February 18, 2025 • 19 mins
Dairy Queen’s international development team seeks to expand into countries where they can quickly grow market share, the customers can afford the product, a sizable limited-service market already exists and strong potential franchisee partners operate, Chief Operating Officer Nicolas Boudet tells Bloomberg Intelligence. In this episode of the Choppin’ It Up podcast, Boudet sits down with BI’s senior restaurant and foodservice analyst Michael Halen to discuss the company’s sizable overseas operations and development strategy. He also comments on recoveries in China and the Middle East.
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Speaker 1 (00:13):
Welcome the Chopping It Up. I'm your host, Mike Hamon,
the senior Restaurant and Food Service analyst at Bloomberg Intelligence.
Our research and that of bi's five hundred analysts across
the globe can be found exclusively on the Bloomberg terminal.
Today we're joined by Nicholas Boudet, the Chief Operating Officer
of International for Dairy Queen. Thanks for doing us, Nicholas.
Speaker 2 (00:34):
Thank you, Michael, it's great to be on your podcast.
Speaker 1 (00:38):
Yeah, I've been looking forward to this. You've worked for
some great brands. Please tell me a little bit about
your career journey and what attracted you to Dairy Queen.
Speaker 2 (00:45):
Oh. Yeah, Look, I started in the food space back
in two thousand and eight. I joined Young Brands as
the chief development officer for KFC Pizza, Taco Bell and
Long Good Silvers and ANW Filatin America and the Caribbean.
And then that took me to Taco Bell domestically as
(01:07):
the VP of Development and head a franchising, which later
turned into the Chief Development Officer for Taco Bell, And
after that joined a privately held company called Focus Brands
owned by war Capital as the president of International for
brands such as Cinnabon, Annie and Mos the licensee of
(01:28):
Seattle's Best Coffee company and see others. Then joined Wingstop
based in Dallas, and then from Wingstop, I have the
pleasure to have joined Dairy Queen back in September twenty
twenty two. So that's the background in a nutshell. And
prior to joining the food space, I was in the
hospitality world, working with brands such as A Club met
(01:52):
but also star with hotels and resorts. So that's my
background in a nutshell.
Speaker 1 (01:57):
Michael, what was it about Dairy Queen that drew.
Speaker 2 (02:00):
Yeah, Darry Queen is an iconic brand. It's been in
the business for you know this year, for eighty five years,
so there's a huge raw being part of such a
se brand. But also the fact that Dairy Queen is
very well and solid established biness around the world. So
those are the I would say, the prime primary driver
as to why I joined the company.
Speaker 1 (02:20):
Yeah, I was surprised to find out how big Dairy
Queen is overseas, how big is the international footprint and
how many countries do you operate in.
Speaker 2 (02:30):
Yeah, now your surprise was like mine as well before
I join. So look dairy Queen is exclosed to a
six point eight billion dollar brand measured by system sales.
We have close tour's not more than seven seven hundred
stores operating in twenty one market, twenty of which are international.
So we have performed exceptionally well globally, you know, during
(02:53):
the last years, during and since COVID. In fact, our
market chair outside of the US has consistently growth as
we have on an average grown our net international football
close to six percent year of a year over the
last five years. So you know what's remarking about about
Derrick Quein. It's his legacy as I was saying before,
but also the logevity of the brand. As I said,
(03:15):
we are about to turn a massive milestone in June
this year or eighty five year, which is pretty impressive.
But going back to international, so look, we have been
doing business internationally over the last seventy two years. In fact,
we first launched out out of the US in Canada
(03:35):
in nineteen fifty three. So there's a lot there's a
lot of market and institutional knowledge that the brand has
been leveraging and continue to leverage across the globe. Our
second international market, which is still operating today is Panama
and Panama we've been in operation there for the last
sixty six years, and then Mexico for fifty four years,
(03:56):
so a really strong presence in an actually and then
very early owned as a pioneer. The other thing, which
I know we're going to talk about a little bit more,
is our China business. It's been a you know, uh
impressive that we've been there close to thirty three years
and we Insact studied in nineteen ninety two, which is
(04:17):
slightly more than six years after Kiffy started there as well,
So pretty impressive footprint. Yeah, very very impressive.
Speaker 1 (04:27):
That's a it's been a long time to be operating internationally.
Is Dry Queen one hundred percent franchise?
Speaker 2 (04:35):
Overseas it is insict tiah. Our international business is hundred
percent franchise. The only caveat to that is that we
have two corporate stores there are based in Minneapolis next
to our quarters. But yeah, overall, the the Insact ninety
nine point nine percent is a franchise.
Speaker 1 (04:53):
Gotcha. So internationally, does the brand have different store layouts
based on you know, the countries that they operate in
and the particular sites that they occupy.
Speaker 2 (05:05):
Yeah, that's a good question. So look from a brand
recognition standpoint, you will unmistakably recognize our iconics world logo
wherever you go, and as well as our as our
you know, key product, which is our self serve. Either.
What we do is we adapt our restaurant design to
the marketplace. And we do this because we want to
keep the brand fresh and we want to keep the
(05:27):
brand relevant to the consumer and in the marketplace that
we find ourselves in. And I think China is a
great example of that where we flex more there in
terms of innovative and cuttage, cutting edge design to make
sure that our brand is top of mind with our consumers,
who uh we do. We give a lot of attention
and credit to brand that stay current with with the trends.
(05:48):
So we have a slightly different expression outside of the
country when it comes to design but also layout. So
another distation that we do as well is that we
also to be more urban in terms of the development
strategy versus the US, which which makes our asset base
a little bit more of a destination versus what you
(06:10):
would find to be more of a functional suburban type
of design. So and then a good example of that
is our adaptation of our newly launched the air Queen
Blizzard and Burgers in China, which is our version of
Derrek Derek Quin Grill and Shield in the US. A
local partner there, one big, exactly one big in choosing
a location in Shanghai that is the equivalent of or
Times Square in New York with a beautiful brand building assets.
(06:33):
And I also made a big statement about the brand itself,
its origin, the minor maniacal focus on our product quality,
and frankly the overall placeableness of the brand with fun
and color, colorful seating package and urals. So yeah, so
we do differ, but you will, as I said at
the beginning, uh not be confused to recognize there Queen
(06:57):
wherever you go?
Speaker 1 (06:58):
Got it? What percentage of your international stores offer food?
Speaker 2 (07:03):
So almost all of our state outside of the US
is uh is and Canada Street, what I call treat
is our you know, soft served venu and we have
a few exceptions with few markets. As I say, Canada
is clearly a grevalential market as well as Street, but
also Bahrain, Catar and Kuwait and now China, and I'll
(07:26):
expand more on China specifically which is a pretty recent
news as well as far as the restaurant launch is concerned.
So you know, depending on the provinces of the market
that we're in, the mix between treat and food very
but directionally is well bounced between between the two. In China,
for example, of Blizzard and Burger, which is only based
on three units so far, and we have, you know,
(07:49):
fifty five percent food forty five percent treat.
Speaker 1 (07:53):
Got it. What are your largest international markets and which
markets are growing the fastest for you?
Speaker 2 (07:59):
Yeah? Yeah, So largest by far is China is close
to seventeen NDRED stores as of January, and it's also
one of the I would say the fact that growing
market in some ways, we do derive a lot of
growth from that market specifically, and not only that, but
also consistently over the last few years that I've been
(08:19):
with the company. Is still a pretty impressive growth specifically
based on the side, but when you look at the macros,
obviously you could expect significant growth from that market. It
tel great.
Speaker 1 (08:32):
Are you opening any new markets this year?
Speaker 2 (08:35):
So yes, potentially yes, And I say potentially because a
lot of a lot of injuries on supply chain and
as you know, there are a lot of movements these
days around trade, and we're carefully monitoring the you know,
the US China relationship, which which obviously influenced us and
frankly see for our ability extend beyond mainline China, such
(08:57):
as you know, places like Hong Kong and Macau's so
those type of destination and market would be possible for
us to enter in the very near future. But I
can tell you that we've made significant progress also an
our new market entry pipeline, and we have set sits
on different markets such as you know India as an
example of Saudi on which I'm going to go there
(09:18):
and this weekend, but also UK, Frances, Spain and a
few others in between. So a pretty robust pipeline in
an act for the next eight years.
Speaker 1 (09:27):
Great, can you walk me through the process of deciding
which new market you're going to open next?
Speaker 2 (09:32):
Yes, our process. Look, it really helps us turn our
attention to markets where a few things where we believe
we can grow the market share relatively rapidly, which implies
a sizeable urban concentration, So we do pay attention to
the organization of the market were getting get into. The
second one is where there's a decent purchasing power parity
(09:52):
from a consumer based in other words, can the consumerl
for us? And then the third one is there a
sizeable intermited service rest market, So do we have in
some ways in other words, do we have to educate
the market or the consumers or not? And ultimately the
ability to find like minded franchises what we we see
(10:14):
as potentially good brand builders, good operators, good developers, but
also well capitalized. So when you run through these filters
and from seventy countries that we're currently not in, the
fuel eventually gives us, you know, a sixteen to twenty
market which will racket stack depending on the attractiveness, the size,
(10:34):
and whether they are concentric to an existing market or not,
which is a big consideration for us on the supply
chain standpoint, but also finding whether or not there are
consumer similarities perspective which will be probably easier to get into.
So without disclosing too much, I think you know I
aliated earlier, but western Southern Europe our priority for US,
(10:55):
North Asia as well, Central Asia, the GCC yet larger,
the greater GO countries and our few markets to South
America are also coloring our attention, but I would say
much further down the pipeline.
Speaker 1 (11:06):
Yeah, very well thought out a strategy which I love
to hear. Yeah, I love to hear. It's not just
accepting whoever whoever wants.
Speaker 2 (11:18):
No, no, no, no, no no. We try to stay
away from that and another look. I mean I personally,
you know, have been exposed to that type of a
development strategy, which you know, it's great when you sign
a deal, but probably painful to support and grow in scale.
So no, we're very disciplined when it comes to deciding
where and when and with w we are deciding to
(11:39):
put Dere a queen on any given.
Speaker 1 (11:40):
Market, it's fantastic. I'd imagine some markets like the GCC,
where it's hot pretty much year round, would help ice
cream sales.
Speaker 2 (11:49):
Now, yeah, I mean you the common wisdom is you
would think that weather influences ice cream consumption as all,
and it does to something type, but not as much
as one would think. So weather does play a role,
but I think it's really about, you know, the the
affordability of the product, the brand, uh you know, uh,
(12:11):
you know, relative strength and anticipation from the consumer standpoint.
So yeah, there's a plenty of other factors which I
think are probably quite significant. Over the weather, it's help,
but yeah, it does play a role.
Speaker 1 (12:26):
Nonetheless, Uh do you have any well known franchised partners
that are operating maybe other brands, other US brand we do.
Speaker 2 (12:34):
I don't know if they're well known, but they're pretty
large and sophisticated and extremely well capitalized. And above all,
and this is an important poet for US, is that
they are extremely dedicated to the brand and and what
I call them brand builder is not just necessarily by
building restaurant, but but contributing to make the brand what
it is today. So a couple of a couple of
(12:55):
franchise group comes into mind. One is CFB CHINAUS with
business in In in China, is all master franchise in
uh In, a part of China and backed by a
large private withion called Fountain Investors. Very good people, super
long term, perspective minded individuals and very very a real
(13:19):
pleasure to work with. The second one, which is probably
known uh in In in Southeast Asia and and pretty
much across the world because they're well diversified from a
from a franchise group standpoint. It's the minor group based
out of Talent also a very large publicly traded company,
well diversified in a way where they they do have
(13:41):
multiple other brands. They do own some brands, but also
not just in the food space, and as well in
the hospitality. They've just recently acquired actually at the very
onset of Covid, a huge hotel chain called n H
and so, yeah, very very sophisticated, super super dedicated to
the brand and insactly being with us for a very
(14:02):
long time. So we have very privileged and a good
relationship with with those two.
Speaker 1 (14:08):
Yeah, it's so important to have good franchise partners.
Speaker 2 (14:11):
Absolutely.
Speaker 1 (14:12):
How do your sales shake out based on time? In
the time of day?
Speaker 2 (14:17):
Yeah, so look from a treat perspective, we do most
of our trade in the afternoon, uh, in the evening
and late evening our restaurants, you know, except those who
are doing breakfast. I mean, we have a quarter of
ourselves or at lunch, you know, in the afternoon and
and and and then in the evening. The any of
the balance between the two uh, the to the to,
(14:39):
these two day parts are split evenly. So yeah, so
those are those are you know, day parts. The way
they are being distributed.
Speaker 1 (14:48):
And you mentioned late evening. You're open pretty late in
some in some markets.
Speaker 2 (14:52):
In some instances, yeah, sometimes we're actually nearing midnight or
in some instances, depending on the location, you know, you
could actually push.
Speaker 1 (14:59):
Up to to am Okay, col, I'm not sure you know.
The Dairy Queen I frequent is at the Jersey Shore.
I'm not sure what time they're I don't know sure
what time they're open, so I'm trying not to eat
ice cream too late.
Speaker 2 (15:13):
So I'm good to you.
Speaker 1 (15:15):
But yeah, we visit every summer. Man, It's great. My
mom loves Dairy Queen. So does your menu vary by country?
Speaker 2 (15:22):
Yes and no. It is consistently built around our iconic
suff serve and our cold and a blizzard and our
cakes on the street side, but it does take on
a localized approach when it comes to flavors and combination
of flavors or even Brent tie in with regional conflictionary brands.
So from a food standpoint, our categories are very similar,
(15:43):
but some of the bills, as an example of our burgers,
are slightly different. So yeah, but I would say it
does vary from a flavor standpoint.
Speaker 1 (15:54):
And you know, in the fourth quarter, you know, we
had expected better results in the Middle East as we
were lapping the start of the Israel Maas war. But
I think, you know, we were kind of like pleasantly surprised,
I guess at the rate of improvement for some of
the companies we cover, McDonald's being one. Can you talk
(16:15):
a little bit about how sales.
Speaker 2 (16:17):
Are doing in the Middle East, Well, you know, ourselves
have been pretty consistent up until you know the vess
that you mentioned the October seventh last year, and then,
like many other brands, were affected by the overall region turnmoil.
But we still the course and frankly ourselves have been
growing as well as our footprint. In fact, as I
was saying earlier, I think I'm flying to Saudi to
this week to to meet potential interesting parties, which is
(16:40):
pretty exciting. So we do have a lot of hope
and a lot of expectation in that region, and I
hope to see more dairy Queen good stuff.
Speaker 1 (16:48):
And are you seeing any improvement in China?
Speaker 2 (16:51):
So the market, you know, has had its challenges from
a domestic demand standpoint. We fell the consumer at large
less optimistic over the last few months of the last
twelve months I would say in general, which was you know,
somehow reflected in their in their spending. So we didn't
ever react by by leaning heavily on our value offering
to keep our transactions flowing and then growing. But so yeah,
(17:15):
so it's it's okay. I think the consumer overall is
expected to be resilient and I'm hopeful that they will
feel better about their country economic prospect. I know, franchise
in the and bankers are so so we are too
as well.
Speaker 1 (17:29):
All right, good stuff, So what's your go to water?
Speaker 2 (17:32):
Well, I really like the mango sticky rice, which is
usually coming from Thailand, but it's been adopted in China. Uh,
the mango STICKI rise is a pretty interesting uh you
know flavor which I really I really like color wise
as well. There's one fault not for the faint arts,
called the Durian, which is Southeast Asian fruit, which has
(17:54):
a very uh I would say, special taste and smell,
but it's more than a quiet taste. But I think
it's worth trying.
Speaker 1 (18:04):
I have very cool you know, in the States. I'm
more of a blizzard kind of guy that you know.
I'll change the flavors based on my mood. But I
love mango and sticky rice. Man, there's a very good
mom and pop Thai restaurant. Oh yeah, and they have
fantastic mango and sticky rice. I'm there when mango's in season.
I'm there more frequently for sure.
Speaker 2 (18:26):
Yeah. It's a big, big fruit in the in that
part of the world, and it's usually seasonal fruits. So
when when the season is up, I mean, you know,
we go, we go again bus stars.
Speaker 1 (18:37):
Before very good. All right, thanks again, Nick, this is awesome.
Where can our listeners go find their closest to us,
Dairy Queen and what social media channel should we be
following the chain on?
Speaker 2 (18:49):
Well, derekqueen dot com to begin with, but also or
any any social media such as Instagram, Facebook, and and
the and the likes. But yeah, I would say check
us out. We'd love to have you o our restaurants.
Speaker 1 (19:02):
Good stuff. And I want to thank the audience for
tuning in. If you like the discussion, please leave us
a review. It'll help us expand the podcast reach. Check
back soon for another episode of Chopping It Up.
Welcome the Chopping It Up. I'm your host, Mike Hamon,
the senior Restaurant and Food Service analyst at Bloomberg Intelligence.
Our research and that of bi's five hundred analysts across
the globe can be found exclusively on the Bloomberg terminal.
Today we're joined by Nicholas Boudet, the Chief Operating Officer
of International for Dairy Queen. Thanks for doing us, Nicholas.
Speaker 2 (00:34):
Thank you, Michael, it's great to be on your podcast.
Speaker 1 (00:38):
Yeah, I've been looking forward to this. You've worked for
some great brands. Please tell me a little bit about
your career journey and what attracted you to Dairy Queen.
Speaker 2 (00:45):
Oh. Yeah, Look, I started in the food space back
in two thousand and eight. I joined Young Brands as
the chief development officer for KFC Pizza, Taco Bell and
Long Good Silvers and ANW Filatin America and the Caribbean.
And then that took me to Taco Bell domestically as
(01:07):
the VP of Development and head a franchising, which later
turned into the Chief Development Officer for Taco Bell, And
after that joined a privately held company called Focus Brands
owned by war Capital as the president of International for
brands such as Cinnabon, Annie and Mos the licensee of
(01:28):
Seattle's Best Coffee company and see others. Then joined Wingstop
based in Dallas, and then from Wingstop, I have the
pleasure to have joined Dairy Queen back in September twenty
twenty two. So that's the background in a nutshell. And
prior to joining the food space, I was in the
hospitality world, working with brands such as A Club met
(01:52):
but also star with hotels and resorts. So that's my
background in a nutshell.
Speaker 1 (01:57):
Michael, what was it about Dairy Queen that drew.
Speaker 2 (02:00):
Yeah, Darry Queen is an iconic brand. It's been in
the business for you know this year, for eighty five years,
so there's a huge raw being part of such a
se brand. But also the fact that Dairy Queen is
very well and solid established biness around the world. So
those are the I would say, the prime primary driver
as to why I joined the company.
Speaker 1 (02:20):
Yeah, I was surprised to find out how big Dairy
Queen is overseas, how big is the international footprint and
how many countries do you operate in.
Speaker 2 (02:30):
Yeah, now your surprise was like mine as well before
I join. So look dairy Queen is exclosed to a
six point eight billion dollar brand measured by system sales.
We have close tour's not more than seven seven hundred
stores operating in twenty one market, twenty of which are international.
So we have performed exceptionally well globally, you know, during
(02:53):
the last years, during and since COVID. In fact, our
market chair outside of the US has consistently growth as
we have on an average grown our net international football
close to six percent year of a year over the
last five years. So you know what's remarking about about
Derrick Quein. It's his legacy as I was saying before,
but also the logevity of the brand. As I said,
(03:15):
we are about to turn a massive milestone in June
this year or eighty five year, which is pretty impressive.
But going back to international, so look, we have been
doing business internationally over the last seventy two years. In fact,
we first launched out out of the US in Canada
(03:35):
in nineteen fifty three. So there's a lot there's a
lot of market and institutional knowledge that the brand has
been leveraging and continue to leverage across the globe. Our
second international market, which is still operating today is Panama
and Panama we've been in operation there for the last
sixty six years, and then Mexico for fifty four years,
(03:56):
so a really strong presence in an actually and then
very early owned as a pioneer. The other thing, which
I know we're going to talk about a little bit more,
is our China business. It's been a you know, uh
impressive that we've been there close to thirty three years
and we Insact studied in nineteen ninety two, which is
(04:17):
slightly more than six years after Kiffy started there as well,
So pretty impressive footprint. Yeah, very very impressive.
Speaker 1 (04:27):
That's a it's been a long time to be operating internationally.
Is Dry Queen one hundred percent franchise?
Speaker 2 (04:35):
Overseas it is insict tiah. Our international business is hundred
percent franchise. The only caveat to that is that we
have two corporate stores there are based in Minneapolis next
to our quarters. But yeah, overall, the the Insact ninety
nine point nine percent is a franchise.
Speaker 1 (04:53):
Gotcha. So internationally, does the brand have different store layouts
based on you know, the countries that they operate in
and the particular sites that they occupy.
Speaker 2 (05:05):
Yeah, that's a good question. So look from a brand
recognition standpoint, you will unmistakably recognize our iconics world logo
wherever you go, and as well as our as our
you know, key product, which is our self serve. Either.
What we do is we adapt our restaurant design to
the marketplace. And we do this because we want to
keep the brand fresh and we want to keep the
(05:27):
brand relevant to the consumer and in the marketplace that
we find ourselves in. And I think China is a
great example of that where we flex more there in
terms of innovative and cuttage, cutting edge design to make
sure that our brand is top of mind with our consumers,
who uh we do. We give a lot of attention
and credit to brand that stay current with with the trends.
(05:48):
So we have a slightly different expression outside of the
country when it comes to design but also layout. So
another distation that we do as well is that we
also to be more urban in terms of the development
strategy versus the US, which which makes our asset base
a little bit more of a destination versus what you
(06:10):
would find to be more of a functional suburban type
of design. So and then a good example of that
is our adaptation of our newly launched the air Queen
Blizzard and Burgers in China, which is our version of
Derrek Derek Quin Grill and Shield in the US. A
local partner there, one big, exactly one big in choosing
a location in Shanghai that is the equivalent of or
Times Square in New York with a beautiful brand building assets.
(06:33):
And I also made a big statement about the brand itself,
its origin, the minor maniacal focus on our product quality,
and frankly the overall placeableness of the brand with fun
and color, colorful seating package and urals. So yeah, so
we do differ, but you will, as I said at
the beginning, uh not be confused to recognize there Queen
(06:57):
wherever you go?
Speaker 1 (06:58):
Got it? What percentage of your international stores offer food?
Speaker 2 (07:03):
So almost all of our state outside of the US
is uh is and Canada Street, what I call treat
is our you know, soft served venu and we have
a few exceptions with few markets. As I say, Canada
is clearly a grevalential market as well as Street, but
also Bahrain, Catar and Kuwait and now China, and I'll
(07:26):
expand more on China specifically which is a pretty recent
news as well as far as the restaurant launch is concerned.
So you know, depending on the provinces of the market
that we're in, the mix between treat and food very
but directionally is well bounced between between the two. In China,
for example, of Blizzard and Burger, which is only based
on three units so far, and we have, you know,
(07:49):
fifty five percent food forty five percent treat.
Speaker 1 (07:53):
Got it. What are your largest international markets and which
markets are growing the fastest for you?
Speaker 2 (07:59):
Yeah? Yeah, So largest by far is China is close
to seventeen NDRED stores as of January, and it's also
one of the I would say the fact that growing
market in some ways, we do derive a lot of
growth from that market specifically, and not only that, but
also consistently over the last few years that I've been
(08:19):
with the company. Is still a pretty impressive growth specifically
based on the side, but when you look at the macros,
obviously you could expect significant growth from that market. It
tel great.
Speaker 1 (08:32):
Are you opening any new markets this year?
Speaker 2 (08:35):
So yes, potentially yes, And I say potentially because a
lot of a lot of injuries on supply chain and
as you know, there are a lot of movements these
days around trade, and we're carefully monitoring the you know,
the US China relationship, which which obviously influenced us and
frankly see for our ability extend beyond mainline China, such
(08:57):
as you know, places like Hong Kong and Macau's so
those type of destination and market would be possible for
us to enter in the very near future. But I
can tell you that we've made significant progress also an
our new market entry pipeline, and we have set sits
on different markets such as you know India as an
example of Saudi on which I'm going to go there
(09:18):
and this weekend, but also UK, Frances, Spain and a
few others in between. So a pretty robust pipeline in
an act for the next eight years.
Speaker 1 (09:27):
Great, can you walk me through the process of deciding
which new market you're going to open next?
Speaker 2 (09:32):
Yes, our process. Look, it really helps us turn our
attention to markets where a few things where we believe
we can grow the market share relatively rapidly, which implies
a sizeable urban concentration, So we do pay attention to
the organization of the market were getting get into. The
second one is where there's a decent purchasing power parity
(09:52):
from a consumer based in other words, can the consumerl
for us? And then the third one is there a
sizeable intermited service rest market, So do we have in
some ways in other words, do we have to educate
the market or the consumers or not? And ultimately the
ability to find like minded franchises what we we see
(10:14):
as potentially good brand builders, good operators, good developers, but
also well capitalized. So when you run through these filters
and from seventy countries that we're currently not in, the
fuel eventually gives us, you know, a sixteen to twenty
market which will racket stack depending on the attractiveness, the size,
(10:34):
and whether they are concentric to an existing market or not,
which is a big consideration for us on the supply
chain standpoint, but also finding whether or not there are
consumer similarities perspective which will be probably easier to get into.
So without disclosing too much, I think you know I
aliated earlier, but western Southern Europe our priority for US,
(10:55):
North Asia as well, Central Asia, the GCC yet larger,
the greater GO countries and our few markets to South
America are also coloring our attention, but I would say
much further down the pipeline.
Speaker 1 (11:06):
Yeah, very well thought out a strategy which I love
to hear. Yeah, I love to hear. It's not just
accepting whoever whoever wants.
Speaker 2 (11:18):
No, no, no, no, no no. We try to stay
away from that and another look. I mean I personally,
you know, have been exposed to that type of a
development strategy, which you know, it's great when you sign
a deal, but probably painful to support and grow in scale.
So no, we're very disciplined when it comes to deciding
where and when and with w we are deciding to
(11:39):
put Dere a queen on any given.
Speaker 1 (11:40):
Market, it's fantastic. I'd imagine some markets like the GCC,
where it's hot pretty much year round, would help ice
cream sales.
Speaker 2 (11:49):
Now, yeah, I mean you the common wisdom is you
would think that weather influences ice cream consumption as all,
and it does to something type, but not as much
as one would think. So weather does play a role,
but I think it's really about, you know, the the
affordability of the product, the brand, uh you know, uh,
(12:11):
you know, relative strength and anticipation from the consumer standpoint.
So yeah, there's a plenty of other factors which I
think are probably quite significant. Over the weather, it's help,
but yeah, it does play a role.
Speaker 1 (12:26):
Nonetheless, Uh do you have any well known franchised partners
that are operating maybe other brands, other US brand we do.
Speaker 2 (12:34):
I don't know if they're well known, but they're pretty
large and sophisticated and extremely well capitalized. And above all,
and this is an important poet for US, is that
they are extremely dedicated to the brand and and what
I call them brand builder is not just necessarily by
building restaurant, but but contributing to make the brand what
it is today. So a couple of a couple of
(12:55):
franchise group comes into mind. One is CFB CHINAUS with
business in In in China, is all master franchise in
uh In, a part of China and backed by a
large private withion called Fountain Investors. Very good people, super
long term, perspective minded individuals and very very a real
(13:19):
pleasure to work with. The second one, which is probably
known uh in In in Southeast Asia and and pretty
much across the world because they're well diversified from a
from a franchise group standpoint. It's the minor group based
out of Talent also a very large publicly traded company,
well diversified in a way where they they do have
(13:41):
multiple other brands. They do own some brands, but also
not just in the food space, and as well in
the hospitality. They've just recently acquired actually at the very
onset of Covid, a huge hotel chain called n H
and so, yeah, very very sophisticated, super super dedicated to
the brand and insactly being with us for a very
(14:02):
long time. So we have very privileged and a good
relationship with with those two.
Speaker 1 (14:08):
Yeah, it's so important to have good franchise partners.
Speaker 2 (14:11):
Absolutely.
Speaker 1 (14:12):
How do your sales shake out based on time? In
the time of day?
Speaker 2 (14:17):
Yeah, so look from a treat perspective, we do most
of our trade in the afternoon, uh, in the evening
and late evening our restaurants, you know, except those who
are doing breakfast. I mean, we have a quarter of
ourselves or at lunch, you know, in the afternoon and
and and and then in the evening. The any of
the balance between the two uh, the to the to,
(14:39):
these two day parts are split evenly. So yeah, so
those are those are you know, day parts. The way
they are being distributed.
Speaker 1 (14:48):
And you mentioned late evening. You're open pretty late in
some in some markets.
Speaker 2 (14:52):
In some instances, yeah, sometimes we're actually nearing midnight or
in some instances, depending on the location, you know, you
could actually push.
Speaker 1 (14:59):
Up to to am Okay, col, I'm not sure you know.
The Dairy Queen I frequent is at the Jersey Shore.
I'm not sure what time they're I don't know sure
what time they're open, so I'm trying not to eat
ice cream too late.
Speaker 2 (15:13):
So I'm good to you.
Speaker 1 (15:15):
But yeah, we visit every summer. Man, It's great. My
mom loves Dairy Queen. So does your menu vary by country?
Speaker 2 (15:22):
Yes and no. It is consistently built around our iconic
suff serve and our cold and a blizzard and our
cakes on the street side, but it does take on
a localized approach when it comes to flavors and combination
of flavors or even Brent tie in with regional conflictionary brands.
So from a food standpoint, our categories are very similar,
(15:43):
but some of the bills, as an example of our burgers,
are slightly different. So yeah, but I would say it
does vary from a flavor standpoint.
Speaker 1 (15:54):
And you know, in the fourth quarter, you know, we
had expected better results in the Middle East as we
were lapping the start of the Israel Maas war. But
I think, you know, we were kind of like pleasantly surprised,
I guess at the rate of improvement for some of
the companies we cover, McDonald's being one. Can you talk
(16:15):
a little bit about how sales.
Speaker 2 (16:17):
Are doing in the Middle East, Well, you know, ourselves
have been pretty consistent up until you know the vess
that you mentioned the October seventh last year, and then,
like many other brands, were affected by the overall region turnmoil.
But we still the course and frankly ourselves have been
growing as well as our footprint. In fact, as I
was saying earlier, I think I'm flying to Saudi to
this week to to meet potential interesting parties, which is
(16:40):
pretty exciting. So we do have a lot of hope
and a lot of expectation in that region, and I
hope to see more dairy Queen good stuff.
Speaker 1 (16:48):
And are you seeing any improvement in China?
Speaker 2 (16:51):
So the market, you know, has had its challenges from
a domestic demand standpoint. We fell the consumer at large
less optimistic over the last few months of the last
twelve months I would say in general, which was you know,
somehow reflected in their in their spending. So we didn't
ever react by by leaning heavily on our value offering
to keep our transactions flowing and then growing. But so yeah,
(17:15):
so it's it's okay. I think the consumer overall is
expected to be resilient and I'm hopeful that they will
feel better about their country economic prospect. I know, franchise
in the and bankers are so so we are too
as well.
Speaker 1 (17:29):
All right, good stuff, So what's your go to water?
Speaker 2 (17:32):
Well, I really like the mango sticky rice, which is
usually coming from Thailand, but it's been adopted in China. Uh,
the mango STICKI rise is a pretty interesting uh you
know flavor which I really I really like color wise
as well. There's one fault not for the faint arts,
called the Durian, which is Southeast Asian fruit, which has
(17:54):
a very uh I would say, special taste and smell,
but it's more than a quiet taste. But I think
it's worth trying.
Speaker 1 (18:04):
I have very cool you know, in the States. I'm
more of a blizzard kind of guy that you know.
I'll change the flavors based on my mood. But I
love mango and sticky rice. Man, there's a very good
mom and pop Thai restaurant. Oh yeah, and they have
fantastic mango and sticky rice. I'm there when mango's in season.
I'm there more frequently for sure.
Speaker 2 (18:26):
Yeah. It's a big, big fruit in the in that
part of the world, and it's usually seasonal fruits. So
when when the season is up, I mean, you know,
we go, we go again bus stars.
Speaker 1 (18:37):
Before very good. All right, thanks again, Nick, this is awesome.
Where can our listeners go find their closest to us,
Dairy Queen and what social media channel should we be
following the chain on?
Speaker 2 (18:49):
Well, derekqueen dot com to begin with, but also or
any any social media such as Instagram, Facebook, and and
the and the likes. But yeah, I would say check
us out. We'd love to have you o our restaurants.
Speaker 1 (19:02):
Good stuff. And I want to thank the audience for
tuning in. If you like the discussion, please leave us
a review. It'll help us expand the podcast reach. Check
back soon for another episode of Chopping It Up.
Host
Michael Halen
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