Weather, ‘economic challenges’ drag on A+W sales

Canadian burger chain A+W cites “poor winter weather” in most regions and “economic challenges” in its Alberta and Saskatchewan markets for flat sales in its first quarter.

The Vancouver-based burger and root beer chain on Tuesday booked total sales of $245.16 million for the quarter ending March 26, up 0.6 per cent from $243.8 million in the year-earlier period, for net income of $5.42 million, up from $3.33 million.

The income fund said its small sales bump came mainly from the net gain of 23 restaurants in its royalty pool as of Jan. 5, offset in part by two fewer days of sales in the quarter. The chain’s royalty pool now sits at 861 stores covering all 10 provinces and two territories.

Against that, the company said, “there was poor winter weather in most regions in the quarter and this plus the continuing weak foodservice industry in Canada, especially in Alberta and Saskatchewan, negatively impacted sales.”

Same-store sales growth, which many fast food chains in expansion mode prefer to use as their barometer of improving or declining sales, was “essentially flat,” coming in at negative 0.3 per cent, compared to positive 8.6 per cent in the year-earlier period.

“We continue to see economic challenges in the important Alberta and Saskatchewan markets that impact our overall results,” A+W Food Services CEO Paul Hollands said in the company’s release.

However, he added, the chain is “aggressively pursuing growth opportunities in the business,” specifically noting the chain’s launch of all-day breakfast sandwiches and wraps at the end of February.

The response to all-day breakfast menu options “has been exciting,” Hollands said in the release, not offering specific data.

The company in recent years has also revamped its ingredient sourcing and promoted its menu items accordingly — among them beef raised without the use of hormones or steroids, eggs from hens fed a diet without animal byproducts, chicken raised without the use of antibiotics and bacon from hogs raised without the use of antibiotics.

The changes to the chain’s beef sourcing policy led it to expand its supply lines beyond Canada to also include producers in the U.S., Australia and New Zealand who could meet the new requirements, which in turn led to backlash from some quarters in the Canadian livestock sector. –– AGCanada.com Network