Dairy Queen Franchise Cost, Profit & Failure Rate 2024

Wherever you reside in the United States or in other countries, you have probably heard about Dairy Queen.

They are one of the most popular ice cream and fast-food restaurant chains with thousands of locations across continents. It is amongst the 10 best food truck franchise opportunities.

This level of brand awareness and rapid growth shows that Dairy Queen is a good business, especially if you are looking to own a franchise.

If you are thinking about owning a Dairy Queen franchise to expand your portfolio or get started with entrepreneurship, they are a great opportunity.

They offer franchising opportunities not only in the US but also in other countries. This article will guide you through Dairy Queen’s franchise system and every detail of it. But let’s first understand who owns Dairy Queen.

Dairy Queen Franchise

About & History Of Dairy Queen Franchise Busines

Dairy Queen is a soft-serve ice cream and fast-food restaurant chain. With its current headquarters in Minnesota, they have been serving customers since 1940.

The company is quite famous for its signature soft-serve ice cream that is used in a variety of treats. Some of Dairy Queen’s menu items include cones, sundaes, and milkshakes.

In addition to the signature ice creams, they also offer fast-food items such as burgers, hot dogs, chicken tenders, and fries.

Dairy Queen has over 4,000 locations worldwide, with a strong presence in North America, Asia, and Europe.

Many of their restaurants are franchise owned, but they also have some corporate-owned locations in different areas.

Dairy Queen is known for its iconic branding, including the signature “DQ” logo and the red and white color scheme that is used throughout the restaurants.


Dairy Queen History

Dairy Queen’s foundation goes back to 1940 when their first store was opened in Joliet, Illinois, by John Fremont McCullough.

The first Dairy Queen location served soft-serve ice cream in cones, cups, and sundaes and quickly became popular among customers.

Their fresh menu and quality ingredients led the company to grow quickly. They opened their first store outside of the US in 1953 in Canada.

They kept on growing to international locations as well as in the United States, which brought enormous success to the company.

Over the years, Dairy Queen has introduced a number of new products and menu items, including the Blizzard, which is a popular one.

The company has also expanded its menu to include burgers, hot dogs, and other fast-food items.

Today, Dairy Queen continues to expand both domestically and internationally, with over 4,000 stores worldwide.


Dairy Queen Franchise Model

Cost Or FeeAmount
Initial Investment$1.5 million – $2.5 million
Franchise YES
Franchising Since1944
Franchise-Fee$45,000
Royalty-Fee4%
Liquidity$400,000
Estimated Outlets4,321

How Much Does It Cost To Open A Dairy Queen Franchise?

Opening a Dairy Queen franchise requires an initial investment of between $1.5 million to $2.5 million.

This number is for franchises in the US, and it is an average number that includes all the operational costs.

The initial franchise fee, which is $45,000, is also included in this number. Other costs include equipment, training, property, marketing, and other important details.

If you are looking to own an international Dairy Queen, numbers could change drastically depending on the location and the size of the store.

You also have to additionally pay an area fee which depends on the specific country of the location.

Overall, you can still expect to spend something similar to the domestic initial investment number in most locations.


Dairy Queen Franchise Requirements

Dairy Queen Franchise Requirements

Dairy Queen expects the potential franchisees to meet both certain financial and personal requirements.

On the financial requirement side, you need $400,000 in liquid capital for a single unit approval. You also need $750,000 of net worth for a single unit, like liquid capital.

The numbers are higher if you are looking to own a multi-unit which depends on the number of units.

For personal requirements, you first need to have a prior restaurant management experience in the industry.

It’s a vital requirement, and if you don’t have this requirement personally, you can partner with or hire someone who has it.

In addition to this, you also need to have knowledge of the local market and the real estate development processes.


Dairy Queen Profit & Revenue

The latest available data from Dairy Queen’s financials show us a very strong financial situation, with increases year over year.

In 2021, the company had annual sales of $5.5 billion. Of this $5.5 billion revenue, $225 million of it turned out to be the revenue for the year 2021. This is an increase of 18% from the previous year.

Their net income for the same year was $84 million, again about 17% higher than the previous year.

Also, as per sources, Dairy Queen franchise owner make $1,474,000 in sales on average. So if we assume a profit margin of 15% then we can calculate that a Dairy Queen franchise owner make $221,100 in net profits on average.

This is how we calculated this amount:

Financial OverviewPercentage of RevenueAmount ($)
Individual Franchise Annual Revenue100%1474000.00
Rent10.63%(156612.50)
Insurance5.31%(78306.25)
Salaries21.25%(313225.00)
Franchise Royalty Fees5.31%(78306.25)
Utilities2.13%(31322.50)
Cost of Goods Sold (COGS)26.56%(391531.25)
Labor (Variable)13.81%(203596.25)
Total (Expenses)85.00%(1252900.00)
Net Profit15.00%221100.00

Note: The displayed expenses are estimates based on industry averages and standard costs. Actual expenses may vary due to factors like location, business size, and market conditions. We recommend conducting detailed research or consulting with a financial advisor for a tailored financial analysis.


Payback Period Of Dairy Queen

On the basis of a midpoint investment of $1,066,400 and a yearly profit of $221,100, we can calculate the payback period of Dairy Queen.

So, to find out how long it will take to earn back the initial investment:

Payback Period = Midpoint Investment / Yearly Profit = $1,066,400 / $221,100 = 4.8 years

Based on these figures, it will take approximately 4-5 years to pay back the initial investment for Dairy Queen. This time period could be longer or shorter depending on your sales, revenue, and profit figures.


Failure Rate Of Dairy Queen

Franchised Outlets:

YearOutlets at the Start of the YearOutlets at the End of the YearNet Change
20201,9131,926+13
20211,9261,952+26
20221,9521,965+13

For the Franchised outlets:

  • In 2020, the growth rate was (13)/1,913×100≈0.67%
  • In 2021, the growth rate was (26)/1,926×100≈1.34%
  • In 2022, the growth rate was (13)/1,952×100≈0.66%

According to the above-mentioned data, there is no failure rate for franchised outlets as the outlets at the end of the year increased during the span of 3 years.

We can see that the franchised outlets for Dairy Queen grew from 2020 to 2022, showing a growth rate between 0.67% and 0.66%.


Dairy Queen Franchise Training and Support

Dairy Queen Franchise Training and Support

The manager and at least two assistant managers must undergo three different training phases.

The first one is a management training readiness that happens at a location approved by the franchisor.

It focuses on measuring and later on teaching leadership, customer service, and other business-related issues.

Once you pass this, you must attend a ServSafe program that is recognized by the National Restaurant Association. This training happens at a designated location by the franchisor.

As the last step, you attend the operational training program held by Dairy Queen itself in either their headquarters in Minnesota or at another designated location.

Dairy Queen also offers continuous support both for operational and marketing needs.

They send operations business consultants after your opening to offer their operations support for your branch. They also take a hand in helping you with buying and supply chain.

Additionally, Dairy Queen gives continuous marketing help with their marketing material throughout the year.


Dairy Queen Franchise Terms of Agreement and Renewal

The initial franchise agreement with Dairy Queen is for twenty years. This means that when you sign the agreement for the first time, you get to run the branch for twenty years.

Unless you breach the contract, you will have the option to renew for an additional period which is only ten years.

To be eligible to get the renewal period, you need to be able to meet the requirements of the franchisor.

This generally means that the franchisor needs to be satisfied with you as a franchisee, and you don’t break any rules. If that is the case, you will be able to renew it for ten years.


Dairy Queen Franchise Obligations and Restrictions

As the franchisee, the owner of the franchise branch, you are obligated to run your branch under your continuous supervision.

You need to be able to spend full-time on the operational duty of the franchise.

If you are a franchisee as a business entity, then you need to have an owner that will actively participate in the daily operations of the branch.

In addition, the franchisee must only sell services and goods that the franchisor approves beforehand.

They are also obligated to sell all the products and services that the franchisor wants the franchisee to.


Dairy Queen Franchise Financial Assistance

Currently, Dairy Queen does not offer any kind of direct financial assistance to prospective franchisees.

This means that they have no kind of support for any kind of investment you are going to make.

They do not help you finance the lease or the property, equipment, or other related operational costs.

However, they periodically work with third-party sources to arrange financing programs for those interested.

This doesn’t happen all the time, and there is no guarantee as to when it could happen.

Their third-party sources are financial companies or banks that will arrange a loan for you with an interest rate.


Dairy Queen Comparison

CompanyFranchise FeeRoyalty FeeInitial Investment
Carvel$30,000$1.93/liquid gallon$247,474-$388,724
Baskin-Robbins$25,0005.9%$293,840-$642,360
Dairy Queen$45,0004%$1.5 million – $2.5 million

Conclusion

It is no doubt that Dairy Queen is one of the most popular restaurant chains not only in the United States but also internationally.

They have over 4,000 stores across different continents, and they only keep growing.

Being a part of this company as a franchisee could generate a substantial amount of profit if you can manage it well and open it in a good location.

You have to have previous restaurant management experience and a certain amount of liquidity and net worth to be approved to be a franchisee.

Once you get approved, the expected initial investment is between $1.5 million and $2.5 million.

It is definitely not easy to become a Dairy Queen franchisee, but it’s a worthwhile effort because some suggestions say that each Dairy Queen makes about $332 thousand annually in profit.


FAQs

Who is the CEO of Dairy Queen?

Troy Bader is the current CEO of Dairy Queen as of April 2023. He has been in this spot since January 2018.

How much does it cost to open a Dairy Queen franchise?

The average initial investment required to open a Dairy Queen is between $1.5 million to $2.5 million.

This number includes all the operational costs, including the initial franchise fee of $45,000.

Can anyone open a Dairy Queen franchise?

No. You need to have a certain financial amount ready to spend and a personal background experience in restaurant management.

Dairy Queen is specifically looking for people experienced in the industry and managing a restaurant.

How Many Locations Does Dairy Queen Has?

The Dairy Queen has more than 6000 locations operating in the United States, Canada, and over 20 other countries.

Where Is Dairy Queen Headquartered?

Dairy Queen is headquartered at Minneapolis, Minnesota.

Who Owns Dairy Queen?

Dairy Queen is owned by International Dairy Queen Inc, which is a subsidiary of Berkshire Hathway Inc. Berkshire is owned by Warren Buffett.

Who founded Dairy Queen?

Dairy Queen was founded by J.F. McCullough and his son, Alex, in 1938 near Moline, Illinois.

Sources

https://www.dairyqueenfranchising.com/investment-info/

https://www.dairyqueen.com/en-us/locations/

https://www.dairyqueenfranchising.com/why-the-dq-brand-/corporate-support/

https://www.dairyqueen.com/en-us/about-us/

https://en.wikipedia.org/wiki/Dairy_Queen

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