Quality focus key to beefing A&W sales, expansion
TORONTO — Bolstered by an ongoing strategy to beef up its food quality and customer experience, A&W is now expanding rapidly in Canada despite the challenging environment fastfood giants face.
While some market leaders appear to have stumbled navigating changing consumer demands for healthier foods made up of more high-quality ingredients in recent years, A&W has continued to post record strong growth, according to food analysts.
For its 2015 financial year, the fast-food operator reported same-store sales growth — a key metric that measures sales at restaurants open for more than a year — of nearly eight per cent, said Elizabeth Johnston, equity research associate for Laurentian Bank Securities.
That’s higher than most of A&W’s quick-service competition in the country, Johnston noted, which has recently ranged anywhere from negative one per cent to five per cent.
McDonald’s Canada, by way of comparison, recorded several years of sliding sales figures and operating profits before marginally beginning to post improvements in 2016, according to estimates by industry research firm IBISWorld’s April report on the Canadian fast-food industry.
A&W, however, has been ahead of the curve by incorporating higher quality ingredients in its food, said IBISWorld industry analyst Andrew Alvarez, “which has helped them significantly.”
In 2012, the chain started serving up beef from cows raised without the use of hormones or steroids.
“We saw a real uptick,” in quarterly sales figures after introducing the more natural beef, said Don Leslie, A&W’s chief financial officer.
The company followed that up with chicken and pork raised without the use of antibiotics, and eggs from hens fed a diet free of animal byproducts.
The chain’s strong sales have also been boosted by significant expansion, added Alvarez.
Since A&W opened its first restaurant in Winnipeg in 1956, it’s grown to 858 Canadian locations as of June 19. A&W plans to expand by an additional 300 restaurants over the next five to seven years.