Dairy Queen seeks fivefold increase in outlets in next 3 years

MANILA, Philippines - Arenete-led Philippine Pizza, Inc., the local franchise holder of international ice cream chain Dairy Queen (DQ), is adding four more stores by yearend to its 16 outlets, and will put up 80 more in the next three years. The company, however wants to saturate the Metro Manila market before moving to key cities nationwide, said Rose M. Herrera, Philippine Pizza vice-president for concept development. International Dairy Queen President and Chief Executive Officer John P. Gainor cited Metro Manil’s growth potential. Several officials of International Dairy Queen are in the country for the opening of the ice cream chain’s 500th international branch at Ali Mall in Cubao. Dairy Queen has 5,600 outlets in Canada and the US and is present in 19 countries, including India, China, Thailand and Indonesia. Mr. Gainor said the Philippines is one of Dairy Queen’s best sales performers in Asia, outselling its Southeast Asian counterparts by as much as 30%. Mr. Gainor said they are satisfied with the pace of the chain’s expansion here. Jean Champagne, chief operating officer of International Dairy Queen, said the brand can become the market leader despite tighter competition in the Philippines compared with other Asian markets. It will be the second time Dairy Queen will try to gain a foothold in the Philippine market. Concepcion-led RFM Corp., a firm also engaged in food and beverage, gave up the franchise in 2004 after the brand failed to take off. The Araneta group picked it up two and half years ago. Philippine Pizza will undertake the expansion by itself since its deal with International Dairy Queen bars it from selling the franchise to other investors. Ms. Herrera said Dairy Queen would not increase prices this year, adding that it has been largely unaffected by rising consumer prices. The local franchise holder has managed to cut costs by combining supply orders with its other brands — Pizza Hut and Taco Bell. Ms. Herrera declined to disclose Dairy Queen’s sales and profit targets this year. Officials said Philippine Pizza has to put up as much as $100,000 or about P5 million for every Dairy Queen store. Profits can go as high as a fifth of investments. Ms. Herrera said Dairy Queen gets more than half of its ingredients locally, but is planning to increase this. The ice cream mix used to be imported but is now produced locally.