Cathie Anderson

Dairy Queen, Winmark plan expansion in Sacramento area

The DQ Grill & Chill restaurants offer sandwiches along with the burgers, hot dogs and dairy treats that elicit nostalgic memories for many customers.
The DQ Grill & Chill restaurants offer sandwiches along with the burgers, hot dogs and dairy treats that elicit nostalgic memories for many customers. Courtesy Photo

American Dairy Queen Co. is looking for the right real estate and well-capitalized individuals to help it significantly expand its number of restaurants throughout the Sacramento region.

Jim Kerr, who oversees franchisee development for the fast-food chain, told me that he has visited the area frequently over the past year or so. The company already has one franchisee, he said, who is looking to expand into the capital area.

“We are really, at this time, trying to work with the local brokers to get high-quality sites in some of the best areas to get one of our franchisees kicked off in the right direction,” Kerr said. “We’re still recruiting additional operators for the region.”

The company, owned by Warren Buffett’s Berkshire Hathaway, has been encouraging franchisees to update their restaurants worldwide to a new design known as the DQ Grill & Chill. These restaurants expand the menu with sandwiches while maintaining the dairy treats that elicit nostalgic memories for so many customers.

Dairy Queen is one of two Minnesota-based franchisors attempting to find real estate and franchisees in the Sacramento region. Winmark, the company behind such secondhand stores as Plato’s Closet, Play It Again Sports, Once Upon A Child, Music Go Round and Style Encore, is holding an informational session for franchisees at the Courtyard Marriott Cal Expo, 1782 Tribute Road, from 7 to 9 p.m. April 20.

Winmark had tried an expansion in the Sacramento region back in 2011, but didn’t find the right real estate and franchisees at that time, said spokeswoman Toni Lewin. Winmark does have five local stores, the first of which was a Once Upon A Child shop in Roseville in 1995.

The company said it has room to open four of its Plato’s Closets, four Style Encores, four Play It Again Sports outlets and three Music Go Round locations. Depending on the brand, it will cost $250,000 or $350,000 to open one of the stores.

Dairy Queen’s Kerr has covered a lot of miles, checking out potential real estate in Yuba City, Lincoln, Folsom, Roseville, Rocklin and Sacramento. Kerr and his team study the amount of activity around schools, churches, hospitals and other places of business because the chain gets multiple visits from customers around those types of areas.

“In the Sacramento DMA, we are looking at over the longer term (adding) about 50-plus locations,” Kerr said, referring to the designated marketing area that extends south to Modesto. “Currently we have seven right in Sacramento. We have 15 in the DMA.

“We’ve done a lot of planning to figure out what we needed to do to grow at that kind of pace, and we do have focus areas, but more importantly, we have … a high-quality operator with capital and operations experience.”

In addition to buying the land, franchisees will pay between $1.08 million to $1.83 million to build and outfit a restaurant, Kerr said. They also pay royalties of 4 percent and an advertising promotion rate of 5 percent. Kerr said potential Dairy Queen franchise operators should have $400,000 in liquid assets and a net worth of about $2 million to open one store.

Worldwide, the company has 2,500 franchisees operating more than 6,700 locations. In the Lone Star State, where Dairy Queen’s logo is known as “the Texas stop sign,” the company has more than 600 restaurants. In California, Kerr said, there are only 98, so the company sees big potential for long-term growth.

“According to the latest stats I have, which may be a little out of date, there’s over 1,300 McDonald’s in California,” Kerr said. “There’s just under 700 Jack in the Box (restaurants). There’s 671 Burger Kings.”

Cathie Anderson: 916-321-1193, @CathieA_SacBee