LEXINGTON, Ky. —A&W Restaurants has become an anomaly as the coronavirus pandemic ravages the U.S. foodservice industry.
The company—known for its burgers, draft root beer and root-beer floats—experienced double-digit sales growth in June at its franchised locations in convenience stores despite consumers driving and filling up on gas less often. Sales rose 10.5% in June, compared to 8.3% in May, A&W said. They were an average of 11% higher during the January-February period before falling off in March and April.
“At a time when Americans were staying off the road, it’s remarkable that sales at A&W convenience store locations were so strong,” said Kevin Bazner, CEO of A&W Restaurants. “This shows the tremendous value that A&W brings to c-stores and travel centers.”
A&W credits its recent success to the surge in drive-thru foodservice and people navigating towards comfort foods during times of crisis, Banzer told CSP Daily News. A&W even opened a second drive-thru lane at some c-store locations to speed up customer wait time during the pandemic.
“Everyone in the drive-thru business has done well since the end of April,” Banzer said. “We also have lots of indicators that, in times of crisis, people navigate towards the brands they know.”
A&W—which operates about 90 franchised locations in c-stores nationwide—will open eight new c-store quick-service restaurants in Albany, N.Y.; Berkeley, Calif.; Cody, Wyo.; Hot Springs, Ark.; Howard Lake, Minn.; Jefferson, Wis.; Prescott Valley, Ariz.; and Yermo, Calif. All eight will feature a drive-thru, A&W said.
A&W will lower royalties for these locations during its first a second years from 5% to 3% and 4%, respectively. It will also discount initial fees on multi-unit agreements.
“Given our ownership structure and long-term view of the business, we’re okay with taking less on the front end and establishing long-term relationships,” Bazner said. “Those first couple of years are critical; a couple of percentages won’t save a business, but it sure helps to start them.”
System-wide, A&W experienced double-digit comp-store sales growth in May despite nearly all dining rooms being closed because of the pandemic. Average unit sales increased by 38% since franchisees acquired A&W from Yum Brands in 2011, the company said.
“The pandemic is sadly forcing many stores, as well as independent and other chain restaurants, to close permanently,” Bazner said. “We expect more new franchisees will capitalize on these real estate opportunities and convert facilities that once housed other restaurant brands or businesses to A&Ws.”’
Founded in 1909, Lexington, Ky.-based A&W Restaurants Inc. operates 1,200 locations worldwide.
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