In the last 10 years, A&W has delivered consistent same-store sales growth, a benchmark that eludes many restaurant chains. Comparable sales are up 67% compared to a decade ago, and the QSR is eyeing its next growth stage: non-traditional development.
“The brand is as popular as it’s ever been,” said Jack Palumbo, A&W senior director of franchise development. “It just seemed like it was a really good time to capitalize on that.”
The brand has been building up non-traditional growth internationally for many years, Palumbo said. But now A&W is plotting domestic non-traditional units, as well.
The company is targeting airports, grocery stores, universities, stadiums and amusement parks. In some cases, non-traditional units in these spaces are less expensive than a large, freestanding drive-thru restaurant, Palumbo said. Non-traditional locations are those that come with a captive audience.
The company is also opening additional units in gas and convenience stores, which the company has been developing for at least 25 years, he said.
A&W plans to take off in travel destinations
Conversations about growing non-traditionally within Palumbo’s team started about six months ago. Palumbo led a cross-functional panel and committee to ensure the brand was ready for this shift from a training, design, construction, real estate and menu optimization standpoint.
In order to thrive in these locations A&W will need to be flexible, he said. For example, the chain’s menu may need change depending on the venue, and its restaurant design might have to shift depending on the size of the site. Non-traditional restaurants tend to take up about 850 to 2,100 square feet. The average size of a traditional restaurant is 2,100 square feet.
As A&W grows its non-traditional U.S. network, airports will be “paramount,” Palumbo said, since these sites come with a large, captive audience. But not all airports are equal, and consideration will be made to available pre- and post-security sites, as well as the number of travelers an airport attracts, he said. A&W has already been in contact with all of the major concessionaires, including the likes of Delaware North, HMS Host, Centerplate and Aramark.
A&W will open its first Walmart location in Rock Hill, South Carolina, on Jan. 20. The company will continue to open inside Walmarts going forward, he said.
While A&W considers gas and convenience store locations as traditional developments, these units are also a growing area for the chain. Convenience stores are an attractive anchor and many convenience stores will allow restaurants to tack on a drive-thru at the end of the building, he said.
For the last six to seven years, A&W has been a preferred vendor with Cenex Cooperative, a convenience and gas station network in the Midwest, and is planning additional growth through Cenex’s 1,400-unit footprint. The company has a number of Cenex-branded units within A&W’s system, Palumbo said.
The restaurant is building an A&W at a Cenex-branded gas and convenience station to be operated by a co-op named Cooperative Energy in Sibley, Iowa, with an expected opening of Spring 2023, Paulmbo said. Another unit is being built in Fairview, Kansas, but won’t be Cenex branded.
While A&W’s initial non-traditional units in process have been in the Midwest, the restaurant is open to different geographies. A&W also has a presence in Arizona, for example, Palumbo said.
Going forward, A&W aims to have about 25% non-traditional and 75% traditional development, Palumbo said, which could shift toward 30% non-traditional and 70% traditional growth over time.
“We felt like [non-traditional] was another opportunity for us to … serve more people and expose our brand to the country in a different way,” Palumbo said.