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DQ Low End no Longer

Julie Boatman asked if Dairy Queen is a low end business.  I am not sure what she means by that but…
DQ is concentrated in small towns, I don’t think there is a small town in West Texas without one.  But I guess the formula is successful.  Click here to learn that no less than Warren Buffet  bought the company in 1993. He has high standards of return on capital so they must do well. Remember the ratios we studied – margin, return on assets, ROI, etc?  From the stand point of what we study in cost accounting it makes sense.  Locations in Andrews, Seminole, and Seagraves Texas are certainly less expensive than those on I 35 coming into Dallas.  While they may not  have as large a customer base, when you are the only game in town, you can still do well. Come to think of it, a McDonald’s and a Burger King both came and went in Andrews, TX, but the DQ is still there! MCD and BK lasted less than two years as I recall. 

Now they are rolling out a new concept, Grill and Chill to better compete with MCD and the rest. As for not taking credit cards, well there is a percentage and a fixed fee charge for that.  Restricting it to cash customers means more money in the till at the end of the day. And if there is no MCD next door as there isn’t in many small towns, I guess DQ can get away with that practice. I notice many establishements now have a minimum price at which they will accept credit cards in payment.

Dq_burgerClick here to learn more about the cost of becoming a Grill and Chill  owner,  Before you click, take a guess at the total cost of becoming a franchisee.  Notice the requirements that you must have been in this type of business previously.  Why do you suppose DQ requires that?  Notice that DQ requires a business plan including a projected budget which we study in Chapter 9 in the cost class. 

Bkh_homepageBy the way, if you have not read Warren  Buffet’s annual report to shareholders, this would be a good time to do so.   Click right there for the link. 

Thanks Julie, a good question that lead to an illustration of several concepts in the cost class!

DLE

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3 responses to “DQ Low End no Longer”

  1. April Y Avatar
    April Y

    I think DQ is a staple for any small town. Ironically for me, it is actually only there that I will eat at a DQ because it almost seems more appropiate. Small town=DQ. It just seems to taste better there.

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  2. Margaret W Avatar
    Margaret W

    Concerning Warren Buffett’s report to shareholders: While the report itself is not all that interesting (no, I really mean it), I do find the various sections of his website interesting. The different businesses that BH owns (from insurance co’s to jewelry to Pampered Chef), as well as his letters to various foundations to which he has committed funds. I also got a laugh at the section where one can go to purchase BH active wear- I really can’t see Buffett in a baseball cap playing with a deck of cards with the BH logo blazoned across them. Go figure.

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  3. Dennis Elam Avatar
    Dennis Elam

    Well could you see WB with his new wife eating at the DQ in Omaha while wearing the ball cap of his minor league team? Would he go for the Hunger Buster or the Country Steak Basket? I have seen a photo of him throwing the first pitch for a minor league game.

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