Dairy Queen is in expansion mode and has its sights set on Arkansas.
The company said recently it would like to see 20 new Dairy Queen franchise operations in Northwest Arkansas over the next five years. That's nearly double the number of Dairy Queen stores in the entire state.
Dairy Queen franchisee Andy Patel owns one store in Jonesboro and has another under construction. He said Dairy Queen is a good fit for Arkansas and noted the company's market penetration is small when compared with other Southern states.
"Most states have 60 to 80 stores," he noted.
Patel said, with the assistance of Jonesboro-based Haag Brown Commercial Real Estate and Development, he plans on further expansion around the state. He said he's worked in the restaurant industry for years and always aspired to run a Dairy Queen of his own.
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"I always loved Dairy Queen," he said. "It's where we go as a kid as a reward or special treat."
There are more than 6,000 Dairy Queen locations in the U.S., Canada and 20 other countries. In the U.S., Texas has the most Dairy Queen stores with more than 600, according to the company website.
In Arkansas, Dairy Queen has 14 stores with three more projected to open within the year. A Dairy Queen is expected to open by the end of this month in Farmington at 310 W. Main St. Patel's second store in Jonesboro at 2005 Madison Street is scheduled to open in October. A Sherwood store is expected to open in late 2016 but is not yet under construction.
"Arkansas is a state we're focusing on," said Jim Kerr, vice president, franchise development with International Dairy Queen Inc. "We see real strength in the Northwest Arkansas region."
Known for its frozen ice cream treats for more than 70 years, Dairy Queen rolled out a menu change in 2015, adding hot sandwiches and warm deserts to its Blizzards and soft serve cones. It also developed a new tag line -- Fan Food not Fast Food -- in the summer of 2013.
Dairy Queen rebranded many of its stores in recent years, updating its image and dubbing the new operations "Grill & Chill Restaurants" to compete in the growing fast-casual dining segment. Nine of the current Dairy Queen stores in Arkansas are Grill & Chill stores, as are the three new locations.
Privately held International Dairy Queen Inc. is a subsidiary of Warren Buffett's Berkshire Hathaway Inc. All of the company's operations around the U.S. are owned by franchisees.
Kerr said that helps keep the quality high at Dairy Queen stores, and that the company is seeking new franchisees in Arkansas as part of the expansion.
"Ownership is pretty critical," he said.
Higher wages and lower unemployment around the U.S. are strong predictors for growth for the quick service restaurant segment, according to the Franchise Business Economic Outlook for 2016. The report was prepared for the International Franchise Association by IHS Economics, an analysis and forecasting firm.
For 2016, the report projects there will be 159,839 franchises in the quick-service restaurant sector, an increase of 1.5 percent. Growth across all franchise segments is predicted at 1.7 percent for 2016, according to the report. Quick-service restaurants will account for 3.4 million jobs in the sector for 2016, making up 38 percent of all franchise employment for 2016, up 3.3 percent.
Tom Smith and his business partner Cheryl Zotti are opening the Dairy Queen in Farmington and plan on opening additional stores. He said he's currently hiring for the new store, noting it will employ three managers and about 75 workers.
Smith said there's still plenty of room in Northwest Arkansas for fast-food operations despite a competitive market. Recently several fast food chains have moved into or expanded in Northwest Arkansas including Whataburger, Raising Cane's Chicken Fingers and Captain D's.
He said Diary Queen has the advantage of an established brand but added its new menu offerings and updated look give a fresh dining experience to patrons.
In the end though, he said, it's hard to beat the nostalgia and familiarity Dairy Queen has established with its customers over the years.
"You grow up with that taste," Smith said.
SundayMonday Business on 08/07/2016