“It's a little bit of an anchor as you try to position yourself for growth," admits Michael Keller, executive vice-president of marketing and R&D with International Dairy Queen (IDQ), the parent company.
He says IDQ is preparing for that growth to come from the food side of its business. At first blush, such a strategy appears to be a no-brainer considering the treat industry has flattened out in recent years and food sales have grown to now represent more than half of the company's revenue.
But the challenge arose when Dairy Queen discovered its patrons overwhelming associated it with Peanut Buster Parfaits, Dilly Bars and Pecan Mudslides.
"If you were to ask our customers about Dairy Queen, they'd say 'treats.' If you ask them about food, they may or may not be able to comment on that," Keller says.
So, in order to grow its food business significantly, the company decided it had to make a fundamental change, one that would leave no question in people's minds as to what it was doing.
Thus the Grill & Chill concept was born three years ago. From the look of the new building (equipped with a stone fireplace) and earth tones color palette to the high-end menu board and modified table service (customers order at the counter, take a number and their food is brought to their seats), Keller says it's clear this isn't your father's Dairy Queen.
"You walk in the door and it doesn't look anything like a Taco Bell, McDonald’s, Burger King or Wendy’s. It all sends a very strong signal this isn't your usual QSR”—quick service restaurant—“or treat establishment," he says.
Just 40 of Dairy Queen's North American locations have been converted to the Grill & Chill brand since the first one was christened in Chattanooga, Tennessee, in 2001. Keller says many more will follow.
"Over the next 10 to 15 years, all of our restaurants in North America that are in the food business are going to be under the Grill & Chill division," he says, noting that treats are still a part of the new concept’s menu.
Keller declines to offer specific sales results but says the Grill & Chill locations, some of which are now a couple of years old, some just a few weeks, are performing "very well."
One important but subtle difference with Grill & Chill is it's under the DQ banner, not Dairy Queen. Keller says for a concept trying to establish itself in a new arena, "Dairy" and "Queen" simply weren't “food friendly.”
"Because of the 64 years of Dairy Queen history, it carries a treat message. The letters ‘DQ,’ while still perfectly reflecting the brand, would signal a change that this isn't your typical Dairy Queen," he explains.
He notes that after conducting online surveys, IDQ determined the two brands are virtually interchangeable but DQ carries more food credibility than Dairy Queen without losing treat credibility.
Keller notes despite the recent emphasis on the DQ Ultimate Hamburger and DQ Dogs, IDQ isn't about to let its treat business melt away. The company is working on a revision for its more than 1,000 locations that only serve treats called "Project Cornerstone." Keller says the first one is due to open in January but he's protecting the fine details for competitive reasons. He did admit it will feature a significantly modernized look, a larger menu and an expanded "experiential" component of what customers see, smell and watch in the restaurant.
"For a 64-year-old brand that experienced little change or investment in two, three, or four decades, we have a lot of ground to make up to modernize the brands and unify the system in a way that consumers and competitors really see and feel a difference," he says.
One element of Dairy Queen's brand that customers will no longer be seeing is Dennis the Menace. Its forever-five-year-old spokesperson retired in 2001 after a nearly 30-year affiliation with the company. "He's taking a nap," Keller says. "He was a wonderful fit for the brand at a time when the brand, culture and society were in a different place. He just doesn't have the relevance with today's youth that he had with yesterday's youth."
Considering his age, he probably liked the treats better anyway.