As CEO of International Dairy Queen since 2007, and its supply chain officer before that, John Gainor has led the revival of the 75-year-old brand. He has helped move Edina, Minn.-based Dairy Queen beyond its famous frozen treats to a full-fledged quick-service concept under the Grill & Chill brand, and beyond the borders of the U.S. and Canada to 27 countries abroad — 687 units in China alone.
With new and remodeled locations, a “$5 Buck Lunch,” and new marketing touting “Fan Food, Not Fast Food,” Dairy Queen is not just evolving, it’s reinventing. The efforts have led to a return to growth in its home base of the United States, both in unit counts and sales. In 2014, domestic system sales rose 7.8 percent, placing it within the top 40 fastest-growing chains.
Here, an excerpt from a conversation between Golden Chain Award winner John Gainor and 2013 Golden Chain honoree Peter Cancro, CEO of Jersey Mike’s Subs.
Peter Cancro: What is it like to run a brand with such a rich history?
John Gainor: The thing that’s kind of unique about Dairy Queen … it is a true iconic brand. When you think back 75 years, Dairy Queen was one of the first to get into franchising in the restaurant business. But what is so unique about this brand and what attracted me to Dairy Queen is the emotional connection that our fans have with the brand. People grew up with Dairy Queen. They normally have what we say are “a smile and a story.”
PC: How do you keep the brand relevant to today’s customers, from that long history? What’s the secret?
JG: We’ve listened to our fans over the years and we believe [it] is very important to give your fans, your customers, what they want. We’ve had the opportunity to what I would call reinvent the brand. To begin to remodel stores, build new stores, develop our Grill & Chill concept, and we’re really able to have our fans appreciate the heritage but embrace the changes that they’ve seen in the Dairy Queen brand over the last 10 to 15 years.
Meet the other 2015 Golden Chain winners:
PC: How has the supply chain experience I see in your background prepared you for running the company, and what kind of perspective did you bring to the job?
JG: When you look at supply chain, it’s all about managing costs and managing profitability for our franchisees, and be it the products that any of us sell in our
restaurants, the equipment [and] all the materials to build our stores, at the end of the day they are all components of franchisee profitability. Here at International Dairy Queen, franchisee profitability is one of our three strategic pillars. It also gave me a lot of insight into the expansion of our international business.
When I took over as CEO seven and a half years ago, I remember my first meeting with Mr. [Warren] Buffett [CEO of Berkshire Hathaway, owner of Dairy Queen] and we talked a little bit about my goals for Dairy Queen. One of those objectives was international [expansion]. Today we are in 27 countries outside the U.S. and Canada, and to be very honest with you, we have to build out our supply chain infrastructure before we can ever enter a new market. Finding vendors, getting vendors approved, and getting equipment and supplies are all critical.
Inspiration, Warren Buffett, and the future
PC: Who inspired you or mentored you in your career, and what special insights did they give you?
JG: I first have to mention my parents [and] the way I was brought up. With hard work and dedication, if you really set your mind to anything, you can accomplish that.
Having the opportunity to work with Warren Buffett over the last seven-plus years, I mean, what a great opportunity. It has been a real learning experience, but very rewarding. I really believe that it’s some simple principles [that make an impact], and those are that everyone in the organization has a role and that every role in the organization is as important as mine or anyone else’s. It takes an entire team to work together to be successful, and I really think one of the things that I learned early in my career is that you [should] treat everybody the same way. I think it’s just critical to running a good organization.
PC: Love that last quote. That resonates. What kind of role does Mr. Buffet play in Dairy Queen?
JG: This has been one of the great things about being able to work with Warren. Warren actually bought Dairy Queen in 1998, and we’ve heard him tell the story several different ways about why he bought Dairy Queen, but first and foremost, it’s an iconic brand and Warren believes that if you buy a great brand that has a moat around it and you can continue to build that moat and protect that moat, that any business will be successful. Warren is definitely the No. 1 fan of the brand.
Berkshire is all about integrity and the beauty of running this brand is Warren allows us to take a long-term approach so that we’re really focused on the health of the brand.
PC: Let’s talk a little bit about the restaurant industry and its future. What concerns do you have and what are you optimistic about?
JG: In talking to our franchisees, I think one of the greatest challenges that we all share is the challenge about finding the right labor and how we retain that labor. We all do so much training of our employees in the restaurant industry, and as you’re aware, it can take weeks, months or even years to get people to the point where they’re providing the best service. And one of the challenges I believe that we have and will continue to have is how we retain those front-line leaders.
I also believe that we need to focus more on developing leadership traits [at] all levels, and to show people that the restaurant industry is a desirable destination to build a career. I think our future as an industry is quite bright.
Our industry as a whole does so much to give back. I’ll give you one example: At Dairy Queen, we’ve had a 31-year relationship with Children’s Miracle Network Hospitals. Our operators have helped raise over $100 million to help children. All the money stays in the local communities, a network of 170 hospitals, and that money is raised not only by Dairy Queen operators but also our fans who come into our restaurants.
And I know that many of our competitors have similar efforts, but when you think about what the industry does for our economy, be it providing jobs and growth or just giving back to improve the lives of people that live in our communities, I just think it’s a great industry.
2013 Golden Chain Award winner Peter Cancro, CEO of Jersey Mike’s Subs, interviewed John Gainor for this report.