Dairy Queen announced last week that it would be opening its first ever location in Manhattan – something that many New Yorkers consider a long overdue move. With New Yorkers asking for a Dairy Queen for years, why did the Berkshire Hathaway-owned chain finally decide to expand now?
It seems the pros at last outweigh the cons for Dairy Queen in its journey to bring the Blizzard to the Big Apple. The restaurant, which is set to open in May before Memorial Day, is just the beginning of Dairy Queen's plans for New York. The chain hopes to open 35 to 50 additional restaurants in Manhattan, Long Island, Queens and Brooklyn, and already has locations open in Staten Island and Massapequa, Long Island.
Dairy Queen's vice president of franchise development Jim Kerr says demographics are what drew the chain to the big city. "There's a wide range of income levels and diversity," he says. The Manhattan Union Square location hopes to attract customers from residences, offices, schools and those fresh off the subway.
Usually, Dairy Queen aims to build locations in areas where there will be a high number of potential customers located within a five to seven minute driving distance. In New York, the franchise shifts to five to six minutes walking distance—and can still reach 250,000 people.
Of course, to reach these customers, Dairy Queen had to make some adjustments to survive in the city. The restaurant will be one of Dairy Queen's few two-story locations, with extra space to provide enough seating for customers. The chain, which typically relies on drive-thru traffic, not only has to add a floor of seating, but increase its speed over the counter.
"In urban areas, we definitely have to be on top of our game operationally," says Kerr. "We do not want to have lines out the door, not being handled properly."
Taking over Manhattan would likely never have happened if not for Dairy Queen's shift towards the DQ Grill & Chill. In 2001, Dairy Queen rolled out the DQ Grill & Chill concept, providing customers with a wider array of lunch and dinner options, in addition to icy Blizzard and Orange Julius drinks. Today, Grill & Chill is Dairy Queen's preferred concept for all new stores.
"One of the reasons why we're going to [Manhattan] is we've been breaking sales records multiple times in the last five years," says Kerr. The record breaking opening of a Chill & Grill in Massapequa, on Long Island, in particular helped convinced Dairy Queen that expanding to New York could be profitable for the chain.
"The New York City market has always been an area that expresses interest [in franchising]," says Kerr, who reports 5 to 10 percent of franchising leads every year have been based in New York City. "Anecdotally, a lot of us come in and out of New York City. I know I will land and people will see 'DQ' on my shirt, and they say 'When are you going to build one here?'"
Kerr said the franchisee is local to New York, with franchising experience in Manhattan. While Kerr said the franchisee preferred not to be named, others have reported LSQ Foods to be the owner of the Manhattan location.