Royalty Reductions Help New Franchisees Thrive in Post-Coronavirus Era
Lexington, KY (RestaurantNews.com) A&W Restaurants posted double-digit, year-over-year sales in May, with some franchise locations doubling their sales. Other burger chains, on average, managed only a two-percent increase, according to Black Box Intelligence.
The iconic brand’s performance comes as it reduces royalties for new franchisees. The incentive program lowers royalties in the first year of all new development agreements from the standard 5% to 3%. Second year royalties are 4%. Initial fees on multi-unit agreements also are being discounted.
“The incentives give franchisees extra cushion in their first few years of operation,” said Dave Crowley, director of Franchise Recruitment. “They are in keeping with our commitment to help every franchisee grow profitable same-store sales.”
A&W, which celebrated its 100th anniversary last year, has experienced an uptick in interest among potential franchisees since the COVID-19 outbreak started. “We’re hearing from candidates who like that A&W has stood the test of time,” said Crowley. “They want to be part of a brand that is stable and has shown it performs well, even during the most challenging times.”
A&W responded to the COVID-19 pandemic by introducing exceptionally successful family packs and rapidly expanding delivery to supplement drive-in and drive-thru service. Its menu of all-American food favorites, including fresh-made Root Beer sold by the gallon, has been extremely popular as guests turn to traditional comfort foods.
In 2011, A&W franchisees acquired the company from YUM! Brands and hired Kevin Bazner as CEO to lead its resurgence. Since then, A&W has posted eight straight years of U.S. sales growth, with average unit volumes up 38%. The leadership team Bazner installed remains in place today.
Unlike most other established fast food brands, A&W has territories available throughout the country. Its restaurants are successful in markets of all sizes. Having opened more than 70 new restaurants since 2011, A&W currently has 15 freestanding and convenience store locations in development.
With many professionals avoiding travel, A&W is hosting virtual discovery days. “Prospects are eager to make decisions and start building restaurants,” Crowley said. “We’re doing everything we can to expedite the development process for them.”
Now in its 101st year, A&W is America’s first franchised restaurant chain. Known for Root Beer that is made fresh in each restaurant and served in frosty mugs, there are more than 900 A&Ws in the U.S. and Asia.