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The Dairy Queen Story: A Smart Riskologist’s Guide to Building a Better Microbusiness

Dairy Queen

I’m not a fan of fast food. It’s horrible for you, it doesn’t taste good, and I hate myself every time I eat it.

Luckily (for both of us), this story is not about fast food. It’s about a very clever business that built a small empire called right under the nose of its competition.

And if you’re a smart Riskologist who wants to earn some extra income with a microbusiness of your own, you’ll want to do the same thing.

Two of the most common objections I hear from friends and readers about starting a business are:

  • There’s already a lot of people doing it. Where could I possibly fit in? Or,
  • “X” company is already really big. How can I compete?

Never mind that both of these questions are  great indicators that there’s plenty of money to be made, they’re concerns hopeful entrepreneurs often have a hard time answering.

This is why I love the story of Dairy Queen.

Have you ever noticed that if you go to a major city in The U.S. you’ll see a McDonald’s or another fast food joint on damn near every corner? They all fight with each other for the most prime real estate. Every other building has a billboard on it for the restaurant you saw on the block before it.

But not Dairy Queen. If you go to a large, metropolitan area, you’d be hard pressed to find a Dairy Queen at all. If you never left the big city, you may not even know DQ exists. Yet, they’re one of the top ten largest chains in the world with more than 5,000 locations.

Where the hell are the Dairy Queens?

If you’ve ever taken a road trip, you already know exactly where they are—in the places you’d least expect to find a fast food restaurant! For more than 70 years, DQ has built its empire by going where no other food chain would—America’s small and rural communities.

And, for those same 70 years, they’ve absolutely kicked ass at making money in these economically depressed communities that the big players like McDonald’s, Wendy’s, and the like wouldn’t dream of going to because there “aren’t enough customers.”

So how did they do it?

This is the beautiful part. It’s also the part you should pay  attention to because it’s filled with lessons for starting a microbusiness.

Even though Dairy Queen looks like any other fast food joint today, their beginnings were anything but.

DQ Success #1: Focusing on small, repeatable wins to build loyalty

To be successful in small communities where other major players didn’t see opportunity took creative thinking and a wildly different approach than the typical fast food growth plan of “find the most people, put a store in the middle of them, and try to serve as many of them as quickly and efficiently as possible.”

Instead, they looked at the needs of their small communities and made a plan that would allow them to be successful with a small audience.

When DQ first opened, their stores did not serve food. They sold soft serve ice cream. In rural communities, going out for a meal is much more of a special occasion than a regular occurrence. But ice cream is a small treat that’s relatively inexpensive and can be enjoyed regularly.

By focusing on these small treats, they were able to become profitable by getting their small audience to visit them regularly. If you’ve ever driven through a town with a DQ in it on a Sunday after church, you know exactly what I mean!

DQ would not have made it in the beginning if they’d tried to copy the model of other franchise businesses. They’d have never gotten people to come in often enough to justify staying open. But, by focusing on small treats that could be enjoyed often, they gave small, rural communities exactly what they wanted.

Microbusiness question #1: What small but meaningful things does your audience want that you can provide on an ongoing basis?

DQ Success #2: Providing a service when no one else would

I grew up in a very small town—less than 2000 people! We didn’t have a Dairy Queen, but the next town over did.

When you live in a big city, if you want to buy something, you just go out and buy it. If you want to do something, you just go out and do it. There are enough businesses around that you can take care of just about any want or need you might have whenever you might have it.

This is not the case in small towns. Where I grew up, every store in town was closed by 6:00 PM besides the few family restaurants that stayed open until—wait for it—8:00.

There is, quite literally, nothing fun to do in a small town after about 8:00 PM that is:

  1. Kid friendly, and
  2. Legal.

So what did DQ do? At many of their locations, they took the initiative to stay open late. Some stores would even stay open 24 hours.

The DQ in my town stayed open until midnight. When I turned 16 and got my driver’s license, it became the default meeting spot any time I went out with friends. And we weren’t the only ones. The DQ was always busy every night after 6:00 PM. It was the only place to go!

Here’s another example: Even here in Portland, most coffee shops close by 6:00 despite the many night owls in this town. My friend, Kacey, runs the city’s only 24-hour café.

On nights I have trouble sleeping, I’ll go to her shop and try to get some work done. The problem is, after 10:00 PM, it gets so crowded, you cannot find a place to sit down. Kacey is killing it with her late-night café!

I can’t believe no other café owners have noticed how busy her shop is at night and copied her, but all the more success for Kacey as a result.

Microbusiness question #2: What’s lacking in the current offerings that you can provide? What customers are other businesses ignoring that you can step in and provide for?

DQ Success #3: Reducing a major pain point for a small audience

I don’t think Dairy Queen ever set out to become a grocery store (and you’d be hard pressed to find groceries at any DQ these days), but in the early days, DQ built trust and repeat customers in their small communities by providing more than just fast food; they offered limited grocery items for sale as well.

If you’ve never lived in a small town, you probably wouldn’t realize that buying groceries can be a difficult task. When my local grocery store went out of business, suddenly, my parents (and every other parent in my town), had to make a 25 mile journey to get to the nearest store and back. Quite the hassle!

Dairy Queen saw this need in their rural communities, and stepped up to offer staples like milk, bread, and canned goods. They weren’t a full service grocer, but they helped relieve a serious problem, and that built a tremendous amount of rapport with their customers.

To this day, my hometown does not have a full service grocery store, but the gas stations and small shops around town that have stepped up to offer the basics have had success where others have struggled.

Microbusiness question #3: What unique and painful problem does your small audience have that you can help them relieve. You don’t even have to solve it—just make it hurt less.

DQ Success #4: Encouraging word-of-mouth promotion by becoming part of the social scene

I remember going to a friend’s birthday party when I was about 8 years old and seeing—for the very first time—an ice cream cake.

Guess where it came from? Yep, Dairy Queen. At my next birthday, I had to have one.

For the rest of my childhood, I can remember many parties where a Dairy Queen ice cream cake was, basically, the guest of honor.

In a small community where there isn’t even a grocery store, you better believe there’s no bakery. If you wanted a cake, you were driving a very long way, or you were going to Dairy Queen.

By having an offering that customers can take home and share with others on special occasions, DQ gets a lot of great word-of-mouth marketing—something all the big players in the big cities spend millions and millions of dollars to get. All DQ has to do is make a cake.

Microbusiness question #4: How can you make what you offer something customers will want to share with others? And how can you make it easy for them to do that?

Successful microbusinesses become part of a community

If you’re a smart Riskologist, you may have noticed a theme running through all the examples above. Dairy Queen didn’t establish itself just by providing a service to its communities, it did it by becoming a part of the social fabric of those places.

When you become a part of a community, you don’t need an enormous customer base to succeed. You only need a small base of very committed customers.

By relieving some of the unique pains every small town suffers from—an affordable restaurant offering, a place to go at night, an easy way to buy household staples and gifts—DQ became a trusted part of each community it entered.

You can (and must!) model these same practices to become a trusted part of the small community you serve with your own microbusiness.

Your Homework Today [Reader Contest]

If you’re one of our Riskolgists who operates a microbusiness of your own (or is planning to), your job today is to answer the 4 microbusiness questions from this lesson in the comments below:

  • What small but meaningful things does your audience want that you can offer on an ongoing basis?
  • What’s lacking in the current offerings that you can provide? What customers are other businesses ignoring that you can step in and provide for?
  • What unique and painful problem does your small audience have that you can help them relieve. You don’t have to solve the problem—just make it hurt less.
  • How can you make your customers want to share your business with others? And how can you make it easy for them to do that?

I and a few highly impartial judges will pick one person from the comments to receive a free life-time pass to The Bootstrapper Guild, my tried and tested online course for building a successful microbusiness.