A&W Restaurants’ CEO Talks Off-Prem Pivot

A&W CEO Kevin Bazner explained to viewers of CNBC’s Worldwide Exchange how the franchised chain restaurant has performed after a “scary” March and April and the steps the legacy brand has taken during the COVID-19 pandemic.

Starting in April, business at A&W’s 550 US locations started to recover, driven by increased demand for drive-thru business, Bazner explained. (The majority of A&Ws have drive-thrus).  In the US, drive-thru visits increased by +26% in the April, May and June quarter and represented 42% of all restaurant visits, according to research by The NPD Group’s daily tracking of U.S. consumers’ use of restaurants and other foodservice outlets.  

According to Bazner, A&W Restaurants’ year-to-date sales growth is the highest since 2011, when franchisees purchased the brand. Comp sales were up by double-digits: 15% in May, 16% in June and 12% in July, and 8.2% in August.

Since franchisees acquired the brand from YUM! Brands in 2011, sales are up 38%.

As the COVID-19 pandemic continues, many restaurants are increasingly leaning in to off-prem, including drive-thru, curbside and to-go operations. A&W is among those brands

In response to the pandemic, A&W expanded delivery and added family pack meals to its menu. The company has helped its franchisees secure PPE, suspended advertising and franchise fees.

Out of A&W’s 550 locations in 39 states, about 40 are legacy restaurants with the classic drive-in format. Those locations have converted drive-in stalls to pickup stalls, Bazner said, adding that “those stores have performed the best.”

Also for the foreseeable future, safety and sanitation are top of mind. “Safety is new buzz word in hospitality,” said Bazner.

“A lot of that stuff is here to stay,” Bazner said about mask, plexiglass barriers, increased sanitation and hand sanitizer,  “and certainly (so is) off-premises. We continue to focus on the drive-thru business and layering upon that delivery and curbside.”