LIAP #05 - Turnaround Management of A&W(M) Sdn. Bhd.

LIAP #05: Corporate Turnaround Management of A&W Malaysia

About 25 years ago, TDM Berhad, a publicly listed company on the Kuala Lumpur Stock Exchange (KLSE), took full control of A&W (M) Sdn. Bhd. I was a director of both companies at the time. Prior to this acquisition, TDM owned only a 30% equity stake in A&W, which was losing approximately RM300,000 annually.

The acquisition was a strategic corporate decision aimed at:

1. Diversifying TDM’s revenue streams from plantation-based income to the food and beverage (F&B) industry.

2. Reducing financial losses and improving the group’s overall revenue and profitability.

The Turnaround Strategy

To achieve these objectives, we formed a Corporate Turnaround Management (CTM) team comprising two directors and senior management of A&W. Turnaround management is essentially a business project, and like any project, it required:

• Meticulous planning

• Disciplined execution

• A clear vision of the desired outcome

From experience, I can say that turning around a struggling business is tough work—but worth every effort and investment.

Understanding A&W’s Business Landscape

Before developing the CTM strategy, we conducted a thorough assessment of A&W as a business entity, focusing on four key quadrants:

1. Business Concept – How A&W positioned itself in the fast-food industry.

2. Organization – The management structure, human resources, and leadership.

3. Financials – Profitability, cost structures, and potential for growth.

4. Operations – The efficiency of daily restaurant operations, supply chains, and customer service.

As always, we began with the end in mind—determining what we wanted A&W to become within three years and setting measurable goals to achieve that vision.

Executing the Turnaround Plan

Once the objectives and strategy were clearly defined and agreed upon, the directors and management worked as a team from day one.

1. Closing Unprofitable Stores & Expanding to Better Locations

My first task was to visit all 13 A&W outlets. I found that three of them were losing money. With the Board of Directors’ (BOD) approval, we made the tough but necessary decision to close those unprofitable outlets and identify better locations for expansion.

Lesson: In business, you must know when to cut losses. Like fixing leaking pipes, problems must be stopped early before they drain the company’s resources.

Within three years, we expanded from 13 to 30 restaurants nationwide.

2. People: The Key to Success

A business is only as good as its people—both employees and customers. To kick-start the transformation, we:

• Hired a new General Manager (GM) to lead the restructuring.

• Implemented a corporate restructuring to place the right people in the right roles.

• Empowered existing staff with training while hiring new staff to support expansion.

With a minimum 20% staff turnover in the fast-food industry, recruitment and training became an ongoing process. After three years, A&W had grown to 300 staff and generated RM30 million in revenue.

3. Investing in Growth: CAPEX & OPEX

Fast food does not mean fast money. Growth required capital investment. Each new outlet required at least RM500,000 in setup costs.

With a projected RM3 million annual profit within three years, it was financially justifiable for TDM to inject RM10 million to support the expansion.

Lesson: Expansion requires strategic financial planning. Investing in the right areas is key to sustainable growth.

4. Hands-On Leadership & Operational Discipline

As directors, we not only set the vision but also closely monitored execution. This included overseeing:

• Procurement processes

• Restaurant operations

• Service quality

One night, I visited a 24-hour A&W restaurant at 1 AM and found the shop manager sleeping. Instead of firing him, I reassigned him to the Training Department the next day.

Lesson: Leadership is about sending a message. My hands-on management style was heard loud and clear—discipline and accountability matter.

5. Competing with Industry Giants

The fast-food business is highly competitive. We had to compete with giants like KFC and McDonald’s by:

• Enhancing product quality and service to meet customer expectations.

• Leveraging media—we ran daily TV and radio ads to maintain brand visibility.

• Exploring new locations to expand our market presence.

Lessons Learned from the Turnaround Experience

1. Always have a clear vision – Start with what you want to achieve and work backward.

2. Cut losses early – If a business unit is failing, fix it fast or close it down.

3. Invest in people – The right leadership and trained staff are critical to success.

4. Plan financials strategically – Expansion requires capital, but investments must be justifiable.

5. Be hands-on and lead by example – Walk the ground, engage with staff, and set high standards.

6. Stay competitive – Always know what your competitors are doing and strive to do better.

Most importantly, enjoy the journey. After all, some of the best moments included indulging in a Root Beer Float with a Coney Dog on a Tuesday.

All reactions:

2Rosman Mohd Said and Mohammad Amin