There's a change at the top at Dairy Queen -- and we're not talking about the curls on the cones.
John Gainor, 51, was named CEO and president at International Dairy Queen Inc. of Edina on Wednesday, effective July 1. He replaces Chuck Mooty, 47, who held the post for seven years and will remain chairman until the end of this year.
Gainor takes over as the 68-year-old Dairy Queen -- owned since 1998 by Warren Buffett's investment company, Berkshire Hathaway -- tries to reinvent itself as a broader food and dessert restaurant chain. This interview with the new CEO was edited for length.
Q What's your strategy for Dairy Queen?
A We intend to continue with the strategy Chuck Mooty set forth. We're known as a leader in treats, and over the last several years we've also been growing our food business. To do that, we're focusing on restaurants that are food-centric, our Grill & Chill restaurants, and those that are treat-centric, our DQ/Orange Julius Treat Centers.
Q What progress have you made with the new restaurant concept?
A About 13 to 14 percent of our 5,700 restaurants (including 4,670 in the U.S.) will be Grill & Chill by the end of the year. We're now in our second year of testing DQ/Orange Julius Treat Centers.
Q How have you been affected by the lawsuit filed by some franchisees that claimed remodeling to become a DQ Grill & Chill or a DQ/Orange Julius Treat Center would cost them tens of thousands of dollars?
A Obviously, the lawsuit is a distraction. But we are only requiring franchisees to do what is included in their contracts with us. Most major restaurant chains reinvest in new concepts on a regular basis.
Q What's your background?
A I joined Dairy Queen in 2003 to revamp its supply chain. In the old model, we bought food products and resold them to franchisees at a profit. Under the new model, we are weaning ourselves off the profit margin we made on the supply chain and focusing on growing the profitability of franchisees. As they grow, we get more royalties from their sales. Many of the things Dairy Queen is doing, I also did when I was at Burger King in 1992.
Q How have the economy and gas prices affected Dairy Queen?
A They haven't reduced our business, but we are seeing people "trade down" from fine dining to casual dining, and, in our case, trade down from casual dining to quick-service restaurants, where we compete with chains such as McDonald's and Wendy's.
Q What other challenges are you facing?
A The challenge for the whole restaurant industry right now is rising commodity costs -- increases in the cost of grain and corn that have a big impact on the cost of chicken, hamburger and oil. The weather also has a major impact on Dairy Queen's business; cold weather is not good for us. I'm glad to look out the window today at a bright, sunny day.
Q What's your favorite thing to eat at Dairy Queen?
A A vanilla cone and a double cheeseburger.
Visit Share Investor Blog