Sundaes in Shanghai: Dairy Queen expands global empire

It’s getting easier to track down a Blizzard in Beijing.

Dairy Queen opened 450 new locations around the world last year — and 300 of them were in China.

“China continues to be our fastest-growing market,” said Troy Bader, CEO of Bloomington-based International Dairy Queen. “International plays a really, really important part of our future.”

Dairy Queen restaurants reported $6.4 billion in sales last year. Since 2019, sales are up 36%, Bader said, and global growth played a big role in that.

More than a third of Dairy Queen’s nearly 7,500 locations are now located outside the U.S. and Canada.

“Our international growth is where we’re seeing our greatest opportunities — our presence isn’t as mature,” Bader said.

China is a huge market for American fast-food chains, where KFC and McDonald’s are the dominant players. However, local brands are starting to catch up.

“Initially considered a luxury item for a select few, fast food has become increasingly accessible and affordable for a broader segment of Chinese consumers as the economy has grown and disposable incomes have risen,” according to a report by Dezan Shira & Associates, a foreign direct investment consultancy, which pegs the Chinese fast-food market at more than $500 billion.

Dairy Queen is focusing on Southeast Asia broadly; the brand already has about 500 locations in Thailand and a presence in other nearby countries like Vietnam and the Philippines.

“We have supply chains established, we have brand recognition,” Bader said. “We are looking at new markets, but that is one area we continue to focus on.”

Mexico has also taken to soft serve, where there are nearly 325 Dairy Queen locations. The chain operates in 20 countries.

Internationally, Dairy Queen is known more for its ice cream treats than its food, though the emphasis is shifting toward the Grill & Chill model more common in the U.S.

“We are still the undisputed treat leader and plan to be,” Bader said. “But we also are a very balanced food and treat player.”

Domestically, Dairy Queen is pushing even harder to be known for its hot eats as well as its cool treats.

“We talk about our chicken strips being Blizzard-good,” Bader said, and a new burger lineup released in 2022 is still performing well.

International Dairy Queen had $248 million in revenue last year and a $93 million profit, according to franchise disclosure documents, both improvements from the year before. The company earns royalties paid by franchisees and boasts a roughly 50% operating margin.

Like other restaurants, Dairy Queen franchisees have had to increase prices in recent years to deal with higher wages and ingredient costs. Bader said the specific increases are up to individual store owners, though the company provides guidance, especially for maintaining the $7 meal and two-for-$5 promotions.

“We still want to make sure we have everyday value available for our fans,” Bader said.

Dairy Queen, owned by Berkshire Hathaway, will be serving up Dilly Bars at the multinational conglomerate’s famed annual meeting this weekend in Omaha. Though a small part of Warren Buffett’s business empire since 1998, the 84-year-old ice cream company is well-loved by shareholders, Bader said.

“Dairy Queen is one of their favorites because it has a special place in many people’s lives and their hearts.”