International Dairy Queen (IDQ)

1. Origin of Relationship

Berkshire Hathaway acquired International Dairy Queen (IDQ), a global fast-food franchisor best known for its "Dairy Queen" stores, in October 1997 for approximately $585 million in cash and stock. Buffett was attracted to IDQ because of its enduring consumer franchise and efficient capital model, praising the long-term management of the business which had built a robust system of loyal franchisees.

2. Major Milestones

• 1940: First Dairy Queen store opens in Joliet, Illinois.
• 1997: Acquired by Berkshire Hathaway for $585 million.

3. Strategic Importance

Dairy Queen has a powerful, nostalgic brand in the United States, particularly known for its "Blizzard" treats. The "guilty pleasure" nature of frozen treats provides a degree of stability even during economic downturns. At the time of acquisition, IDQ had over 5,800 stores. Because the business is primarily a franchisor, it generates high returns on invested capital with relatively low capital intensity for the parent company.

🔗 Connections

• Concepts: The Inevitables
• Sources: 1997 Letter, 1997 Meeting