Popeyes' new unit sales are 30% higher than system average

Feb. 28, 2014 | by Alicia Kelso

Popeyes Louisiana Kitchen reported its fiscal 2013 results on Wednesday, which included its fifth consecutive year of domestic same-store sales growth (at 3.6 percent), and seventh consecutive year of international same-store sales growth (at 4.7 percent).

One indication that this momentum could continue comes from the chain's new restaurants; CEO Cheryl Bachelder said on the company's earnings call that first-year sales of Popeyes' new freestanding restaurants opened in 2012 averaged $1.6 million.

This is "approximately 50 percent higher than new freestanding restaurants opened in 2007, and approximately 30 percent higher than the current total domestic system average," she said.

Drivers of that trend include national cable advertising and restaurant-level margin improvements made within the past few years.

"Our primary gains in restaurant operating profit have been from the stunning improvement in the average unit volumes of our restaurants, and from the strong cost savings we've delivered to our system," Bachelder said. "The go-forward opportunity in cost is primarily at the restaurant level."

To enhance that opportunity, Popeyes is currently working on back-of-the-house systems upgrades that give franchisees better control and yield better margins.

Ralph Bower, president of U.S., said a standard for the new systems was required by the end of 2013. This year, the chain's focus shifts to training employees "on how to get the best use out of those systems to drive profitability at the restaurant level."

The training will be done nationwide. The company will continue to invest in driving AUVs both domestically and internationally, executives said.

Guest experience, expansion efforts

Another initiative coming this year — in the summer — is a new guest experience tool.

"The next-generation resource will help our restaurant managers focus on action steps that will further improve the guest experience," Bachelder said. This has also facilitated new training procedures.

Expansion — internationally and domestically — also remains a priority. During 2013, Popeyes opened 194 new restaurants, including 126 net new units globally. This included entry into two new markets: Vietnam and Chile.

Domestically, six new company-owned locations were added in two new markets — Indianapolis and Charlotte, N.C. — as well as three new units in Memphis, Tenn., and New Orleans.

"Over the last five years, Popeyes has opened 365 new locations in the U.S. That is a 20-percent increase in the size of our system," Bachelder said.

Expected for 2014 is the opening of 180 to 200 new restaurants, including about 75 new international locations. Net restaurant openings are projected to be between 100 and 130.

All new restaurants feature the brand's new Popeyes Louisiana Kitchen image. In 2013, about 550 domestic units were remodeled in the new image, which brings the total to plus-1,100, or 60 percent of the U.S. system.

"Our expectation is that by the end of 2014, approximately 80 percent will be in the new image," Bacheloder said. "The approximate cost, including the reinstallation of digital menu boards and other equipment, is $120,000."

On average, remodeled restaurants are experiencing a 3 to 4 percent sales advantage compared to non-remodeled units.

Topics: Franchising & Growth , Marketing / Branding / Promotion , Operations Management

Alicia Kelso / Alicia has been a professional journalist for 15 years. Her work with FastCasual.com, QSRweb.com and PizzaMarketplace.com has been featured in publications around the world, including NPR, Good Morning America, Voice of Russia radio, Consumerist.com and Franchise Asia magazine.
View Alicia Kelso's profile on LinkedIn

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