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March 2007 - Strategy Magazine
Biz

Word from the corner office
Dairy Queen: an icon in transition
They say they want healthy options, but it's cake they're buying. Dairy Queen Canada prez Jean Champagne on supporting a venerable brand while launching a spin-off

by Karen Mazurkewich
page 11

When he turned 13, Jean Champagne was given an unusual birthday present: a Dairy Queen uniform and the opportunity to make ice cream cones in his hometown of St. Catharines, Ont. "It was a big deal," says Champagne, who was the middle child of a large family.

From son of a franchise owner to current president of the Canadian arm of DQ and COO of the International Group, Champagne hasn't strayed far from his roots. Yet his ties to the past aren't holding him back. In fact, they've helped make the 22-year veteran of the company a global success.

Two years after taking over the job as Dairy Queen Canada president in 1999, Champagne engineered a management coup. He did what his colleagues in the U.S. have been unable to do: mend the rift between head office and disgruntled restaurant owners.

For over 12 years, Dairy Queen HQ has been in conflict with its franchise owners over pricing of products sold from the corporation to the franchisees. While the U.S. operators are still at loggerheads, Champagne brokered a peace deal in Canada. He created the Unified Purchasing Alliance, a board comprised of franchisees and head office representatives who collectively negotiate price.

"When I took over the [president] position, it took five years of continual relationship building for both sides to understand we were on the same page," says Champagne. But the time invested is now paying off. "The deal has allowed us to work better," he comments. DQ Canada saw same-store sales growth of 8% in Canada compared to only 2% in the U.S. He has also given a charity the company supports, Children's Miracle Network, a push in revenues. Since creating Miracle Treat Day four years ago, donations to CMN jumped from under $200,000 to over $1 million annually.

The stabilization Champagne brought to DQ Canada couldn't have come at a better time. Dairy Queen is beginning a long rebranding journey that will see its business split into two separate entities - one targeting the treat-seekers (primarily women and kids who want an ice cream fix) and its new concept DQ Grill & Chill restaurants targeting families who want a quick meal but are willing to spend a bit more for better ambience and table service.

The new DQ Grill & Chill restaurants still serve frozen treats, but will offer a greater range of food items. The logo and plastic seating of the old franchises will eventually be phased out, along with the old "Brazier" nomenclature. "It's a term that no longer has any meaning," says Champagne.

"The market is saturated in QSR," says Denise Hutton, VP marketing, DQ. By taking a different approach to the QSR business, "we hope to steal market share," she says. By splitting the franchise into two distinct brands, DQ is also hoping franchisees will further invest in the company. They can have seasonal shops that focus on ice cream, and a separate restaurant that focuses on food. "The two [brands] won't compete with one another," says Hutton.

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