John P. Gainor took over as president and chief executive of the 5,860-unit International Dairy Queen Inc. in Edina, Minn., last July, just as the economy started to head south. Since then, the food-and-treat company has launched its successful Sweet Deals value menu, which the company says has resulted in sales gains nationally. Gainor, who previously served as chief supply chain officer, also has helped to drive margin reductions for IDQ. In addition, the company is preparing for two major milestones in 2010: the 70th anniversary of the iconic brand and the quarter-century birthday of its popular Blizzard.
How’s business?
We’ve gotten off to a good start. Normally, when the economy turns down, the QSR industry fares decently. We took some steps last year to ensure we would have a good value proposition—people still want quality, but they want value.
We just rolled the Sweet Deals value menu [nationally] March 1. We had it in test for two years. It has a little different twist. We did a lot of research and found consumers want choices. Sweet Deals offers nine items, both food and treats, which is unique. Consumers can choose two [items] for $3, three for $4, or 4 for $5.
Why is it popular?
It gives consumers flexibility—it lets them decide how much to spend, how many items to order and how much they want to save. But we believe quality is important, too. These are everyday menu items. We didn’t design downscale items for this.
How is it performing?
We’re seeing good sales results. Year to date through February, we’re up north of 4 percent. So far in March, we’re seeing traffic growth and sales growth. [Recent statistics show the value menu has helped drive a 5-percent surge in same-store sales since January.]
What else are you doing to help business?
Recently, we rolled a program that focuses on the cost of goods and managing overall costs at the store level. We also took some positions on commodities in the third quarter of last year. I think we’re positioned well for ’09.
FAST FACTS EDUCATION: Ohio University, B.S. communicationsHOMETOWN: Coatesville, Pa.AGE: 52HOBBIES: family, hockey, travelingPERSONAL: married; three grown sons
What about expansion?
We have two growth strategies. In the United States and Canada, we have a strategy of reinvestment, of remodeling our stores. Land costs are down, construction costs have dropped dramatically. Right now is a great time to reinvest.
So we’re working with franchisees to try to push this through. Those that reinvest now will be winners when the economy improves.
As far as international growth goes, we’re still moving forward with new store development [DQ has 550 locations in 19 countries outside of the United States and Canada].
How difficult is it to get financing?
We don’t have a lot of large multiunit developers, and they’re the ones having difficulty because they’re carrying more debt. Our franchisees are one-to-four-store operators who deal with regional banks and have a good credit history. There are some problems, but our franchisees still seem able to borrow money.
