How Root Beer Sales Give A&W Restaurants a Critical Edge On The QSR Competition

The name A&W is synonymous with root beer. After more than a century of serving crowd-pleasing burgers, fries, chicken tenders and other American-food favorites, the iconic franchise is still most closely associated with its famous frosted mugs of fresh-made root beer. In recent years, that beloved menu offering has provided a critical edge for A&W Restaurants as the brand continues to experience a high volume of beverage sales while competitors see drink sales plummet.

Since the onset of the COVID-19 pandemic, QSR brands have experienced a boom in drive-thru and to-go sales at the expense of dine-in. For most brands, that shift was celebrated, indicating the segment’s resilience in the rapidly changing foodservice landscape. A dip in beverage sales as a result of that shift has largely been seen as a necessary concession —  but it's a concession that A&W has not had to make, thanks to the brand’s fan-favorite root beer.

“Most concepts had no way to maintain solid beverage sales over the past two years,” said A&W CEO Kevin Bazner. “Customers typically already have beverages at home, so if they are picking up take out or going through the drive-thru, they tend to skip the drink. But A&W hasn’t lost a step with regards to beverage sales.”

Even at the height of the pandemic, when more than 90% of A&W's sales came from drive-thru and to-go orders, Bazner says beverage sales — specifically root beer — remained at or near pre-pandemic levels.

“People come to us specifically for root beer,” he said. “It’s a handcrafted product, made fresh at every one of our locations around the globe. And it's always been served in a frosted mug, which has helped make it iconic. We have the second-highest beverage sales in the QSR industry, and 75% of our carbonated beverage sales are root beer, so it’s a major part of our brand."

Beverages are among the highest-margin menu items in the foodservice industry, so Bazner says A&W’s continued success in that category is no small win for franchise owners.

“Beverages are incredibly profitable — anyone who has worked in this business can tell you that,” he said. “In the QSR segment, most brands see about 75% or 80% of customers purchase a beverage. At A&W, it’s about 90%, which means our restaurant owners are getting higher check averages with minimal overhead.”

Because A&W’s root beer is made in-store, franchise owners also save on distribution costs. Rather than paying for gallons of root beer to be shipped to each store, the franchise only has to purchase concentrate, which is mixed with water at the store. “The savings are dramatic, and they add up quickly,” Bazner said.

Throughout the pandemic, A&W took a number of steps to keep its frosted mugs of rootbeer top of mind among consumers.

“We launched a big social media push that put our root beer front and center,” Bazner said. “Any time we feature the frosted mug on social media, we see response and engagement increase.”

A&W’s beverage sales go beyond the frosted mug. The franchise also offers bulk root beer sales, including gallons and growlers, which Bazner says customers happily pay a premium for.

“People will pay more than they would at the grocery store for a gallon of root beer from A&W because they love and trust the product,” he said. “Throughout the pandemic, we found opportunities to bundle those bulk sales with other items. Typically, when most QSR brands offer larger, packaged meals, they exclude beverages because people have those at home, but we’re able to offer a gallon of root beer with a family meal, and it’s a compelling selling point."

A&W has served the same root beer, with only minor modifications, for the past 102 years. “Not only is it iconic, it's a genuine comfort to people,” Bazner said. “It’s familiar, it’s consistent, and it’s a large part of the reason we have such a strong relationship with our customers.”

The total investment necessary to begin operation, not including rent or land costs, is $871,000 to $1,454,750 for a Freestanding Restaurant; $401,000 to $1,013,750 for an Inline Restaurant; and $276,000 to $704,000 for a Captive Restaurant, including a $15,000-$30,000 franchise fee. To learn more about franchise opportunities with A&W Restaurants, please visit https://franchising.awrestaurants.com/