A&W Outlines C-store Growth Strategy

NEW YORK — Kevin Bazner, president and CEO of A&W Restaurants, was in New York last month to promote National Root Beer Float Day with a giveaway and a charitable donation program for disabled veterans. On Aug. 6, A&W restaurant locations around the country offered customers a free small root beer float with any purchase and collected donations for Disabled American Veterans.

Convenience Store News caught up with Bazner in Manhattan for a breakfast conversation about A&W’s accelerated expansion into the convenience channel.

“We are a 98-year-old brand that has had its ups and downs,” he said. “We’ve had changes in ownership. We got lost amid all the Yum! restaurant brands. But now, we’re an independent brand, owned by our own franchisees, and that strong collaboration between management and franchisees has resulted in very strong results.”

Since being sold by Yum! Brands more than five years ago, A&W’s same-store sales have grown by nearly 30 percent and average unit volume is up 35 percent, according to Bazner. A&W operates more than 1,000 stores globally, more than 620 of them in the United States.

The Lexington, Ky.-based restaurant chain had positive unit-count growth last year for the first time in five years, and it continues to view convenience stores as fertile partners to bolster that expansion.

Last month, the company opened its newest franchised A&W with a convenience store and gas station in Siren, Wis. So far this year, A&W also opened new restaurants with c-stores in Barron, Wis.; Tonkawa, Okla.; Dinuba, Calif.; Sigourney, Iowa; and Orbisonia, Pa.

The restaurant chain has six more gas station and convenience store locations in the works. These future locations will be in Freemont, Neb.; Bemidji, Minn.; Berkeley and Hayward, Calif.; Salome, Ariz.; and Mount Pleasant, Iowa.

While A&W is hardly as well-known as fast-food giants like McDonald’s and Burger King, Bazner points out that it is one of the oldest restaurant brands, with deep roots in rural America. That makes the franchise much more desirable for c-stores operating in small towns.

“We typically target five to 20-unit c-store chains for franchises,” the chief executive said.

He listed Casey’s General Stores, based in Ankeny, Iowa, and TravelCenters of America, based in Westlake, Ohio, as prominent convenience brands that operate A&W franchises at select locations.

“We really specialize in rural markets,” noted Bazner. “We get all the fast-food customers in those areas. We have a nationally recognized brand with great momentum behind it.”

Overall, the company plans to add 20 new units in the U.S. this year, and a total of 30-35 new units internationally. In 2018, the chain plans to add another 25-30 units.

Regarding A&W’s measured expansion, Bazner said, “We would rather open one store that is successful for 50 years than to open 50 stores today that close in a year.” He added that profitable same-store sales growth is the No. 1 key metric that drives the business.

The company’s core customer has also shifted over the years from baby boomer to millennial. “We focus on made-to-order, handcrafted, better quality,” said Sarah Blasi, vice president of marketing. “We tell our customers around the world that all our root beer is made fresh at the store.”

Quality improvements include changing from a frozen chicken tender product to one that is hand-breaded at the store, added Bazner, who noted that 60 percent of new A&W stores are being built by existing, successful franchise owners.

The company’s marketing strategy is “mobile first,” and that includes social media, email promotions and the company’s Mug Club loyalty program, which is on track to hit 200,000 members by the end of the year, according to Blasi.

“Everyone has good memories of the brand,” she said. “People are rooting for us to succeed.”