By Barbara L. Vergetis Lundin, Assistant Editor
A&W is famous for its root beer and floats, but did you know that root beer is made fresh daily at many of the restaurants? Probably not. A lot has changed over the past several decades from multiple different ownerships to a new brand strategy using loyalty programs and social media. Here’s the scoop on what else you might not know.
A Storied History
A&W Restaurants is the longest running quick-service franchise chain in America. Structured for long-term growth, A&W Restaurants Inc. is now owned by a partnership of domestic and international franchise partners. But that wasn’t always the case.
“After multiple ownership changes over the past several decades, it was important for the survival of the A&W brand for its franchisees to acquire the company to protect their own interests,” said A&W CEO Kevin Bazner. “There is no involvement by private equity and no exit strategy. This has allowed the corporation to focus on strengthening the base A&W brand and protecting the franchise partners’ interests for another 97 years.”
The most recent ownership change was from Yum! Brands, who purchased nearly 1,000 A&W and 1,200 Long John Silver restaurants for $320 million in 2002. Fast forward to 2011 when Yum! announced that Long John Silver’s and A&W no longer fit its long-term growth strategy and it would be selling everything off in an effort to sharpen its focus on international expansion and improving the U.S. brand positions of KFC, Pizza Hut, and Taco Bell.
“Over the past decade, Yum! has delivered annual EPS growth of 13 percent, exceeding our 10 percent annual growth target. This has been driven by aggressively building restaurants in China and Yum! Restaurants International at a pace of nearly four new restaurants every day of the year. We do not believe Long John Silver’s and A&W All–American Food restaurants fit into our long-term growth strategy,” David C. Novak, Yum! Brands, Inc. chairman and chief executive officer, explained in a statement.
A&W was acquired by A Great American Brand LLC, who learned from Yum’s experience.
“We were able to learn from Yum! and build upon their research. In many ways, Yum! was on the right track with their strategy but the execution wasn’t 100 percent flushed out, and it was rushed,” Bazner contends. “With our new ownership structure, we are able to develop our strategy hand in hand with our franchise partners as opposed to developing the strategy on our own and handing it down to our operators. This is a more tedious and time-consuming process, but we ultimately get to a better place.”
The first place to focus was on the existing core value, “grounding themselves in the realities of the chain and its current scale.” They then tailored their resources to take advantage of local store marketing opportunities and local digital and social media, which allows them to be more efficient with funds. A&W is now focusing on adding infrastructure to support new unit development and, ultimately, accelerate unit development growth.
“Obviously, we had more overall resources under the Yum! umbrella, but we don’t think having less resources is necessarily a bad thing,” Bazner said. “The resources we have now, both in the field and at the Restaurant Support Center, are 100 percent dedicated to the A&W brand. We have a small team with an entrepreneurial spirit that is passionate about the business.”
Social Levels the Playing Field
A&W uses social media for two main reasons: 1) increasing brand awareness; 2) engaging with consumers on a daily basis.
A&W’s philosophy on social media lines up with the rest of its brand strategy: be authentic and use the available platforms to its advantage as an extension of an in-restaurant experience. A&W uses social media as a way to connect with consumers in a very direct and personal way, targeting messages based on region, age, or interest, as well as responding to questions and concerns on a personal, one-to-one level.
“We encourage operators to own their online real estate in a way that’s unique and appropriate for their particular location,” Bazner explained. “Consumers know when a brand is trying to manufacture a connection; we have 97 years of actual memories and operator experience to draw from.”
Further developing the personal connection is the fact that A&W doesn’t outsource its responses; they are all managed in house by a team that knows the brand and really cares about the consumers’ experience.
“We’ve had great success with Facebook, Twitter and YouTube in terms of getting our message out to a highly targeted audience,” Bazner said. “These social platforms allow A&W to compete with larger brands on a much more level playing field. Content and brand voice are key; massive ad spend doesn’t mean much if a company isn’t dedicating time and effort to the message.”
In the past year, A&W has also increased its focus on “influencer marketing,” identifying “super fans” online and reaching out to them to give sneak peeks of new menu items, behind-the-scenes information, and advance notice of contests and sweepstakes. In addition, A&W has created a network of Brand Ambassadors who are passionate about A&W and love spreading the word about the brand to their followers.
“It’s the new word-of-mouth advertising, and a great way to tap in to an existing network of A&W fans,” Bazner said.
In addition, in the past five years, A&W has revamped its VIP email program, customizing The Mug Club based on guest’s favorite location, making sure that limited time offerings and menu items line up, and adjusting content based on feedback from fans to include more videos, surveys, and social contests.
Eye on the Future
As A&W focuses on raising the bar on quality, it is looking at its signature product – root beer.
“Most of our restaurants still make their root beer fresh daily, and we know we aren’t getting credit for this with our consumers,” Bazner said. “We are looking at some fun ways to celebrate the ‘theatre of the pour,’ as we call it, and continue to elevate this signature, heritage product.”
Outside of its signature product, A&W is continually looking at opportunities to improve the quality of its products and the guest experience.
“From a product standpoint, our hand-breaded chicken tenders are an example. We took a heritage freezer-to-fryer product and upgraded it to a hand-breaded-in-restaurant chicken tenderloin based on a 20-year old recipe from one of our operators,” Bazner explained. “That’s just one example of the many ways we can keep raising the quality bar on our products going forward.”
Franchise partners are also front of mind.
“Our message to both existing and new franchise partners is ‘we’re growing again.’ We are accelerating our development goals both domestically and internationally,” he said. “Globally, we expect to open 50 new restaurants next year and, conservatively, we think we can open an additional 350 restaurants in the next five years.
Despite these goals, they are in no rush.
“At the end of the day, we know we can take the time to ‘get it right,’ and we don’t have to be in a hurry to grow just for the sake of growing,” Bazner concluded.