Dairy Queen hopes that coffee will energize its afternoons.
The Minneapolis-based frozen-treat chain has surged in recent years with menu expansions and more focused marketing. Now Dairy Queen hopes that a line of cold coffee drinks introduced last month will help lure customers in the afternoons, when the market for cold coffee is strongest.
“One of the areas we thought we had some white space in was taking what customers love about afternoon pick-me-up kind of drinks, and combine that with the great taste they know comes from Dairy Queen,” said Barry Westrum, Dairy Queen’s executive vice president of marketing. “We can jump into that space and be successful.”
The chain introduced a selection of iced coffees and frappes last month. Cold coffee represents the biggest growth market in the beverage category. The offerings include vanilla, salted caramel and mocha flavors, while the frappes come in Oreo, Caramel Chip or Midnight Mocha varieties.
“Our brand does very well in the afternoon and evening snack periods,” Westrum said. “We saw an opportunity to strengthen in the afternoon. Coffee peak period is between 2 and 5 in the afternoon.”
Dairy Queen has started a “Hardest Working Happy Hour” to entice customers to buy the drinks. Small iced coffees are priced at $1 during the happy hour, while small frappes and a selection of Orange Julius smoothies are priced at $2.
That continues a strategy of marketing that Dairy Queen is doing to boost business at specific dayparts.
Estimated unit sales rose more than 10 percent at the 4,400-unit chain last year. Part of the reason was Dairy Queen’s successful $5 Buck Lunch promotion, started in 2013, offering a hot dog, burger or chicken fingers, fries, a drink and a sundae for $5.
“We have been successful recently with very targeted daypart promotions,” Westrum said. The $5 Buck Lunch “essentially did two things for Dairy Queen. It told customers that we do have a value offering. And it was very focused: This is a lunch offering. Relative to our competitors, we underperformed at lunch at that time.
“By jolting the customer into acknowledging this is a lunch offer, we have really grown our lunch traffic.”
By using the happy hour promotion, Dairy Queen hopes to have the same success generating traffic in late afternoons that it did in generating traffic during lunch.
It also could help Dairy Queen generate sales after last year’s strong performance, which also included some new products, as well as its popular Jurassic Blizzard — the third bestselling Blizzard of all time.
The coffee drinks, along with the spring introduction of the line of Royal Blizzards, play a major role in the company’s marketing plans this year. And Dairy Queen has high hopes for the coffee drinks.
The company is only offering cold coffee drinks, at least for now.
“We see this as the beginning of an overall beverage platform,” Westrum said. “Our brand is already well developed in shakes and malts and slushes and things like that. It only makes sense for us to build out this platform.”
Coffee is a notoriously difficult market for chains to break into, given its habitual nature and the presence of numerous formidable competitors.
Dairy Queen has worked for years on its strategy. The chain has tested the beverages for two to three years. It uses a special blend developed specifically for these drinks.
“We could really have a taste win here relative to some of the more ubiquitous competitors in the space,” Westrum said. “We worked really hard to get this right. It’s not something we entered capriciously. We wanted to make sure we delivered a superior tasting product.”