By Jonathan Stempel
OMAHA, Nebraska (Reuters) -Dairy Queen, owned by Warren Buffett’s Berkshire Hathaway (NYSE:BRKa), has seen signs that consumers are dining out less, but believes American franchisees can withstand economic pressures, including from tariffs, its chief executive said.
Troy Bader, who has led the fast-food chain since 2018, said Dairy Queen sales and transactions grew in the first quarter - "somewhat uncommon" relative to rivals - before "a little bit of flattening" in April.
Tariff-related concerns could dampen demand from consumers who have become "weary of high interest rates and multiple years of high inflation," he said.
Slowing sales could pressure franchisees that could see new tariff-related costs on cooking equipment, uniforms and a handful of ingredients such as bananas, pineapples and vanilla.
Bader said Dairy Queen shouldn’t over react, however, noting that the scope of the tariff threat changes regularly.
"When I think about our largest market, the U.S., I think it’s quite manageable," Bader said. "Most of our products and ingredients are grown, produced, raised, processed and distributed in the United States."
Bader spoke with Reuters on May 2, one day before Warren Buffett announced his plan to step down as Berkshire’s chief executive.
Dairy Queen sells ice cream products including the Blizzard, and hot foods including burgers and chicken strips.
Rivals such as McDonald’s (NYSE:MCD), Chipotle Mexican Grill (NYSE:CMG), Domino’s Pizza (NYSE:DPZ) and Starbucks (NASDAQ:SBUX) have said that Americans are spending less on dining out.
They said this reflected diners’ concern that U.S. President Donald Trump’s tariffs could eat too far into their paychecks and savings.
Bader said Dairy Queen is not raising franchisees’ costs, though those building new stores or replacing existing stores may face greater challenges absorbing new tariffs so their customers would not.
"The consumer is under pressure, and the last thing they can do is absorb big price increases," he said.
International Dairy Queen, the Bloomington, Minnesota-based company’s full name, has more than 4,100 stores in the United States and more than 7,700 worldwide in 20 countries. That includes more than 1,600 stores in China, including nearly two-thirds of the 419 stores opened last year.
Total sales rose to $6.4 billion in 2024 from $6.1 billion in 2023.
Bader said Dairy Queen wants to expand in the Middle East, where it has an established supply chain and stores in Bahrain, Kuwait, Oman and Qatar.
"We’re looking at Saudi (Arabia) in particular" as a potential new market, he said.