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How Profitable is a Dairy Queen Franchise? 2022 Costs & Profits

With over 6,800 stores across 20 different countries, Dairy Queen is one the most recognisable ice cream franchise around the globe. For the same reason, it’s also a very popular franchise for franchisees.

But is this a profitable business? Indeed, with a hefty investment cost of $1,404,220, Dairy Queen isn’t the most affordable franchise out there.

So should you invest in a Dairy Queen franchise? In this article we’ll look at how much profits you can make with this franchise and whether this is really a good investment. Let’s find out!

Dairy Queen franchise: key figures

Franchise fee$25,000
Royalty fee4.5%
Marketing fee4.5%
Investment (mid-point)$1,404,220
Average annual sales$1,143,180
Investment to sales ratio0.8x
Investment payback*8.2 years (mediocre)
Minimum net worth$750,000
Minimum liquid capital$400,000
* using 15% net profit margin

🔎 How does Dairy Queen compare vs. other franchises? Check the ranking

What is a Dairy Queen franchise?

Dairy Queen is a leading American chain of soft-serve ice cream and fast food restaurants.

It serves soft-serve ice cream as well as burgers, chicken strips, sandwiches, and fries. On its rich menu are also dessert treats, such as the Dilly Bar and Buster Bar, a variety of ice cream sundaes, and the world-famous Blizzard, a yummy mix of ice cream shakes with candy chunks.

John Fermont McCulloughs and his son Alex founded Dairy Queen in 1940. And the first Dairy Queen restaurant was opened in Joliet, Illinois.

Its franchising journey started in 1944 under the ownership of the parent company, International Dairy Queen Inc., a subsidiary of Berkshire Hathaway. As of today, Dairy Queen has over 6,800 stores in the US, Canada, and 20 other countries.

Dairy Queen franchise: pros and cons

Pros

Some of the benefits of operating a Dairy Queen franchise include the following:

  • Brand popularity: Dairy Queen has established a strong brand following among its customers. Since its founding 80 years ago, the quick-service chain has now over 4,000 stores in the US alone, and more than 6,800 restaurants globally. Franchisees can market their businesses easily and reach a wide customer market.
  • Industry leaders: Dairy Queen is best known for its famous and tasty food offerings. It has the expertise that has led to its success as one of the leading soft-serve treat restaurants. From the famous Blizzard treats—Orange Julius and sundaes—to their ice cream sandwiches, Dairy Queen has a huge following, and customers will identify with its unique delicacies.
  • Wide menu: In addition to its frequently served treats, food, and beverage menu items, Dairy Queen has introduced other foods to its menu to keep up with the competition and changing market trends. This gives customers a great variety to choose from and a reason to come back.
  • Comprehensive training and support: As a new Dairy Queen franchisee, you are assured of comprehensive training and support. Dairy Queen provides guidance in site selection and construction as well as store establishment, management training, and support. You’ll get on-the-job training on how to operate the franchise and become successful.
  • Non-dairy products’ future: In a move to meet customers’ changing tastes and market trends, Dairy Queen has established non-dairy menu items. For instance, the Non-Dairy Dilly Bar includes plant-based, gluten-free, and vegan ice cream. This provides great choices for those looking for healthy eating options and appeals to a diversified customer base.
  • Proven business strategy: Having been in business for more than 80 years, Dairy Queen has an established business model. New franchisees benefit from the best ice cream treat production recipe, operation, and marketing practices, as well as from management ideas that have worked before. This is good for the growth and profitability of newly launched franchises.

Cons

Despite being one of the best-known quick-service soft ice cream franchises, Dairy Queen has its flip side.

  • Qualifications: The Dairy Queen franchise requires new franchisees to have prior experience in franchise management. This discourages interested entrepreneurs who lack multi-unit franchise experience.
  • Unhealthy food items: Some of the menu items offered by Dairy Queen are said to contain a lot of calories. This is unappealing to customers who are looking for healthy eating options.
  • Stiff competition: With many people opting for healthier eating habits and changing trends, Dairy Queen faces stiff competition from other market leaders. Therefore, opening a Dairy Queen franchise may not be as profitable as it used to be.
  • No financial assistance: Generally, the Dairy Queen franchise or its affiliates do not offer in-house financial assistance. Therefore, would-be franchisees will need to get third-party financing or apply for an SBA loan to fund their investments or expansion.
  • No territory preservation: A Dairy Queen franchise agreement does not guarantee exclusive territory protection to its franchisees. This leaves room for internal competition and cannibalism.

How much does it cost to open a Dairy Queen franchise?

You must invest $1,404,220 to start a Dairy Queen franchise.

The investment amount mentioned above is an estimated average. Thus, this average can vary based on your unique situation; for example, if you are in a big city, you will need to pay more than if you are from a small town. The investment ranges between $846,375 and $1,962,065.

In addition to the initial franchise fee of $25,000, the amount you are paying covers all types of expenses needed at the start of your business. It includes some pre-opening or formation costs as well as some operating costs. To be precise,

  • Formation costs include initial training fee, travel & living expenses, building construction, leasehold improvements, building plans, design intent plans & architectural seal, construction consultation services, equipment, training inventory, business licenses, government charges, professional fees, etc. 
  • Operating costs include credit card processing fees, opening inventory, insurance, supplies, and an additional fund to cover the first 3-6 months’ losses.

Here’s a summary of the various costs you should pay:

Type of costInvestment amount
Initial franchise fee$25,000
Formation costs$749,225 – $1,680,315
Operating costs $72,150 – $256,750
Total$846,375 – $1,962,065
Source: FDD 2020

How much can you make with a Dairy Queen franchise?

On average, a Dairy Queen franchise makes $1,143,180 in sales a year. This number is the median sales of Dairy Queen franchised restaurants in 2019.

When it comes to the evolution of revenue over time, sales have been steadily growing over the years ($1,143,180 in 2019 vs. $1,083,879 in 2018).

How profitable is a Dairy Queen franchise?

As per the available information in its latest Franchise Disclosure Document, Dairy Queen has an adjusted EBITDA margin of 29% (as % of sales).

This means that, on average, you would make $331,522 in profits per year as a Dairy Queen franchisee.

Note that this adjusted EBITDA doesn’t include expenses like amortisation, taxes, debt interest and any other expenses not included below.

Profit-and-lossAmount ($)As % of sales
Sales$1,143,180100%
COGS$(285,795)25%*
Labor$(331,522)29%*
Rent$(91,454)7%*
Royalty fees$102,8869% as per FDD
Adjusted EBITDA$331,52229%
* industry average

Is a Dairy Queen franchise a good investment?

When we look at a franchise from a investor (or a franchisee) standpoint to figure out whether this is a good investment, we always look at the investment payback.

In short, the payback (or “payback period”) is the amount of time it takes an investor to recoup her / his initial investment.

So, as a franchisee, it’s the time it takes for your to reimburse to reimburse the original $1,404,220 you have put in (the average investment cost to open a Dairy Queen franchise).

As per our calculations, we found that it takes 8.2 years to recoup your investment. From that perspective, Dairy Queen isn’t necessarily the best franchise investment unfortunately.

Yet, note that this is an average from all the 6,800 stores. As such, it’s possible that your franchise performs better than others. To apply for a Dairy Queen franchise and visualize your financial plan, breakeven, payback and more, download our business plan below.

Download the Dairy Queen business plan and get your franchise funded

Including a 5-year financial plan built with the latest Franchise Disclosure Document numbers

How does it compare vs. other franchises?

FranchiseInvestment ($)Sales ($)S/I RatioPayback (years)Min. net worth ($)Min. liquid capital ($)
Chick-Fil-Ahttps://sharpsheets.io/blog/chick-fil-a-franchise-costs-profits/Chicken1,363,5104,227,4173.12.2--
Dunkin' Donutshttps://sharpsheets.io/blog/dunkin-donuts-franchise-costs-profits/Donuts779,0001,056,5211.44.9500,000250,000
Domino'shttps://sharpsheets.io/blog/dominos-franchise-profits-costs/Pizza398,7251,286,4283.23.9250,00075,000
Krispy Kremehttps://sharpsheets.io/blog/krispy-kreme-franchise-costs-profits/Donuts824,0003,400,0004.11.62,000,000300,000
Little Caesarshttps://sharpsheets.io/blog/little-caesars-franchise-costs-profits/Pizza1,022,850798,1130.88.5350,000150,000
Wingstophttps://sharpsheets.io/blog/wingstop-franchise-costs-profits/Chicken631,6951,460,4592.32.91,200,000600,000
Steak 'n Shakehttps://sharpsheets.io/blog/steak-n-shake-franchise-costs-profits/Burger, Milshakes815,6261,346,3321.74.01,500,000500,000
Crumbl Cookieshttps://sharpsheets.io/blog/crumbl-cookie-franchise-cost-profits/Sweets507,2241,582,0903.12.1300,000150,000
Taco Bellhttps://sharpsheets.io/blog/taco-bell-franchise-costs-profits/Mexican462,4131,650,0003.61.91,500,000750,000
Popeyeshttps://sharpsheets.io/blog/popeyes-franchise-costs-profits/Chicken1,095,7831,444,6171.35.11,000,000500,000
Smoothie Kinghttps://sharpsheets.io/blog/smoothie-king-franchise-costs-profits/Smoothie688,108573,2690.88.0300,000100,000
Jersey Mike'shttps://sharpsheets.io/blog/jersey-mikes-franchise-costs-profits/Sandwich574,3231,220,5862.14.7300,000100,000
Nothing Bundt Cakeshttps://sharpsheets.io/blog/nothing-bundt-cakes-franchise-costs-profits/Sweets538,6501,307,2802.42.7600,000150,000
Jimmy John'shttps://sharpsheets.io/blog/jimmy-johns-franchise-costs-profits/Sandwich513,650874,8451.73.9300,00080,000
Texas Roadhousehttps://sharpsheets.io/blog/texas-roadhouse-franchise-costs-profits/Steakhouse4,209,5002,955,5340.79.5n.a.200,000
Kung Fu Teahttps://sharpsheets.io/blog/kung-fu-tea-franchise-costs-profits/Bubble tea250,125353,2371.44.7n.a.25,000
Wendy’shttps://sharpsheets.io/blog/wendys-franchise-cost-profits/Burger1,374,8331,791,2311.35.11,000,000500,000
Burger Kinghttps://sharpsheets.io/blog/burger-king-franchise-costs-profits/Burger1,242,9501,215,9701.06.81,500,000500,000
Sonic Drive-Inhttps://sharpsheets.io/blog/sonic-drive-in-franchise-costs-profits/Burger1,467,0831,617,0001.16.01,000,000500,000
Panera Breadhttps://sharpsheets.io/blog/panera-bread-franchise-costs-profits/Sandwich2,290,5002,599,4321.15.97,500,0003,000,000
Pizza Huthttps://sharpsheets.io/blog/pizza-hut-franchise-costs-profits/Pizza935,575906,9111.06.9700,000350,000
KFChttps://sharpsheets.io/blog/kfc-franchise-costs-profits/Chicken1,802,0501,567,4740.97.71,500,000750,000
Arby’shttps://sharpsheets.io/blog/arbys-franchise-costs-profits/Sandwich1,184,9751,126,2631.07.01,000,000500,000
Dairy Queenhttps://sharpsheets.io/blog/dairy-queen-franchise-costs-profits/Ice Cream1,404,2201,143,1800.88.2750,000400,000
Jack in the Boxhttps://sharpsheets.io/blog/jack-in-the-box-franchise-costs-profits/Burger2,195,8001,755,5030.812.51,000,000250,000
Papa John’shttps://sharpsheets.io/blog/papa-johns-franchise-costs-profits/Pizza353,6951,101,1273.12.1750,000250,000
Zaxby’shttps://sharpsheets.io/blog/zaxbys-franchise-costs-profits/Chicken534,7502,229,1874.22.41,000,000500,000
Hardee’shttps://sharpsheets.io/blog/hardees-franchise-costs-profits/Burger1,759,0001,147,9750.710.21,000,000300,000
Culver’shttps://sharpsheets.io/blog/culvers-franchise-costs-profits/Burger4,044,5003,051,7620.88.82,000,000350,000
Five Guyshttps://sharpsheets.io/blog/five-guys-franchise-costs-profits/Burger511,2251,203,3662.42.8500,000250,000
Carl’s Jr.https://sharpsheets.io/blog/carls-jr-franchise-costs-profits/Burger1,860,3351,419,5160.88.71,000,000500,000
Baskin-Robbinshttps://sharpsheets.io/blog/baskin-robbins-franchise-costs-profits/Ice Cream465,100316,8150.79.8250,000125,000
IHOPhttps://sharpsheets.io/blog/ihop-franchise-costs-profits/Pancakes2,058,3021,553,3110.88.81,500,000500,000
Applebee’shttps://sharpsheets.io/blog/applebees-franchise-costs-profits/Casual American5,137,9662,356,9650.514.51,000,000500,000
Denny'shttps://sharpsheets.io/blog/dennys-franchise-costs-profits/Casual American3,785,4591,639,5490.415.41,000,000500,000
Papa Murphy'shttps://sharpsheets.io/blog/papa-murphys-franchise-costs-profits/Pizza433,174580,4411.35.0275,000125,000
Auntie Anne'shttps://sharpsheets.io/blog/auntie-annes-franchise-costs-profits/Pretzels229,692343,1351.55.6300,000100,000
Firehouse Subshttps://sharpsheets.io/blog/firehouse-subs-franchise-costs-profits/Sandwich613,186888,3561.44.6350,000100,000
Tropical Smoothie Cafehttps://sharpsheets.io/blog/tropical-smoothie-cafe-franchise-costs-profits/Smoothie430,500961,9692.23.0350,000125,000
Marco’s Pizzahttps://sharpsheets.io/blog/marcos-pizza-franchises-costs-profits/Pizza437,625895,5232.03.3400,000100,000
Cinnabonhttps://sharpsheets.io/blog/cinnabon-franchises-costs-profits/Sweets276,062394,8971.45.8300,000120,000
Cold Stone Creameryhttps://sharpsheets.io/blog/cold-stone-creamery-franchise-costs-profits/Ice Cream310,956417,5881.35.0250,000100,000
Jambahttps://sharpsheets.io/blog/jamba-franchise-costs-profits/Smoothie414,562597,0281.47.7300,000100,000
Church’s Chickenhttps://sharpsheets.io/blog/churchs-texas-chicken-fees-sales-costs/Chicken1,195,1471,395,0881.25.71,000,000300,000
Moe’s Southwest Grillhttps://sharpsheets.io/blog/moes-southwest-grill-franchises-costs-profits/Mexican792,3701,013,3611.35.21,000,000100,000
Tim Hortonshttps://sharpsheets.io/blog/tim-hortons-franchises-costs-profits/Coffee1,242,7501,188,2401.07.0500,000100,000
Checkers & Rally'shttps://sharpsheets.io/blog/checkers-franchises-profits-sales-costs/Burger837,8471,039,7731.25.4750,000250,000
Charleys Philly Steakshttps://sharpsheets.io/blog/charleys-philly-steaks-costs-profits/Sandwich509,806786,2331.54.3500,000100,000
Buffalo Wild Wingshttps://sharpsheets.io/blog/buffalo-wild-wings-costs-profits/Chicken3,546,9002,534,1480.79.31,500,000750,000
Rita's Icehttps://sharpsheets.io/blog/ritas-ice-franchise-costs-profits/Ice Cream215,839248,3401.25.8300,000100,000
A&W Restaurantshttps://sharpsheets.io/blog/aw-restaurants-franchises-costs-profits/Burger786,750851,2121.16.2350,000150,000
Hungry Howie’s Pizzahttps://sharpsheets.io/blog/hungry-howies-pizza-franchise-costs-profits/Pizza419,682806,8991.93.5750,000200,000
Bojangleshttps://sharpsheets.io/blog/bojangles-franchise-costs-profits/Chicken1,658,0001,801,0571.16.11,000,000500,000
McAlister’s Delihttps://sharpsheets.io/blog/mcalister-deli-franchise-costs-profits/Sandwich1,424,9631,865,8611.35.11,000,000500,000
Round Table Pizzahttps://sharpsheets.io/blog/round-table-pizza-franchise-costs-profits/Pizza783,2501,037,8161.35.0500,000200,000
Qdoba Mexican Eatshttps://sharpsheets.io/blog/qdoba-mexican-eats-franchise-costs-profits/Mexican659,250972,9621.54.5
Freddy’shttps://sharpsheets.io/blog/freddys-franchise-costs-profits/Burger1,453,0401,792,9291.25.41,000,000400,000
Taco John’shttps://sharpsheets.io/blog/taco-johns-franchise-costs-profits/Mexican1,119,0001,124,9801.06.61,000,000400,000
Scooter’s Coffeehttps://sharpsheets.io/blog/scooters-coffee-franchise-costs-profits/Coffee1,143,250797,1010.79.6500,000200,000
Einstein Bros. Bagelshttps://sharpsheets.io/blog/einstein-bros-bagels-franchise-costs-profits/Sandwich750,075885,0111.25.71,000,000536,500
Great American Cookieshttps://sharpsheets.io/blog/great-american-cookies-franchise-costs-profits/Sweets385,275452,7711.25.7250,000100,000
Wienerschnitzelhttps://sharpsheets.io/blog/wienerschnitzel-franchise-costs-profits/Hot dogs873,300880,9801.06.6600,000250,000
Blaze Pizzahttps://sharpsheets.io/blog/blaze-pizza-franchise-costs-profits/Pizza865,4501,096,4321.37.9500,000300,000
Wetzel's Pretzelshttps://sharpsheets.io/blog/wetzels-pretzels-franchise-costs-profits/Pretzels377,571748,8572.03.4300,00050,000
Pizza Ranchhttps://sharpsheets.io/blog/pizza-ranch-franchise-costs-profits/Pizza3,268,3001,174,0880.418.61,000,000297,000
Del Tacohttps://sharpsheets.io/blog/del-taco-franchise-costs-profits/Mexican1,406,8501,345,3411.07.02,000,000500,000
Schlotzsky’shttps://sharpsheets.io/blog/schlotzskys-franchises-costs-profits/Healthy, Salads1,102,9331,053,3330.322.21,000,000300,000
Captain D’shttps://sharpsheets.io/blog/captain-ds-franchise-profits-costs/Seafood982,7781,067,8160.419.01,000,000350,000
Biggby Coffeehttps://sharpsheets.io/blog/biggby-coffee-franchise-profits-costs/Coffee310,575648,3520.320.0300,000100,000
Which Wichhttps://sharpsheets.io/blog/which-wich-franchises-profits-costs/Sandwich330,375281,8860.322.2500,000150,000
Marble Slab Creameryhttps://sharpsheets.io/blog/marble-slab-franchises-costs-profits/Ice Cream407,360251,0520.416.7250,000100,000
Mountain Mike's Pizzahttps://sharpsheets.io/blog/mountain-mikes-franchise-profits-costs/Pizza410,900865,7130.320.0300,000100,000
Huddle Househttps://sharpsheets.io/blog/huddle-house-franchise-cost-profits/Diner988,743712,4280.513.3600,000300,000
L&L Hawaiian Barbecuehttps://sharpsheets.io/blog/ll-hawaiian-barbecue-franchises-costs-profits/BBQ334,350612,9210.333.3500,000150,000
Chicken Salad Chickhttps://sharpsheets.io/blog/chicken-salad-chick-franchises-costs-profits/Healthy, Salads651,0001,202,0200.320.0750,000250,000
Golden Chickhttps://sharpsheets.io/blog/golden-chick-franchises-costs-profits/Chicken362,975917,6092.52.62,000,000425,000
Perkinshttps://sharpsheets.io/blog/perkins-franchise-costs-profits/Diner1,922,7281,729,2460.97.41,500,000500,000
Waba Grillhttps://sharpsheets.io/blog/waba-grill-franchises-costs-profits/Teryaki454,000466,5361.06.51,000,000250,000
Bruster’s Ice Creamhttps://sharpsheets.io/blog/brusters-franchises-profits-costs/Ice Cream663,925466,6960.79.5375,000150,000