Executive Q&A with John Palumbo, Senior Director of Franchise Development at A&W

For more than a century, iconic franchise brand A&W Restaurants has experienced consistent growth. Today, the brand boasts more than 500 units in the U.S. and abroad, and it continues to find lucrative white space to establish new locations. 

In 2022, A&W is aiming to award 25-30 new franchise agreements and open 10–12 new restaurants. We spoke with John Palumbo, senior director of franchise development at A&W, to learn how the franchise continues to grow in both domestic and international markets. 

1851 Franchise: What is A&W doing well right now?

John Palumbo: What we are doing well right now is driving same-store sales. We’ve seen same-store sales increase every year for the past decade, including a nearly double-digit increase this year.

I think a big part of that growth is our willingness and ability to read the pulse of our franchise partners and prospective franchisees in the industry. We understand the challenges and opportunities of the job, and we’ve built an operation that helps them find success.

1851: What are some of the differentiators that help A&W stand out as a brand?

Palumbo: Even as a 100-plus-year-old franchise, we’re still growing, and that’s a huge strength of our brand. We’re also different in that our brand is owned by our franchise partners. That’s not something you see often in franchising. 

1851: What are your growth goals for 2022? What is the vision that you want your brand to fulfill?

Palumbo: Our growth goals for 2022 are to award 25 to 30 new locations and open 10 to 12 new stores.

As A&W continues to grow and adapt to the new normal that we’re all living in, we never want to lose sight of what got us to the dance, so to speak. We have a strong connection to our customers and fans, and we never want to lose that. The authenticity of A&W is what makes our customers return. We continue to deliver high-quality food and customer service while offering a small-town feel.

1851: What were some learning opportunities either before or during the pandemic that the brand leveraged to get where it is now?

Palumbo: During the pandemic, and even now, there is an increased focus on doing more with less. Whether it’s fewer employees or navigating changing restaurant layouts because there isn’t an open dining room, we’re figuring out solutions. The pandemic also forced us to think differently with regards to curbside pickup and dual-order-point drive-thrus, which continue to pay off even as dining rooms reopen.

1851: Why did you choose to join A&W as the senior director of franchising?

Palumbo: Honestly, a big part of the decision was the strength of the executive team already in place at A&W.

Moreover, I believe in the A&W brand and know it well. It is well established in the U.S. but still has plenty of room to grow, and that’s a valuable combination. But when we look at growth opportunities, we are cautious. That’s something that really drew me to the team. I could tell right away that the brand has a true moral compass when it comes to franchise development. We aren’t just collecting checks and moving on. We are growing carefully to ensure that every franchise owner is set up for success.

1851: What does an ideal franchisee for A&W look like?

Palumbo: Our franchisees work in an owner-operator model, and that’s the type of candidate we look for when awarding franchises. We want someone who will be there every day, or if they can’t be there every day, have a partner who is connected to the business.

As far as professional backgrounds, we don’t require them to have prior ownership experience or even experience in food service. We prefer that franchise partners have experience managing people, as well as some familiarity with marketing and a lot of customer service experience. Those traits are important to us. Franchise partners don’t have to be serial business owners, but we want them to work within the parameters of a franchise model. We believe that if you have a good franchisor, they can help train good franchisee candidates. That’s the model we strive for.

1851: How does A&W support its franchise partners?

Palumbo: We’ve been around so long that we really know what we’re doing. On the franchise development side, we have a full-service approach to real estate and financing. We don’t outsource the real estate process; we work closely with our franchise partners to help them secure a location and negotiate the terms of the deal of the lease or purchase. We also help them with financing. It’s not about signing a franchise agreement and sending them out on their own; it’s a hands-on approach to educating new franchise partners. Another example is our international purchasing co-op, Restaurant Supply Chain Solutions, which has shown to be important for profitability and the cost of goods.

The total investment necessary to begin operation, not including rent or land costs, is $871,000 to $1,469,554 for a Freestanding Restaurant; $401,000 to $1,051,088 for an Inline Restaurant; and $276,000 to $704,000 for a Captive Restaurant, including a $15,000-$30,000 franchise fee.