Dairy Queen Tenant Overview

Tenant Description

The Dairy Queen system is one of the largest fast food systems in the world, with more than 7,000 restaurants in the United States, Canada, and more than 24 other countries.

There is great demand for their free-standing stores as net lease investments. Dairy Queen has locations in all major markets and are one of the most recognized QSR chains in the world. The leases Dairy Queen tends to sign relieve the owner of any landlord responsibilities and provide for rental increases during the primary term. Dairy Queens are operated by franchisees as opposed to corporately owned.

Dairy Queen dates back to John F. MCullough, his son Bradley and their soft-serve ice cream formula in 1938. They opened an ice cream store with a friend and customer, Sherb Noble, in Kankakee, Ill., and then their first Dairy Queen in Joliet, Ill., in 1940.

Dairy Queen presents a unique and attractive opportunity for net lease investors, combining the stability of a globally recognized brand with a strategic growth model that emphasizes exclusivity. As a staple in the quick-service restaurant industry for decades, Dairy Queen benefits from strong brand loyalty and consistent demand for its beloved frozen treats and fast-food offerings. The franchise's commitment to its “one per market” approach ensures that each location enjoys minimized competition from other Dairy Queen outlets, maximizing market share and revenue potential for each franchisee. This exclusivity strategy not only enhances store performance but also underscores the brand's careful expansion philosophy, which prioritizes long-term profitability over rapid saturation.

From an investment standpoint, Dairy Queen properties are often secured by long-term net leases, providing predictable income streams with limited landlord responsibilities. Many locations are strategically positioned in high-visibility areas with strong demographics, ensuring steady foot traffic and robust sales. As part of the Berkshire Hathaway family, Dairy Queen is backed by significant financial stability, adding an extra layer of security for investors. With its combination of iconic branding, a proven business model, and an exclusive market strategy, Dairy Queen stands out as a compelling choice for investors seeking reliable returns and a competitive edge in the net lease sector.

Back then, food franchising was all but unheard of, but the new product's potential made it a natural for such a system. When the United States entered World War II in December 1941, there were fewer than 10 Dairy Queen stores. However, shortly after the war, the system took off at a pace virtually unrivaled before or since. With only 100 stores in 1947, it grew to 1,446 in 1950 and then to 2,600 in 1955.

Today, Dairy Queen is a staple and leader of the QSR industry. American Dairy Queen Corporation is a subsidiary of Berkshire Hathaway, Inc.