Article

Popeyes lifted by national marketing, promotional offerings

Recent limited time offerings have set sales records.

May 24, 2012 by Alicia Kelso — Editor, QSRWeb.com

AFC Enterprises, parent company of Popeyes, reported results for its fiscal first quarter of 2012 today, including a 21 percent jump in net income, and a domestic same-store sales increase of 8.1 percent.

In an earnings call, CEO Cheryl Bachelder said the company is now outpacing the entire QSR chicken segment with these results, which were driven by consumer response to national media initiatives, promotional offerings and customer experience efforts.

"We also benefited from milder weather and increased consumer spending. Our market share is more than 1 full percentage point over where we were last year," Bachelder said.

Strategic Roadmap

The company continues to strengthen its position in the QSR segment by executing its Strategic Plan, according to Bachelder. These include building a distinctive brand; running great restaurants, growing restaurant profits, accelerating quality restaurant openings and developing servant leaders, the latter of which was just added during last quarter.

National media exposure and promotional offerings boosted Popeyes' "build a distinctive brand" pillar. For example, February's Garlic Pepper Wicked Chicken promotion, followed by March's Louisiana butterfly shrimp, both topped previous sales records for the limited time offerings.

On Monday, Popeyes will re-launch its popular LTO Rip’n Chick’n.

To hit on the "run great restaurants" pillar, Popeyes continues to remodel the restaurants in its system, with approximately 10 percent now finished. The company's goal is to have 600 units completed by the end of the year.

"We view reimaging as an essential element in driving long-term performance. It is an investment in improving our overall value proposition and an essential part of staying competitive," Bachelder said.

Popeyes is also focused on speed of service at the drive-thru and overall guest satisfaction as measured by its "Guest Experience Monitor" (GEM). GEM is now in place at about half of Popeyes' international units as well.

"At quarter's end, approximately three-fourths of our restaurants were clocking below 180 seconds at the drive-thru. Our percentage of guests delighted by their experience is still strong as well," Bachelder said.

Bachelder added that the brand has an intense focus on the profitability of its franchisees. Despite commodity cost inflations of nearly 2.5 percent in the first quarter, operating profits are still expected to be higher than last year.

During the quarter, Popeyes opened 26 restaurants permanently and closed 17 for nine net openings, compared to 18 net openings last year. All of the new units were opened by existing franchisees. The average unit volumes of Popeyes' new domestic freestanding units are approximately 40 percent higher than the system average of $1.1 million. This, Bachelder said, is the result of enhanced site selection and discipline.

Finally, the company's new pillar of developing servant leaders has already shown results.

"We want a legacy of consistent, superior performance. How we conduct ourselves is important and we're building and reinforcing a culture that has delivered results with passionate, accountable people," Bachelder said.

Financial results

Financial highlights from the quarter include:

• Net income of $8.3 million, compared to $7.2 million last year.
• Global same-store sales increase of 7.4 percent, on top of 3.9 percent for the same quarter last year.
• Domestic same-store sales increase of 8.1 percent, compared to 3.9 percent last year.
• International same-store sales increase of 2.3 percent on top of 4.1 percent last year.
• Global system-wide sales increase of 11.8 percent, on top of 6.9 percent last year.
• Operating EBITDA of $16 million, or 30.3 percent of total revenues, compared to 2011 operating EBITDA of $13.3 million, or 28.4 percent of total revenues.

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