There were several disconnects during the YUM! era. Perhaps the most pronounced was a co-branding initiative that drained the chain’s core equities. According to A&W’s most recent franchise disclosure document, the company had 240 single-brand franchised outlets at the end of 2018—down six from the previous year, which speaks to the pause Bazner referred to (four additional units are company run). A&W grew that side of its business by a net of 11 locations from 2016–2017.
Here’s where the focus is shifting for A&W: There were 364 co-branded restaurants in 2018 versus 381 at the start 2017. There were 391 the previous year. That’s a net decline of 27 restaurants in a three-year stretch.
It’s a deliberate move, Bazner says, to improve the health of A&W’s overall system and set it up for the purposeful growth. Of those base stores, the units not co-branded, roughly 65 percent have been reimaged, with 90 percent expected by year’s end. The KFC-A&W stores are about 80 percent upgraded. The Long John Silver’s-A&W units, though, are just 20 percent (A&W Brands bought the seafood chain out of bankruptcy in 1999 before the company that would become YUM! took it over. YUM! sold it nine years later).
Creating a healthier fleet involves thinning the co-branded footprint, Bazner says, especially on the Long John Silver’s side, where those stores are as likely to run their lifecycle as be remodeled.
Bazner says A&W will end, likely, with 200–250 solid performers on the co-branded side. “Less than half of where we started,” he says. “But a stronger half with people who are committed to the brand.” Of those, he expects about 150 to be of the KFC variety.
Why is A&W taking this route? Firstly, the company found value—both sales and affinity wise—in having restaurants fly the A&W banner.
As of December 31, there were 49 freestanding locations with drive thrus. Those averaged net sales of $950,777 with the top quartile at $1.36 million. The highest performer pushed $1.82 million.
Convenience and gas station units with drive thrus, of which there were 59 reporting in the base, averaged $566,119. Twenty-four captive restaurants with a full menu measured $659,527.