“[We] put our money where our mouth is.”How Buffett justified buying Dairy Queen, according to Bill Gates.
People in the UK have happy childhood memories of Mr. Whippy, 99 Flakes, and Magnums – didn’t they used to be bigger? In the US, the equivalents are soft-serve vanilla cones, Blizzards and Busters – and these are all found in one place: Dairy Queen.
Many Americans feel a special affection for this food retailer known best for its sweet and sticky frozen treats. “Two great American symbols worth saluting in one photo”, one fan tweeted recently alongside a shot of the US flag alongside the Dairy Queen logo.
Dairy Queen is also a favourite of US icon of business and trading Warren Buffett. Buffett has “known Dairy Queen all my life”, he told good friend Bill Gates in a video posted by Gates on his blog earlier this year that documents a visit by the two billionaires to a Dairy Queen outlet in Buffett’s home town of Omaha.
According to one biographer, Buffett is fond of Dairy Queen’s Dilly Bars – soft serve ice cream covered with a chocolate, cherry or butterscotch coating. In fact, he likes Dairy Queen and its products so much that he bought the whole business in 1998 for $585 million.
So what is it about Dairy Queen that makes it such a consumer favourite and, in the eyes of Buffett at least, a financial good bet?
Dairy Queen began with a successful innovation. In 1938, father and son team Alex and John Fremont “Grandpa” McCullough came up with a new soft-serve ice cream recipe and persuaded a friend to stock in in his ice cream shop. After it did well, they then went on to open their own business, which became the first Dairy Queen restaurant.
The Dairy Queen business grew steadily and the popularity of its products and venues with customers won it a special place in American mid-century mythology. This is especially true in Texas, where there are still more Dairy Queens than in any other state.
In his memoir Walter Benjamin at the Dairy Queen: Reflections at Sixty and Beyond, Texas-born writer Larry McMurtry describes the Dairy Queens he knew as “simple drive-up eateries, taverns without alcohol”. “What I remember clearly,” he continues, “is that before the Dairy Queens appeared the people of the small towns had no place to meet and talk.”
The business has also inspired a novel – Robert Inman’s Dairy Queen Days – and a book of columns – Bob Greene’s Chevrolet Summers, Dairy Queen Nights.
Dairy Queen has also made a more recent contribution to American popular culture in the form of the Blizzard, a blend of Dairy Queen soft serve with biscuits, brownies or chocolate, including chunks of broken-up branded products such as M&Ms or Reese’s Pieces.
Invented in 1984, the Blizzard was instantly successful. The following year, Dairy Queen sold more than 175 million Blizzards, according to Thrillist.
Today, seasonal versions such as the Star-Spangled Blizzard in July and the Candy Cane Chill at Christmas are greeted with excitement, as are film tie-ins like 2018’s Jurassic Chomp, a toothsome-sounding mix of soft serve, chocolate-dipped peanut butter bites and fudge topping introduced to coincide with the release of Jurassic World: Fallen Kingdom.
Then there is the Blizzard “flip” ritual. Turning a Blizzard cup upside-down (do it right and nothing spills out, thanks to the thickness of the ice cream) originated as a Dairy Queen employee gimmick and is now much-imitated by… pretty much anyone who goes to Dairy Queen.
In some Dairy Queens, the flip has been used as a promotion. At one time in places including Texas, Louisiana and Canada you could claim a free Blizzard if your server failed to perform the trick, according to Thrillist.
Buffett has been known to flip the odd Blizzard. But he did not just invest in Dairy Queen for fun. Rather, when he was approached by the business’s owner as a potential buyer he was attracted by Dairy Queen’s low overheads and growth potential, according to The Street.
These days, he values the business for for keeping costs down while also adapting to changing consumer tastes, according to a recent Reuters article. Though Dairy Queen, as you might expect from its name, will not be jumping too far into the plant-based food trend in the near future, it adds.
With around a third of Americans suffering from obesity, Buffett has been criticised for investing in businesses like Dairy Queen that sell products high in sugar, fat and salt. He also has holdings in Coca-Cola, ketchup and Kool-Aid maker Kraft-Heinz, and sweets company See’s Candies.
But health issues have not stopped Buffett from eating at Dairy Queen himself, and he also takes his own grandchildren there regularly. Evidently for him, as the current Dairy Queen slogan goes, “Happy Tastes Good”.
“Who better [to own Dairy Queen] than some guy who loves the product?” Warren Buffet