Fast-food chain DQ plans massive expansion in California and San Francisco is a key market for growth.
Fast-food restaurant chain Dairy Queen is planning a massive expansion throughout California within the next 10 years, and is eyeing the Bay Area market for growth.
The chain, known for their iconic soft serve ice cream, has identified more than 400 locations across the state where they hope to open new stores, with roughly half of them in Northern California and half in Southern California. The company, which is owned by Warren Buffett’s Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK-B), currently has 98 locations in California and 17 in the Bay Area market, and is expecting to open stores within San Francisco.
DQ’s plans comes on the heels of news that Checkers and Rally’s— a Tampa, Fla.-based chain born of a merger between what used to be the Checkers Drive-In Restaurants and Rally’s Hamburgers — has its sights set on reaching franchisees in Oakland. In March, the company’s director of franchise development, Robert Bhagwandat, told the San Francisco Business Times that the company’s market research suggested Oakland could support up to 40 locations.
Dairy Queen has seen steady growth since its Grill & Chill concept launched in 2002, which includes savory items — such as burgers and sandwiches — and sweet items on their menu. The company opened 84 international locations just last year, which is more than its competitors like Jack in the Box and Wendy’s, according to Mike Mettler, Dairy Queen director of national franchise sales.
Although the company has ambitious long-term goals to expand in the state, the progress will be gradual.
“Long term, we’d like to open that 400,” Mettler told the San Francisco Business Times. “To be able to do that we have to open one great store at a time.”
Driving Dairy Queen’s expansion plans is an effort to catch up to competitors in the state. Mettler said that, according to numbers from each company, Burger King and Jack in the Box each have 600 locations in California, while McDonald’s has over 1,300.
Mettler said the company has no approved locations yet among the 400 that have been identified, but that it’s actively looking for real estate in the market and for passionate store operators, who will be owners of each franchise.
“Our goal is to identify groups of operators in the next two quarters that will help us open restaurants next year,” Mettler said.
The company’s system to identify the most valuable areas in which to open locations looks at population, employment and competitors. Mettler said that Dairy Queen is a family brand, so it targets areas where there are a high number of families and things like sports activities and churches. It also looks at where there is a strong demand for meals during lunch time.
The company also expects to create 50 to 100 jobs at each location, which they say will boost the local economy.
Dairy Queen celebrated its 75 th anniversary in 2015, having opened its first store in Illinois in 1940. It now has 6,700 locations globally. While there are still big steps left in preparing for its California expansion, Mettler said a big goal for this year is spreading awareness.
“It starts with the public relations effort that we initiated to make people aware the Dairy Queen has an opportunity to develop stores in the market,” said Mettler.
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