Executive Insights | February 2012 | By Pamela Parseghian

The Dairy King

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Still, most of the copying was done in second- and third-tier cities, rather than the larger, more populated metropolitan areas. Unfortunately, that’s also where IDQ happens to be concentrating its expansion, he says.

In the past, Dairy Queen’s primary growth was in Shanghai, Champagne says. “Now we’re seeing great success is in second- and third-tier cities because there’s less competition in those regions and people have disposable income there. They are growing at almost the same rate as major cities.

“Rent and labor is a little cheaper,” he says, but that’s balanced with the higher costs of supplying product in less-populated areas.

Throughout China, the soft-serve quick serve’s greatest competitor—by far—is KFC, which has more than 3,000 stores in the country. But like many successful leaders, Champagne learns from his competition, even those six times his size.

“Sometimes you have to take your hat off and admit they’re doing a wonderful job,” he says of Yum! Brands’ fried chicken concept. “They have great site procurements. And they’re good operators.

“They have great product quality and competitive innovation,” he says. Specifically, he points to KFC’s meal deals, which are smaller than those in North America and marketed to Chinese families. They’re smartly promoted meal bundles that include tiny treat options for kids.

“One of the things we learned,” he says, “was the importance of the mini blizzard, and it was a huge success.” The promotion was subsequently brought to the U.S., where it experienced equal popularity.

Moreover, Champagne realized that KFC was appealing to local tastes with such options as spicy chicken. That particular menu item wasn’t readily available from other U.S. chains in China, and the move gave KFC an undoubted edge in the market.

When IDQ expanded into China in 1992, leaders assumed Chinese diners would like the standard menu items—frozen soft-serve ice cream and chocolate-coated Dilly Bars.

“That’s not really true,” Champagne says. “They weren’t big chocolate lovers.”

With that and KFC’s success in mind, DQ launched menu items that were unique to the Chinese market. To date, the most successful Chinese menu item is the Green Tea Blizzard, a result of carefully studying local markets and listening to his franchisees there.

Green Tea Blizzards were so popular in the country, they were rolled out in other places such as Indonesia and the Philippines. In addition, other local menu items like the red-bean and almond-flavored shakes were introduced to rave reviews.

The most successful Chinese menu item is the Green Tea Blizzard, a result of carefully studying local markets and listening to his franchisees there.

Those kinds of local innovations, Champagne says, were the product of not only listening, but also “being in the market.”

Champagne visits international locations often to learn from the operators, taste what they’re offering, give feedback, and meet the front-line employees. When he visits stores he follows his dad’s advice to speak to cooks on duty and shake their hands. Then he challenges them to a friendly competition to see who makes the best ice cream swirls. The COO says he usually wins.

Face-to-face interactions are so valuable to Champagne he’s even planning an international tour with his full executive team. It will include stops in Saudi Arabia and Shanghai. Next on the slate is opening a store in India. Contracts are already set to be inked for that deal, he says.

While Champagne oversees expansion outside the U.S., he points out that “the international group is still very small” compared with domestic operations. Of the 6,200 global stores, 4,600 are in the U.S. And because of the size alone, U.S. policy greatly affects worldwide systems.

“The U.S. operations drive the majority of the global strategy,” he says. Part of that strategy is reenergizing the 72-year-old concept’s image, especially at older locations that may be unchanged since they opened.

“It’s part of being the age that we are,” Champagne says, referring to outdated stores. “When you think back 72 years ago, there were things we did then that we wouldn’t do today. So we’re on a strong campaign for our franchisees to modernize their locations.”

This is particularly hard in bad economic times, and especially at the older locations that are operated by third-generation franchisees, he says. The sweet upside? Dairy Queen is a trusted brand for many in the over-50 demographic.

For example, it has helped him glide though some of his many trips at airport security checkpoints. Once some of the older guards hear what his job is, he says, they enjoy chatting about their own childhood favorite frozen treats.

And what does he say when one of those folks he meets in airports, or the many he runs into at trade meetings, cocktail parties, or even his own family functions, asks for the scoop about being a Dairy Queen franchisee?

He has a pragmatic answer that he quickly rattles off: “I say, ‘it’s a great business, but do your due diligence.’”



Dairy Queen has a great line of ice creams. I remember that years ago they were planning to open in Puerto Rico but I don't recall having seen one opened. I do remember Orange Julius which I loved it but is not here anymore. I don't know what happened if it was a franchisee issue or what. The fact here is that franchisors must take well into consideration the franchisee business background to make sure that he/she is committed with the brand in terms of quality and growth plan.

Be very carefull when dealing with Jean Champagne. I certainly do not trust him.

Dear COO,It is such a pleasure eating from your stores.I traveled to the states several times and it was my first time eating your billizard reeses in wildwood NJ 08260 on the boardwalk.It was a big exciting for me when when i knew that you opened in Egypt (Cairo at city stars mall, nasr city )but the bad part was there ws no reeses, they were out of stock for over 3 months till now.i use to buy the reeses myself from any market and give it to them and they use to charge me little less as i buy the chocolate myself .few days after the manager (owner) came out with a bad attitude that its not our problem that we don't have reeses either you chose a different flavor or you pay our regular price and you add your chocolate yourself.i asked for e-mail someone in charge, they informed there is no email.there is just a call center to complain.As per my knowledge that franchising company should treat the same with the same quality of service.How come there is no reeses for that long?How come there is such a manager ( owner ) with that attitude. ?i don't see any of this.Thanks to contact me on my mail ( [email protected] )or call me on +20 100 6078 49

Bubs, I taught you well.Doug Barlow.

I have a question for CEO in Canada? How come when you order a banana split they aren't as big as they used to be? They are have the size. Your ice cream is the only ice cream I can eat, without getting sick. I live near Swift Current, SK


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