Starting a new business is always a tough task since it requires money, time, and a lot of effort. However, it is worth it when you think about the freedom and independence you obtain thanks to your hard work and dreams.
Besides, you should be able to start a business in something you actually enjoy instead of dealing with the regular job where you open 8+ hours and get paid a salary to make ends and, most of the time, be unable to save for what you want.
If you want your life to be different from the usual salary and working hours, you will have to choose a suitable business model followed by a specific option in the market that you can enjoy + make money with.
A&W Restaurants franchise is one of those options you could consider as long as you are okay with what franchising entails.
For starters, it is a good business model, but it isn’t, for a fact, for everyone that only wants to be independent.
Franchising requires lots of work, and in addition, you have to be sure that the franchise you are choosing is suitable for your goals and dreams.
Therefore, if you already had A&W Restaurants in mind, we want to help you make a decision with the information you should be searching about.
Food for All Americans: A&W Restaurants History
Unlike what many people believe, A&W Restaurants started decades ago and has been around as one of the best fast-food restaurants in America for its amazing burgers, draft root beer, and root beer floats.
We personally love it, and whenever we want to sin a little bit from our diet (joke, we don’t have one), we decide to visit the place or ask for delivery.
That being said, when did it start in specific?
When Roy W. Allen decided to open his first root beer stand in Lodi. California, on June 20, 1919, he never thought that it would grow so much.
Just four years later, and thanks to the success of his root beer, A&W was established in Sacramento, California, by Allen and Frank Wright, a former employee from the first stand.
The two opened a drive-in place called A&W, following the initials of their last names. In it, tray girls and boys served as waiters at the curb.
The company just kept growing, considering how much people loved the root beer, and as a result, Allen decided to buy Frank Wright’s stake in 1924.
After it, in 1925, Allen began franchising the root beer, while the franchisee added the other menu items and operated at their discretion or preferences.
The franchise clearly grew from the additions made by the franchisees over the years, and in 1950 when Allen decided to sell the company and retire, the expansion didn’t take long for the new owner.
In the 1950s and 1960s, more people joined as franchisees and compromised themselves to work in the business for at least 20 years based on their contracts.
In 1956, the company expanded to Canada, and by 1960, there were over 2,000 restaurants between the USA, Japan, and Canada.
From 1963 and the next few years, A&W started franchising, expanding to foreign markets, and making the business grow.
Over the following decades, from 1963 to 2011, the company went through several new owners that introduced the franchise to other countries like Singapore and expanded the menu in burgers while also offering the A&W Root Beer in bottles and cans.
A&W Restaurants’ history is quite “messy” due to all the processes it took to be one of the best franchises nowadays, but it sure has a lot to offer for new members who want to bet their money and time on it.
With over 100 years in the market and expansions being added in the USA yearly, you can rest assured that the company remains strong.
But Is It a Good Franchising Option?
The food is good, the attention (in most places) is good, and the company’s reputation is good as well. So far, we can say that this franchise is great.
However, not everything is perfect, and if you’re considering investing in it in order to have your own business, you need to evaluate the needs and factors involved first.
For example, how much will you have to invest? How long does it take to launch the franchise? Can you afford to manage one? And are you ready to take on this type of work?
To begin with the essentials, we will be focusing on giving you a short answer: A&W Restaurants is a good option if you want to franchise and own a business without having to start alone from zero.
But you will need to handle the requirements, fees, and payments required to get started and continue operating in the future.
Before mentioning the numbers, you must know that the franchise offers different options when making an investment, which is why the initial one can vary based on the business you decide to start.
The initial investment covers from captive restaurants to freestanding restaurants, including conversion and inline restaurants, but none of them include real estate expenses. With this in mind, this is what you can expect to spend.
- Professional fees, licenses, and permits: $30.000 – $80.000.
- Building costs (includes site work): $500.000 – $525.000.
- Signs: $25.000 – $41.000.
- Furnishings, fixtures an equipment: $200.000 – $325.000.
This part alone provides the sub-total: $755.000 – $971.000.
However, other expenses can also be included:
- Initial franchise fee: $30.000.
- Grand opening: $5.000.
- Management training course expenses: $3.000-$10.000.
- On-site team member training expenses: $6.000 – $25.000.
- Miscellaneous Opening Costs: $6.000 – $10.000.
- Opening inventory: $6.000 – $12.000.
- Additional funds – 3 Months: $30.000 – $150.000.
These are upon agreement, and you don’t have to choose them. However, if you do, the total ranges between $841.500 to $1.2 million.
New Inline Restaurant (Retail Space, Gas Station, or Convenience Store):
- Real Estate: Not included.
- Professional Fees, Licenses & Permits: $15.000 – $40.000.
- Building Costs Including Site Work: $150.000 – $325.000.
- Signs: $15.000 – $40.000.
- Furnishings, Fixtures & Equipment: $150.000 – $180.000.
With this, the sub-total goes from $330.000 to $585.000. But including other expenses like:
- Initial Franchise Fee: $30.000.
- Grand Opening: $5.000.
- Management Training Course Expenses: $3.000-$10.000.
- On-Site Team Member Training Expenses: $6.000 – $25.000.
- Miscellaneous Opening Costs: $6.000 – $10.000.
- Opening Inventory: $6.000 – $12.000.
- Additional Funds – 3 Months: $30.000 – $150.000.
The total goes up from $416.000 to $827.000.
For other options like co-brand or conversion restaurants, your initial investment ranges from $343.000 to $734.000. In contrast, new captive restaurants go from $269.000 to $612.500 and include the same or similar expenses distributed at lower prices.
Will It Take Too Long?
With such an investment to handle regardless of the option you choose, it is important to know when you will start to get your ROI and, of course, revenue after you have established the new franchise.
In the case of A&W Restaurants, you can start in 3 to 6 months, depending on the additional expenses, training, features, and elements you chose for your franchise.
Overall, we would recommend you take the training and support by paying the fees since the franchise will then guarantee you follow the designed standards and increase the success rate for your franchise in specific.
Compared to other franchises, A&W doesn’t take too long, but it takes some time to finally see your ROI and revenue after you start depending on where you are located and if you are a good franchisee in services and attention.
Based on time alone, we would recommend giving it a try, but if it is for other factors, we will need to discuss them in detail to give you our verdict about a question you must have right now: is it worth it or not?
Pros & Cons – A&W Restaurants as Your New Business?
As we mentioned when starting this post, if you are fine with the franchising business model, you shouldn’t have problems dealing with the company’s standards and how they operate.
However, if you are not, there’s no point in focusing on this company at all, or you will just waste your money.
If you are just having, on the other hand, a hard time trying to make a decision, we will tell you this: A&W is great, but it is too expensive unless you go for the most affordable options.
Franchising has never been cheap, and regardless of which one you choose, it is something that will follow, but compared to other options, this one can seem a bit too overpriced for most people.
Therefore, we would recommend it because the business has a great reputation and is going strong in the market after 100+ years, but if you aren’t sure about the large investment, don’t do it.
For you to have a better overview, here are the pros and cons you should consider:
- The company has a great reputation, and people in the USA and Canada love it over other fast-food restaurants, which means profitability is very good.
- You don’t have to start from zero or more like by yourself.
- A&W will assist you in establishing the new restaurant or franchise.
- You get started quicker than with other franchises or your own business.
- You don’t have to work directly in the restaurant after a few months.
- You get your independence and freedom thanks to the stable income stream the franchise offers long-term.
- It is quite expensive to start regardless of the restaurant or franchisee option you choose.
- Royalty, advertising, renewal, and other fees will reduce your income and must be paid frequently.
- Inventory, equipment, or other materials can only be supplied and obtained with the company.
- You need to meet standards and rules if you want to continue in business.
- Additional fees for employees hired apply as well.
If you are able to handle the cons, A&W Restaurants will be a great option for you.
However, don’t go for this franchise if you aren’t comfortable, feel it is too much money, or consider that other business models and opportunities fit you better.
Spending Less but Earning the Same (Or More)
Business models are many, and you should evaluate all of them before deciding on franchises and opportunities.
A&W Restaurants is great, but it is not for everyone as we initially mentioned.
We consider it pretty expensive, and you must be into this type of business and niche if you decide to invest in it. If not, what is the point? After all, we didn’t mention that it takes lots of work for a very long time.
Now that we are kind of complaining about the business, you must be wondering what we would recommend instead, and it is simple to answer: lead gen.
Lead generation is a digital business model, which means you won’t have to leave your home, don’t need real estate or even other employees, and can save a lot of money in it.
If you haven’t heard about it, it is simple:
- You choose a niche of small companies or businesses locally, like tree trimming, septic tanks, or others.
- You contact them and offer to generate leads (prospects or potential clients) for them by building a website.
- When you close a deal, you proceed to build the site.
- You must rank it on Google to generate the traffic and then the leads.
- Once generated and ensuring the site has a leads stream, you get paid for the service and per lead.
This is a passive income business model because even when you have to go over these steps, there’s no need to work on the same website twice and just wait for companies to pay you for the leads.
Of course, it requires training since we are sure you don’t know much about lead gen and how to handle all the steps, and for it, this training program can help tons.
You only need to click here to get more info!
Here’s Our #1 Recommended Online Business Model: