Article

Popeyes cites 'superior' real estate focus as driver of new unit profit growth

The chain outperformed the overall QSR category by 6 percentage points in Q3.

November 13, 2014 by Alicia Kelso — Editor, QSRWeb.com

Popeyes Louisiana Kitchen keeps on rolling, turning in its 18^th consecutive quarter of same-store sales growth. The company also continues to buck the overall trend of lackluster QSR performances with an increase of 7.3-percent.

Over the two-year period, Q3 comp sales have exceeded 12 percent.

During today's earnings call, CEO Cheryl Bachelder said the brand's "menu, media and messaging continue to resonate and future growth potential remains exciting." More specifically:

Menu

For Q3, Popeyes launched August's Tear'n Tenderloin Chicken promotion, September's $5 Bonafide Big Box promotion and October's Southern-inspired beer can chicken.

"We continue to delight our guests with a variety of LTOs," Bachelder said, calling the chicken tenderloin "one of the best kept culinary secrets." "We also offered beverage promotions and seasonal desserts to drive up overall ticket. We continue to drive sales with an innovative pipeline."

Bachelder added that the comps reflect a combination of innovation and strong value propositions.

"We never separate those two out in our thinking. We think every offering has to be phenomenal in innovation and value," she said.

The comps helped the company continue to gain market share. The company said third party verification shows that Popeyes has claimed 23.7 percent share in the chicken QSR category, up from 21.2 percent last year, and has also exceeded the overall QSR segment's same-store sales growth by 6 percentage points.

"I think this shows our brand is serving our core customers well. The bump of market share gain means we're giving them the innovation, quality and value they want. We're excited about their response to our offerings, given that economic conditions remain humble for our guests. We're meeting their needs," Bachelder said.

Openings and remodels

Systemwide remodeling remains on track, with 77 percent of the US system in the brand's new image, and 80 percent by year's end in sight.

Bachelder said a "superior real estate focus" has been a particular boon for the company. For example, domestic new freestanding units are averaging first year sales of $1.6 million, compared to the average of $1.3 million. The goal of $1.8M to $2M is possible, Bachelder said, "Because our real estate choices are better."

Popeyes opened 60 new restaurants globally in Q3, versus 39 during the prior year period, and 123 for the year – 71 domestically and 52 internationally.

Franchisees were averaging an operating profit of 22.9 percent through the end of Q2, compared to 22 percent during the same period last year.

Experience

The brand continues to hone its service behind its new Voice of the Guest program, launched at the end of the first quarter. This year, the program will be used to glean baseline data and Popeyes will offer reporting trends in 2015.

nternational

Overseas, development and buzz for the brand continues to grow as well. The system turned in an 8.3-percent increase in same-store sales growth, its 19^th consecutive quarter. On a two-year basis, Popeyes' international is up 13.4 percent.

Bachelder said improvements continue in markets that have reached "critical mass" enough to launch TV advertising, especially in Peru, Canada and Turkey.

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