A&W Restaurants Celebrates 10 Years Under Franchisee Ownership

A&W, owned by YUM! Brands, was struggling. Sales were sliding as franchisee discontent grew.

The Atlantic magazine went so far as to predict A&W’s imminent demise. Then came along a tenacious, survival-oriented group of franchise owners who formed a partnership and bought the company, which was 92 years old at the time. Today, A&W – still the only major restaurant brand 100% owned by its franchisees – is one of the industry’s brightest stars.

Sales and growth

• Same-store sales have increased every year, reversing seven years of declines; sales this year are up 10.2%, following last year’s 9.2% growth

• Average unit sales are up almost 50 percent

• Nearly 70 new restaurants have opened, with more than 20 locations in development

“Most franchisees were excited to be on our own and away from YUM! Brands’ control,” said Kevin Klein, chairman of the National A&W Franchisee Association (NAWFA), which is a significant partner. “Being under franchisee ownership allowed us to control our own destiny, which was thrilling and scary at the same time. We felt that our chain was being forced into co-branding with other concepts, which in many instances was not the right fit. We were a tiny part of a very large company, and we felt lost,” he recalled.

NAWFA’s first move was to ask former president Kevin Bazner to return. Bazner, who spent much of his career with A&W until YUM! acquired it in 2003, gladly accepted the opportunity. “I knew how dedicated the franchisees were to the A&W brand,” he said. “Their hard work and commitment have brought us to where we are today.”

New strategy

Under Bazner’s leadership, A&W moved away from the co-brand strategy, and today is building single-brand restaurants. Unlike most quick-service chains, it has shied away from discounting, instead focusing on quality. A&W resumed making its signature Root Beer fresh in each restaurant.

It also has limited its menu to “All American Food” favorites, including burgers, hand-breaded chicken tenders, 100% Real Wisconsin Cheese Curds, and, of course, Root Beer Floats. “Too many brands try to be all things to all people,” Bazner said. “Our success is directly tied to understanding our guests, serving food they want and providing great service.”

Franchisee support

Equally important is understanding franchisees’ needs, which Klein says comes naturally, since they own the company. NAWFA has a say in all key decisions, meeting at least monthly with Bazner and the leadership team. “The support staff at A&W actually wants to know what we think, which is practically unheard of in most companies,” Klein said. “Many chains say they listen to franchisees, but A&W proves it in every call, in-person meeting and store visit.”

Klein noted that franchisee ownership also has created stability that is unusual in the chain restaurant industry. Franchise and support team leaders typically have 20 years or more of experience with the brand. “This has resulted in many great relationships being formed between A&W and franchisees,” he said. “When we are at board meetings, state franchisee meetings or conventions, there are always more hugs than handshakes. It’s just the way we've always been, and I don't see that changing.”

Since the sale, A&W has welcomed dozens of new franchise partners who have embraced the brand and brought fresh ideas for the future. “The franchisee base we have today is really the ‘best of the best’ compared to 10 or 20 years ago,” Klein said. They've learned how to survive through hard times, which gives them the confidence to take on any challenge.”