.
- Easily Accessed: Can customers easily access your parking lot? Does the drive-thru have easy access to and out of it? When it is difficult to access it, people will simply continue driving.
- Strong Anchors: It is nice to be within the proximity of other business interests that attract people. It is an added advantage to be close to a major supermarket, a movie theater, a large school, or a shopping center.
- The Right Neighbors: You would like to be in the neighborhoods but you are likely to dislike putting up next to three other ice cream stores or a big McDonalds.
- Population: There must be a sufficient number of people residing (or passing by) the area to make your business thrive throughout the year.
Comparison to Other Franchises.
What is the comparison of the costs of Dairy Queen Franchise cost to the other large fast-food chains? It’s good to have some context.
- Dairy Queen (Grill & Chill): $1.5 million -2.5 million.
- McDonalds: This is among the highest priced ones. A new McDonalds is priced at between 1.3 to 2.3 million dollars and usually higher in the urban centers.
- Taco Bell: A new Taco Bell is also rather costly, as it may cost between 1.2m to 2.8m.
- Subway: This is among the cheapest large-names franchise. Since Subway outlets are compact and can fit within an already existing strip mall (you do not construct a new building), the overall price is significantly less, usually between 200,000 and 500,000.
So, where does DQ fit in?
Dairy Queen falls in the high-cost and high-investment category and is directly competing with some of the biggest brands such as McDonalds and Taco Bell.
The reason is that the “Grill and Chill” model is the full-fledged restaurant often having a new facility and a drive-through. They are massive, costly initiatives. It is a lot more of an investment than a mere sandwich shop.
Net Worth and Financial Requirements
This is the last and the most crucial hurdle.You have to be able to demonstrate that you possess some level of personal wealth before Dairy Queen franchise cost even considers looking at your application.
Why? The risk of opening a restaurant with a twenty million dollar value is too high. The firm will require knowing that you are a strong person financially. They would like to know that you can take a large loan with a bank and that you have sufficient amounts of your own funds to deal with issues.
You have to meet two numbers.
Minimum Net Worth Required to Qualify
Net Worth is a simple mathematical problem:
- The amount you own You own less net worth you owe.
- Ones that you are the owner of: your home, your vehicle, your savings in the bank, your shares.
- Owe: mortgage, student loans, car loan, credit card debt.
- The required Net worth to qualify as a Dairy Queen franchisee should be: $750,000
Liquid Capital Requirements
This is another figure, and it is even more significant.Liquid Capital refers to money that can be obtained quickly. It is money in the bank, stock you can sell tomorrow or anything that you can convert to cash very fast. It is not the value of your house (you will not be able to sell your home tomorrow).
- This is the money required in your down payment on the loan and to finance the initial things you need.
- In order to become a Dairy Queen franchisee, you need at least liquid capital of: $400,000
- You must have both. The minimum net worth required is 750,000 and liquid cash of 400,000.
Funding Options and Financing Tips
Rarely does one pay $2 million in cash. You are expected to get a loan. Your down payment is your liquid capital of $400,000. The rest which could be part of $1.5million or more you borrow at a bank using your own money. Dairy Queen does not provide a loan, but it is a valid brand in most banks. This implies that the banks are well acquainted with DQ. They are aware of the fact that it is an old company and strong. This would facilitate the process of securing a loan to start a Dairy Queen compared to a new restaurant that no one has ever heard of.
Conclusion
It is a huge dream to own a Dairy Queen Franchise cost. It is an opportunity to possess a part of American history and an abode of joy among your population.
But it is also a very big business. The following things should be borne in mind: The initial investment required to start a new DQ Grill and Chill is between 1.5-2.5 million dollars. So you need money saved: You need a minimum of 750,000 net worth, and 400,000 cash (liquid capital) to be taken into consideration. You will be giving the company approximately 9%- 10% of your total sales in the form of royalties and ad fees every month. At this point in time you cannot open a Dairy Queen in the United Kingdom.
The US and Canada are the primary markets of new owners. With money and passion for the business, it can be a great and lucrative life. Nevertheless, it is a serious multi-million dollar venture that involves labor, management, and great location.
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FAQs
What is the franchise owner earnings of Dairy Queen?
It varies a lot by location. A properly managed DQ Grill & Chill is averaging sales of 1.4 million yearly which can result in manageable profit of approximately 330,000 annually before taxes and other expenses.
Is it possible to simply open a small, inexpensive DQ that simply sells ice cream only?
Yes, this is the “DQ Treat” model. It is cheaper and its overall investment may begin at about 549,100. Nevertheless, the company is directing the majority of its new expansion to the bigger Grill and Chill model.
What is the restaurant experience requirement to own a DQ?
It assists, and it is not necessarily necessary. Dairy Queen is seeking individuals having good business and management skills. The restaurant component will be taught in their long and elaborate training.
What is the time it takes to open a store?
Between 6 to 18 months It normally takes 6-18 months after the day you apply to your Grand Opening. Locating the ideal location and constructing the store is the time consuming aspect.
