Dairy Queen Looks to China and India for Growth After $5.5B in 2021 Sales

This is an English adaptation of a FoodBud historical article originally published on May 17, 2022.

Dairy Queen, the ice cream and quick-service chain owned by Warren Buffett's Berkshire Hathaway, was looking to China and India as key international growth engines, while its North American business focused on improving burger offerings.

Berkshire Hathaway acquired Dairy Queen in 1998. Since 2018, international markets had become the fastest-growing part of the chain's more than 80-year-old business.

China as a Core Market

China was especially important within Dairy Queen's international footprint. By sales, it was the company's third-largest market; by store count, it was the second-largest. Dairy Queen had more than 1,100 stores in China.

According to Narrow Door data cited in the article, Dairy Queen had 1,185 stores in China. Its domestic footprint was concentrated mainly in new first-tier cities, followed by second- and third-tier cities.

Dairy Queen had two agents in China:

• Hop Hing Group, based in Hong Kong, which had delisted from the Hong Kong Stock Exchange at the end of the previous year.
• CFB, which had been acquired by FountainVest Capital.

Hop Hing mainly operated Dairy Queen stores in northern China, including Beijing, Tianjin, Hebei and other northern regions such as Liaoning, Heilongjiang, Jilin and Inner Mongolia. Because Hop Hing had delisted, the available operating data only ran through the first half of 2021. As of the end of June 2021, Hop Hing operated 193 Dairy Queen stores and generated RMB 120 million in sales revenue in the first half of 2021.

CFB mainly operated in southern China. Before its acquisition by FountainVest, CFB said it operated more than 920 Dairy Queen stores. At the time of the acquisition, it announced plans to open 600 new stores in China by 2030, including 100 new stores in 2022.

Global Scale and Market Outlook

According to Dairy Queen's official information cited in the article, the chain had more than 7,000 stores across 20 countries. In 2021, Dairy Queen generated sales of $5.5 billion, approximately RMB 37.1 billion. Sales at stores open for at least one year were up 18% versus 2019.

At Berkshire Hathaway's annual shareholder meeting, Dairy Queen CEO Troy Bader, then 57, said the company had seen China's middle class continue to grow, improving acceptance of Dairy Queen's brand and products.

Although repeated COVID-19 disruptions slowed Dairy Queen's international expansion, Bader said India could become the next key market.

The company was also facing major supply-chain pressure. In China, pandemic-related controls affected operations; in North America, shortages of warehouse workers and drivers created additional strain. Franchisees were also trying to replace equipment that had failed over the previous two years, tightening vehicle availability. Bader said this was the area where the company felt the most pressure at the time.

Note: forward-looking store targets, acquisition context and IPO/delisting-related figures are historical, based on the May 17, 2022 source article.