Will Dairy Queen Franchise Lose Its Identity?

There’s something very appealing about the Dairy Queen franchise. Created from the gem of an idea in 1938 to serve ice-cream that’s soft directly from the freezer, it’s gradually grown to embrace not only ice-cream but also less romantic fast-food fare like burgers, hot dogs.

Owned by Warren Buffett’s investment vehicle, Berkshire Hathaway, the Dairy Queen franchise comes in two flavours…

Dairy Queen Orange Julius, which is probably closest to the traditional ice-cream parlour concept but also offers up to date smoothies, and blended fruit drinks. As a pure sweet treats store, it has a very clear position and would probably work very well in sunny, warm holiday destinations and also in a busy throughfare like a shopping mall.

Dairy Queen Grill & Chill is the core franchise identity for Dairy Queen and offers the traditional fast-food burgers and so on, along with the ice-creams that started the business in the first place. The question in our mind about this business is what is Dairy Queen trying to be – yet another burger joint or a specialist of some kind?

We believe that the challenge for Dairy Queen’s Grill & Chill concept is to be clear on it’s core identity so that the brand can fully grow and blossom. The trick with brands, at least according to Al and Laura Ries (global branding experts and co-authors of The 22 Immutable Laws of Branding) is to make your brand own a particular word or phrase in the minds of its customers.

How does this work in practice? Well, if see the phrase “coated chicken franchise”, who do you think of first? It’s Kentucky Fried Chicken, the first and biggest of the chicken franchises. If you think of a hamburger franchise, you’re going to come up with McDonald’s first.

In fact, if KFC starting selling hamburgers and did a big marketing campaign on them, would it increase their overall sales? We think not – it would just cannibalise the sales of their chicken and confuse people about what you buy from KFC. In the same mould, McDonald’s may sell chicken and fish sandwiches, but the core of their sales has always been the hamburger.

So this brings us back to Dairy Queen Grill & Chill. What word can this franchise own in the shopper’s vocabulary? It just doesn’t seem to do it for us. And to make it worse, they’re diluting the Dairy Queen brand by splitting it into two. While it may do very well in a town that’s not go too much competition, we think that DQ will struggle for brand presence alongside the established burger joints in one corner and Baskin & Robbins ice-cream in the other.

If you aren’t really clear what your business stands for, with a real sense of identity, it’s really tough for your customer to identify you as something special, too. That doesn’t mean DQ’s businesses will do badly. We just don’t think it’s going to have anywhere near the pulling power of the growth days that the golden arches experienced. Which means you’ll not be buying into such a high flying franchise, in our opinion.

We hope that this gives you another useful angle on the Dairy Queen Franchise.

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