North Vancouver-based A&W Food Services of Canada Inc. is set to rapidly expand in the next few years after adopting a new franchise model for the company in early 2009.
A&W said it has secured commitments for 60 new locations in Ontario to open over the next three to five years, which would push the total number of restaurants to more than 200 from its current 150. The company has nearly 700 restaurants across the country.
The rapid growth will come from adopting its new multi-location franchise model, which gives franchisees the right to build and operate a number of restaurants over a fixed period of time within a geographic area.
The change was a significant shift for the company, which had only offered single-site franchises since it was founded in 1956.
Over the past few years, the company has opened roughly 20 new restaurants annually. It has opened 58 over the past three years, 22 of them opened in 2009.
A&W signed its first multi-site franchise agreement last September, which will contribute about a dozen new restaurants in the Hamilton, Burlington and Milton regions of Ontario over the next five years.
The company has faired relatively well during the recession, with restaurants within the royalty pool of A&W Revenue Royalties Income Fund (TSX:AW.UN) reporting same store sales growth of 2.5% for the nine month period ending September 6, 2009.
The fund reported total sales from the 685 restaurants in the royalty pool of $496.8 million for the nine month period ending September 6, 2009, up from $477.4 million in revenue from 676 restaurants during the same period in 2008.
Graham Cooke, vice-president of new restaurant expansion said the new franchise model is key to the company's growth in Ontario and Quebec.
A&W Revenue Royalties Income Fund's unit price range during the past week: between $15.65 and $15.73; 52-week high: $16; 52-week low: $12.05.