One of the oldest fast food chains in the United States, A&W — founded in 1919 — has languished in relative obscurity in recent years, but a report in fast-food industry publication QSR suggests the burger and root beer slinger is mounting a comeback.
QSR reporter Danny Klein writes that 2017 will be the first year in about a decade that the chain will increase its revenue, and also the first year it will open more stores than it has closed down.
A&W is 98 years old, easily predating fast-food giants like McDonald’s and Wendy’s — but the height of its popularity was around a half-century ago. It was one of the first companies to introduce car hop service, where servers (often women) would take orders and deliver food to cars, and by the 1960s developed a status as something of a roadside attraction, with burger-toting fiberglass sculptures. In the 1960s the company had some 2,400 locations, a number which has since shrunk to 967, one-third of which are overseas (not counting Canada). This year, the root beer-and-burger chain is planning to open 45 restaurants in total, up from 36 in 2016.
Part of A&W’s nosedive happened after fast-food giant Yum! Brands acquired it in 2002. There, the comparatively small A&W was the odd chain out amongst huge operations like KFC and Taco Bell. Yum! “co-branded” many A&W outlets, corporate speak for combining two stores in one location, which is still a popular way for big chains to save on rent and real estate costs. (The relatively common hybrid Taco Bell-KFC outlets are one example of this.) According to QSR, this “diluted” the brand.
Yum! ended up selling A&W back to a group of franchisees in 2011, and as it stepped out from under the corporate umbrella, more A&W locations closed while it found its footing again. Kevin Bazner, an A&W president for 17 years before Yum! bought it, came back to the company as CEO. (A&W still has some “co-branded” stores with chains like KFC, and is partly tied into Yum’s supply chain).
Perhaps because franchisees who had a direct hand in running A&W restaurants were back in charge, the company went on a quality control binge. A&W’s root beer — a staple menu item (a long-running A&W hook was that their root beer was served damn cold, in “frosted” mugs) — went back to being made in-house, according to an early 20th-century recipe, in place of syrup bags that would be carbonated by a soda fountain. “An A&W serving mediocre or even sub-par root beer is really no A&W at all,” Bazner said.
A&W in Canada provides an interesting parallel here — the Canadian arm of the company was sold off in the 1970s — and while it shares the same name and history, it has operated independently ever since. It’s practically a bizarro, alternate timeline for what American A&W could have been — in Canada, the company has more locations than the U.S. (despite only having one-tenth of the population), and has been expanding rapidly.
Canadian A&W got into styling itself as a high-quality alternative to other burger chains earlier than its U.S. counterpart — downtown Vancouver got a “hip and modern” version of the chain in 2010, and from 2012 it has loudly proclaimed that its beef is hormone free. According to Maclean’s magazine, it has been growing rapidly ever since.
A&W Canada has walked a fine line between making itself seem modern (in short, with menu items and approaches to food that read as more “artisanal” or less mass-produced than the average fast-food outlet), while banking on nostalgia — it continues to push the old-timey root beer.
It would appear that A&W in the USA is banking on a similar strategy. It helps that as an almost century-old chain, A&W is well-placed to cash in on nostalgia — a marketing trend that plays well with millennials, according to certain advertisers. And while A&W may be nowhere close to returning to its heyday of 2,400 locations, that nostalgia-plus-quality aspect seems to be working, at least in the short-term.
• Canada still loves A&W [Maclean’s]
• How burger chain A&W is using a focus on food quality to clobber its Canadian competition [Financial Post]
• A&W Hits the Comeback Trail [QSR]