Aug 21, 2009

Brand Health Check... A&W needs to revamp a tired and dated brand

A&W Restaurants - the US-based fastfood chain built around A&W root beer - is trying for a second time to build a presence in Southeast Asia.

Brand Health Check... A&W needs to revamp a tired and dated brand
Once a thriving chain of drive-in eateries, A&W has suffered decades of corporate instability that strangled sales and forced many A&W outlets to close. In 2003, its five outlets in Singapore, plus several in the Philippines were shut down.

Even the popularity of its root beer could not stave off the troubles that beset the company. A revolving door of owners and executives took its toll. Competition from other aggressive fast-food chains, such as McDonald’s and KFC, and high operational costs contributed to hefty losses.

Today, A&W has 360 outlets in the US and 260 across nine other countries. It has retained a presence in some Asian markets. It has 200 outlets in Indonesia, one of the few places where the brand has been doing consistently well. Its Bangladesh operations are also thriving.

Despite A&W’s disappointing end in Singapore, the brand believes it can build on this success and has now announced a change in strategy in Southeast Asia. The company is now targeting growth in Malaysia and Thailand.

KUB Malaysia, which operates A&W in the two markets, recently announced aggressive expansion plans. In Thailand, the company is looking to invest US$23 million. The brand, which currently has 33 branches, is seeking to triple its presence in the country by 2015 to 100 outlets. In Thailand the brand will be rejuvenated through new store designs, packaging and uniforms.

In Malaysia A&W aims to have 60 outlets by 2012, up from 37 now. Each outlet will cost between $206,000 and $353 000, depending on location and size.

The company has also said it is looking at regional expansion beyond Malaysia and Thailand.

The question it faces is how to position itself against a growing number of larger, more powerful rivals.

- In 2003, KUB Malaysia, which owns the A&W franchise, closed five A&W outlets in Singapore after reporting a loss of US$854,000.

- Last year, A&W Malaysia, which has 33 outlets, posted a net loss of $1.5 million on a revenue of $11 million.

- This year, KUB aims to invest $23 million in A&W Thailand and $22 million in A&W Malaysia. The company also wants to triple the number of Thai outlets to 100 by 2015, with 60 outlets in Malaysia by 2012.


Tony Prehn, CEO, Lowe Thailand

A&W needs to position itself in the highly competitive quick-service restaurant (QSR) category. While the brand name may have some residual recognition, consumers would struggle to tell you what it stands for or even what the flagship products of the brand are. We are all familiar with the Big Mac and the Bucket, but what does A&W bring to the table?

The challenge for A&W is more about the brand than branding. The origins of A&W go back to the 50s. A brand renovation is needed. It is essential to build on what made the brand in its heyday. It’s important now that A&W’s proposition and product connect with consumers in this iPod, Facebook and YouTube age. One route may be to make a feature of its strangely conservative iconography. There is something timeless and reliable in its current presentation and that could be a powerful asset if handled carefully.

A&W’s success depends largely on the scale of its ambitions and its willingness to reinvent itself. Taking a safe, conservative approach won’t do. The world has moved on, and A&W is already suffering a decline from the consequences of brand inaction. Success is borne of courage and deep pockets. A&W needs both.

Dean Bramham, CEO, Publicis Malaysia

A&W seems to have been flailing about for years in one of the most competitive environments there is. KFC, Pizza Hut, McDonalds, Jollibee, Burger King, Wendy’s and Carl’s Jnr are incredibly focused on investment in their brands, brand experiences and innovation.
This has left A&W a small,dated, sidelined player in the category with too few stores, no focused positioning and too much Americana baggage.

On the bright side, the brand has a strong heritage, was a very early QSR entrant into Asia in the 70s and 80s and was famous for its American Graffiti-style drive-throughs. It also has a solid range of core products led by its root beer and floats, Coney Dogs, waffles and burgers .

But if it doesn’t invest in its fixed assets to build a minimal retail presence, renovate stores and drive product innovation, it can forget about its growth ambitions.

Any new brand positioning must be focused and rooted in its history, products and experience while remining relevant to the region.
Whatever the positioning, one thing is for sure: to take on the category it needs to leave safe at the door and be very daring and evocative.

Got a view?
Email [email protected]

This article was originally published in 13 August 2009 issue of Media.


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