The loneliness of a fast-food franchise
By Tamsin McMahon - Wednesday, November 21, 2012 - 0 Comments
Despite big investments to spruce up stores and expand menus, once-thriving restaurant chains are suddenly struggling to get ahead
Simon Hayter
Analysts were understandably skeptical this month when Tim Hortons interim CEO Paul House blamed the company’s disappointing third-quarter financial results partly on “capacity issues” at some of its restaurants. Canada’s iconic coffee-and-doughnut chain reported that it’s on track to miss its annual growth target in part because lineups at some of its stores were simply too long. “In some ways, it is not good news, but in other ways, it is good news in the sense that . . . we’ve got lots of business,” House told a conference call last week.
It’s a remarkably positive spin on what has been an off year for the ubiquitous coffee chain. Sales growth at existing Tim Hortons stores has been below two per cent for the past two quarters, while growth of 2.3 per cent at U.S. stores fell well below its target of five per cent. What growth the company has seen has been from customers spending more at each visit, even as traffic to its stores declined. The report wasn’t all bad news. The chain did manage a $105.7-million profit for the quarter, up two per cent from a year ago. Continue…
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Canada still loves A&W
By Alex Ballingall - Tuesday, May 29, 2012 at 3:33 PM - 0 Comments
The fast food chain is ‘barely breathing’ in the U.S., but north of the border it’s on a tear
Photograph by Andrew Tolson
A&W Canada is an old-school company. It opened its first drive-in on Winnipeg’s Portage Avenue in 1956. Many of its executives have been at the company for years, including the CEO, whose first day with A&W was 32 years ago. Most outlets still have a ’50s-inspired decor. And like a humble pro athlete from a bygone era, A&W celebrates its victories—nine consecutive years of same-store sales growth and continued expansion into new markets—quietly. “A&W has kind of always been in the background, just steadily growing,” says Robert Carter, a food industry analyst with NPD Group. “It’s under the radar.”
The home of root beer and Teen Burgers has emerged as the second biggest burger chain in Canada by number of outlets, topping better known rivals like Wendy’s and Burger King. On May 16, it opened its 754th restaurant in Canada. Two weeks earlier, A&W released its first-quarter results, showing sales growth of 3.7 per cent over the same period last year, to $173 million. What makes the success all the more surprising is that in the U.S., where the brand originated in 1919, A&W has been falling off the map. There are only 300 A&Ws in the entire country. “They’re barely breathing,” says Bob Goldin, executive vice-president at the Chicago-based industry consulting firm Technomic.
A&W Canada is a separate company from its American counterpart, and has charted a different course in everything from its branding to menu items. The key to its success, says CEO Paul Hollands, is a willingness to adapt, while at the same time staying true to the character of a brand built largely on baby boomer nostalgia for drive-ins and frosty mugs. “We just keep picking away at the business as the world around us changes,” he says. Up until about 15 years ago, says Hollands, the burger chain was largely absent everywhere except the Atlantic provinces and the West. More recently, its main strategy has been to establish a stronger presence in Ontario and Quebec, regions traditionally dominated by Tim Hortons and McDonald’s. It’s working: on Feb. 8, Hollands was at Toronto’s Pearson International Airport for the opening of the 750th restaurant, making Ontario the province with the most A&W locations.
