Article
A&W rebrands with 3-D experience
After years of only co-branded units, A&W standalones, with drive-in, dine-in and drive-thru, are making a comeback.
August 9, 2009
A&W Restaurants built its brand on the tradition of freshly made root beer delivered to customers' cars. But over the last decade, the chain set aside that tradition to grow on the coattails of sister brands such as KFC and Taco Bell, as part of parent Yum! Brands' multibranding strategy.
A&W's 620 multibrand locations far outnumber its approximately 360 A&W franchised stores in the United States, although the company does have more than 260 standalones in nine other countries.
While the strategy worked to build A&W's brand awareness and number of units, A&W realized many consumers were missing out on the essence of the brand, said Doug Heinrich, director of asset strategy for A&W.
"Most people when they look back on their memories of A&W, it somehow involved that summertime experience with a frosty root beer and a car hop service," he said. "For the brand, it's a key differentiator and a link to our rich heritage."
That heritage is long, as A&W celebrates its 90th anniversary this year. The company got its start as a root beer stand in Lodi, Calif., and by the 1950s was a national drive-in chain. The company merged with Long John Silver's in 1999, forming Yorkshire Global Restaurants. The next year, the chains' stores began multibranding with KFC and other Yum! brands (then Tricon Global Restaurants). Tricon bought Yorkshire in 2002 and formed Yum! Brands, which continued the multibranding strategy.
But the company's future is not tied to remaining a second menu board in larger concepts.
The 3 Ds: Drive-in, dine-in, drive-thru
As the company focused on renewing its brand strategy, executives realized they needed to return the focus to the drive-in experience, Heinrich said. And they're counting on the new 3-D drive-in, which combines drive-in, drive-thru and dine-in options in one store, to do so.
A&W added eight 3-D drive-ins over the last year and has plans for more. In the last six months, the company has announced at least three multiunit franchisee agreements in Wisconsin, including 12 planned for the Milwaukee area by the end of next year.
Those agreements are newsworthy for a brand that until last May hadn't opened a standalone store for a decade. This year, three 3-D models have opened, including one last week, and Heinrich said the company hopes to open about seven more before the end of the year.
Doug Kays, manager of architectural and engineering services for A&W, said the company is focusing on the Wisconsin market because of its strong brand recognition there. Traditionally, A&W drive-ins there have been open only in the summer due to the region's severe winters.
Drive-ins a draw in north
Wisconsin may seem an odd place for the company to re-launch its standalone stores, but ironically, A&W developed its new store strategy there. It made sense to start in that market because the chain has a number of seasonal drive-in stores in the Green Bay and Milwaukee area, Kays said. Only a handful of A&W locations in the state are multibrand locations, and the market is one of the few where the company has local TV advertising.
Heinrich said the company will focus first on franchising in Wisconsin and Michigan markets, where it has local broadcast advertising before moving into other markets.
Sonic, the country's largest drive-in concept, has had successful store openings when it opened in Northern markets. For example, recent openings in Wyoming, Mich., and Kingston, N.Y., have seen three times the sales of stores that open in existing markets.
A&W also experienced record sales when it opened its first standalone in recent years last May in Oshkosh, Wis. That store was a drive-in/drive-thru model, and Kays said, the company was so impressed with the store's sales that it saw the potential for a year-round presence in the market and developed the 3-D model.
Heinrich saidthe chain has always had a dine-in option but until last year never had restaurants with all three options. Past units had dine-in only, drive-in only or a dining room with a drive-in. The 3-D option "gives both, with the convenience of drive thru."
Although Heinrich was unable to provide sales numbers for the 3-D models, he did say that the company is confident in the design's potential. "We believe those numbers are moving in the right direction."
Rebranding looks back, forward
Other components of the company's rebranding included playing up its 90th anniversary, facilitating franchise growth and adding new menu items. Its new menu items include four new drink lines: frozen blend-in Blendrrrs, Smoothees, Slushees and Limeade.
To help franchisees obtain financing in the tight credit market, A&W worked to add its name to the Small Business Administration Registry. Inclusion on the registry helps assure lenders of a brand's viability, a necessity when franchisees turn to small, community banks for loans.
Tying into A&W's history helped elicit nostalgia for the brand as a way "bridge that heritage to the future of the brand," Heinrich said.
Patrick Schwerdtfeger, an author and speaker on the topics of branding and social media, said the company is smart in "attempting to leverage the trend towards nostalgic living in America." Retro is big in everything from clothing and furniture to cars, such as the throwback Ford Mustang and Chevrolet Camaro.
"A&W is hoping to bring back the standalone drive-in restaurant adored by earlier generations," he said.
Schwerdtfeger also said it's clearly time for the chain to move away from co-branding and focus on standalone units.
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"A&W used co-branding to expend the reach of their brand. With such a clear objective, co-branding can be extremely effective and powerful," he said. "Once the objective is met, companies should consider abandoning the strategy. That is precisely what A&W is doing."
As A&W looks to the future, Heinrich said, the chain may do some multibranding but not with the new 3-D model.
"With the three dining options, adding a brand to that would really dilute the experience in our eyes," he said. "Our brand is really focused on the single brand, and focusing on the unit economics. Multibrands are still being built, but it's less of a strategy than in years past."
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