Popeyes' has opportunity to 'at least' double domestic footprint

Popeyes' parent company AFC Enterprises reported another positive quarter Thursday, including domestic same-store sales growth of 4.3 percent. The U.S. system was buoyed by the 3 of a Kind promotion (three variations of Bonafide bone-in chicken and Handcrafted Tenders), Garlic Pepper Wicked Chicken and repriced Zatarain's Butterfly Shrimp.

During Q2, Popeyes opened 29 domestic restaurants, compared to 13 total the year prior. Of those, two are company-operated, in Indianapolis. CEO Cheryl Bachelder said the newly opened units are experiencing annualized volumes of approximately $1.6 million, compared to the domestic system average of about $1.2 million.

"This continuing trend reflects our selection of superior sites and the extent to which our brand-building efforts have created pent-up demand for Popeyes in new and under-penetrated markets," she said.

One of those under-penentrated markets is Minnesota, where the company has converted a handful of recently-acquired restaurants. To dip its toes in this fledgling market, Bachelder said Popeyes created pent-up demand and acquired sites in "superior trade areas." So far, sales in this market are above the national average and are exceeding company expectations.

Ralph Bower, president of Popeyes U.S., added that there are additional markets (11 priority markets across the U.S.) being considered for growth, including Charlotte, N.C., and Indianapolis.

"One of the exciting things about our brand is the opportunity for growth domestically. We think we have the opportunity to at least double in size. We're underpenetrated in almost every market in the country, so there are plenty of opportunities out there," he said.

New restaurants are in the brand's modernized design. At the end of the second quarter, approximately 40 percent of the domestic system was in the new image. Popeyes expects that number to be about 60 percent by the end of the year.

"On average, remodeled restaurants are enjoying a 3 to 4 percent sales lift," Bachelder said.

International brand-building

Popeyes "brand-building efforts abroad" also led to positive international same-store sales of 5.8 percent. During the quarter, Popeyes opened 15 new international locations, up from 12 the prior year. This includes three each in Turkey and Canada, and two in Peru.

International has become more of a focus for the company within the past couple of years and Bachelder said the initial sales results from new international units are trending higher than their respective market averages, also the result of improved site selection and brand support. That brand support includes a degree of education to native consumers.

"The Louisiana Kitchen has to be explained internationally but so does the word 'Popeyes,'" Bachelder added. To do this, the company's marketing materials explain "why Louisiana matters," including the flavors and recipes that come from that region of the U.S.

"There's an education attached to it, but no different than there would be the education of a new brand in any market," Bachelder said. "So it's off to a wonderful start and we're creating very innovative and market-specific campaigns to tell that story."

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