Dairy Queen launches Stackburger line as chain posts record sales in 2021

Dairy Queen is expanding its burger offerings as the fast-food chain looks beyond Blizzards and other desserts.

The new Stackburger line is Dairy Queen’s biggest menu expansion in two decades, bringing five burger flavors to American customers: Flamethrower, Loaded A1, Bacon Two Cheese Deluxe, Two Cheese Deluxe and Original Cheeseburger. They are available as one-third pound double patties or half-pound triple patties, hence the name Stackburger.

The burgers will be a permanent addition to menus at the company’s DQ Grill & Chill locations, which represent 72% of Dairy Queen’s more than 3,300 U.S. restaurants. The Stackburger line is also launching in Canada.

Dairy Queen is far from the only restaurant chain expanding its offerings to attract more customers. Panera Bread has been pushing for more dinner orders adding items like flatbread pizza to their menu, while dine marks’ IHOP made a splash several years ago by briefly changing its name to IHOB to promote its burgers.

by Warren Buffett holding company Berkshire Hathaway has owned Dairy Queen for 25 years. With net income of $84.3 million in 2021, the fast-food chain is a relatively small component of Buffett’s empire, which reported net income attributable to shareholders of $89.8 billion last year. Last year, Dairy Queen’s annual revenue rose 18% to $224.7 million, according to franchise disclosure documents.

The official release on Tuesday is a long time coming. International Dairy Queen CEO Troy Bader said in an interview that the chain began looking critically at its menu nearly five years ago, when he took over the company. The company knew it couldn’t “be everything to everyone,” so it tried to figure out what its customers wanted, according to Bader.

Dairy Queen landed on two foods: chicken tenders and hamburgers. The chain revamped its chicken tenders offering before moving on to burgers.

“I would say it’s one of the first true menu strategies we’ve had within the Dairy Queen system in a long, long time,” Bader said.

In markets like the Southeast, their food offerings already accounted for the majority of sales, surpassing their candy offerings. And customers who bought their lunch or dinner there tended to continue to buy a Blizzard or an ice cream cone, too.

Improving its burgers took several years and began in earnest in 2019. Dairy Queen created a new bun that was airy yet sturdy enough to support the weight of three burgers. She changed her cheese options to white cheddar and a more intense American cheese.

“We were proud of our burgers, but we knew we could do better with them,” Bader said.

So the chain put Stackburgers to the test. For nearly 10 months, Dairy Queen tested the new menu items in Birmingham, Alabama; Sioux Falls, South Dakota; and South Bend, Ind. Restaurants in the Canadian provinces of Ontario and Alberta were also included in the test. In all, nearly 100 locations participated, making it the largest trial for the chain in more than two decades.

The pandemic also caused some delays. A nationwide labor crisis exacerbated supply chain problems, so Dairy Queen opted to postpone the launch, which was originally scheduled for late fall 2021. Bader said the chain wanted to make sure its suppliers had enough employees to ensure that franchisees were not left in a lurch

But the chain wasn’t worried about customers staying home. Bader said Dairy Queen sales dropped significantly for six weeks in the spring of 2020 as the pandemic led to lockdowns and fear of even visiting drive-through lanes. After that month and a half, however, his business picked up quickly.

“From the period on, we’ve had nothing but record sales,” he said.

In the two-year period from 2020 to 2021, the chain’s U.S. same-store sales increased 17% compared to 2019 levels.

Bader is confident that the burgers will further boost sales. Dairy Queen launched the Stackburgers on February 7 and has seen double-digit increases in units sold so far, without any advertising.

While fast food competitors like mcdonald’s are testing or adding plant-based burgers, Dairy Queen is staying out for now.

“There is so much new news with our Stackburgers and with the employment status of our franchisees, we didn’t want to introduce too many new articles for them,” Bader said. “When we think about plant-based protein, it’s something that we continue to monitor, look at, and see what role it can play within the Dairy Queen system.”

Berkshire Hathaway is preparing to hold an in-person annual shareholder meeting on April 30, the first since the pandemic began. Bader said Dairy Queen will give up Blizzards and instead highlight pre-packaged items, like its dairy-free Dilly bars, for the safety and convenience of investors.