San Antonio Express-News (Sunday)
Dairy Queen sees opportunity in the big city
Margie McFarland heads to the Dairy Queen at Bandera Road in Leon Valley once or twice a week.
It’s not just a place to grab tacos, a hamburger or a vanilla soft-serve cone before her afternoon doctors visits and other appointments. It’s also a social outing, said McFarland, who lives alone with her dog.
“I like to dine in,” said McFarland, 80. “I’m old school.”
And during trips to West Texas, stopping in small cities such as Sonora, the chain is her old reliable.
“I always depend on Dairy Queen,” she said.
Dairy Queen isn’t headquartered in Texas — the chain’s parent company is based in Minnesota — but there are more locations here than in any other state, and it’s been a touchstone for Texans for generations.
One sign of how big a role Texas plays in Dairy Queen’s business: The food menu here is different from those in other states, tailored to Texans’ tastes. You can’t get the Hungr-Buster hamburger or The Dude chickenfried steak sandwich anywhere else.
And in small towns across Texas, the restaurants are obligatory stops for campaigning politicians.
By the company’s count, 63 of its locations are in the San Antonio area.
But Dairy Queens are most prominent in rural Texas. They are the gathering spots after church or the high school football game.
When franchisee Vasari LLC filed for bankruptcy in 2017 and closed more than two dozen locations in Texas, the Houston Chronicle and Texas Monthly reported on the effects on the small communities left in the lurch. Not only did the closures take away a dining option and an employer, they took away part of the towns’ identities.
Yet as Texas’ demographics shift — with more people moving from rural communities to the state’s large metro areas — Dairy Queen is following suit, expanding its foothold in the big cities.
Though the head of the Texas Dairy Queen Operators’ Council — a nonprofit made up of franchisees in the state — said new locations are still opening in rural areas, the chain’s expansion is mainly concentrated in major cities such as Dallas, Houston and Austin.
Seven locations are scheduled to open in the state this year.
Dairy Queen “grew from being a small-town brand,” said council CEO Lou Romanus, who sat down for an interview during the council’s convention in San Antonio earlier this month.
“The town arrived when there
was a Dairy Queen,” he said. “The Dairy Queen brand did not grow in high population, big-city areas. Now we’re at that place where we’re rolling into the population bases where we just have not historically had the big growth.”
The chain fared well during the coronavirus pandemic because franchisees already had drivethru business, and customers sought out Blizzards and HungrBusters as they hunkered down at home, he said. Sales increased slightly, but he declined to say how much.
“We realized pretty quickly that all your revenue is going to come through that window,” Romanus said. “That was the only way people had to access the outside world for a very long time.”
Dairy Queen executives tried to keep the chain’s marketing upbeat during the pandemic. They homed in on the good memories attached to the brand.
“We didn’t want to remind people of the complexities that are going on in their life,” Romanus said. “In the face of fear, in the face of anxiety, we wanted to say, ‘Listen, I know it’s tough right now, but remember when? That’s still there. Go down the street and get a Blizzard. Go down the street and bring that memory of normalcy back.’ ”
The labor market has tightened during the pandemic, and franchisees’ biggest challenge is finding and retaining employees. Some are raising wages and offering bonuses, but they are competing with other companies doing the same, Romanus said.
Supply chain shortages are another problem. Equipment deliveries that typically took from 30 to 60 days are now estimated
to arrive in six months, he said. And Styrofoam cups, lids and straws are hard to find. Costs in general are up, too.
“If labor is going to cost you more and your products are going to cost you more, we’ve got to sell more of it, we’ve got to make up for it in quantity,” he said.
Alex McGraw, 52, another regular customer at the Bandera Road location, has been eating at Dairy Queen for as long as he can remember.
He likes the hamburgers, hot dogs, tacos, steak fingers and Blizzards, and visits at least once a week. When he takes trips to the Gulf Coast, he always stops at a Dairy Queen.
“It’s always good,” he said.