Franchising an American Icon

The Made in the USA mindset is powerful stuff. That ubiquitous success story in the heartland of America packs a serious punch. Never moreso than when it comes with the disclaimer: “Since 1919.”

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I’m talking about A&W Restaurants, Inc. And, boy, this is a banner year for the brand. A recent QSR article from Danny Klein said it best: “As it Returns to Growth, A&W’s Quality Remains its Value Proposition: The category legend is gaining momentum headed into the back half of the year.”

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Did you see that?

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A&W is a category legend.

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It’s impressive when an organization that’s been around for 105 years is discussing strong same-store sales, positive unit growth, incredible controls on food costs and (dare I say it) happy customers.

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A&W’s net sales are up 2%, the average check has increased 4.1% year-over-year, same-store-sales have risen 3.7% in the first half of ‘24, and the iconic brand is opening new locations. (Sidenote: Our team calls the A&W videos and franchise development website that we designed among our favorite projects.)

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This isn’t the happy journey for many other chains right now. Same-store sales in Q2 were negative at the Golden Arches for the first time in four years. And McDonald’s just agreed to extend its $5 Meal Deal through December.

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Red Lobster’s Endless Shrimp deal led to $11 million in losses and a bankruptcy filing by May.

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Subway franchisees are reporting sales dips as high as 8-10% from a year ago, are pushing a $6.99 footlong and are now being told to switch from Coke to Pepsi products.

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Starbucks (not a franchise) addressed a 3% decline in global sales by replacing its CEO with Brian Niccol from Chipotle. In an open letter he said, “there’s a shared sense that we have drifted from our core.”

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I’m no fan of great chains falling on hard times. But consumers are cash-strapped amidst rising prices and high inflation while many franchisors are asking franchisees to shoulder heavy discounts impacting their profits.

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But what if your franchisor is actually a group of franchisees who own the brand?

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Franchisees run A&W. And quality (not discounting) is the focus.

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A Great American Brand LLC, a group of domestic and international A&W franchisees, acquired A&W Restaurants from 百胜集团 in 2011. Meanwhile, A&W remains part of YUM!’s purchasing co-op. Talk about a win-win. That has allowed A&W to control food costs across its 900+ locations today while simultaneously focusing on quality versus discounts on its menu.

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In an interview with KRLD New Radio 1080 , CEO Kevin Bazner , who has been associated with the A&W brand for some 40 years, said, “quality is our long-term value proposition.” Food is made fresh-to-order. Locations make root beer from the original recipe daily. And the target customer is nostalgic for the experience.

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Coincidentally, A&W sales were up some 3.5% in Q2. [The same quarter that McDonald’s sales were down 2%.]

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Is this kind of success really surprising? A&W has weathered plenty of economic swings and come out on the other side. The brand has persevered through world wars, the Great Depression, the recession of 2008 and more. When Covid presented its challenges, A&W looked to its drive-ins and drive-thrus to keep the burgers hot and the root beer flowing. Chalk it up to decades upon decades of good old-fashioned experience.

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In 2024, suffice it to say…

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A&W knows the value of a dollar, and also how to invest it.

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Today the company is investing in technology improvements to accelerate the ability to take orders. The guest experience is everything.

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Franchise development also has expanded through non-traditional and traditional sites. Travel plazas, food courts and locations inside of Walmart stores have put flags on the map alongside construction of traditional restaurants. Second-generation real estate also has been attractive for repurposing into A&W restaurants.

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And, oh, that brand!

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“You could put up a sign, and everybody instantly knows what it is,” said David Johnson of KRLD.

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Bazner agreed. “We do have pretty universal brand recognition,” he said. “And that’s not only here, but also in Southeast Asia as well, which is where most of our international restaurants are located.”

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Perhaps that’s why I’m feeling patriotic about A&W. I mean, c’mon. All American Food is a registered tagline on the sign. There’s proof out there that something delicious and nostalgic can succeed and prosper. When it also feels affordable and happens to be synonymous with the world’s best ice cold root beer float, what’s not to love?

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I was at one of my local A&W restaurants this week to celebrate National Cheeseburger Day. The place was hopping. The restaurant was sparkling clean. The drive thru was buzzing. The staff was courteous. And the root beer was ice cold! Both my stomach and my wallet agreed on one thing: A&W has not drifted from its core.

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Could this be a modern-day lesson for other brands that haven’t been around for 100 years?

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Franchising an American Icon can be done. It can also be profitable.

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Cheers to that with my frosty mug!

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(Note: A&W Restaurants is a client of BizCom Associates and Brand J .)

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