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Popeyes plans to leverage employee engagement to sustain growth

CEO Cheryl Bachelder said human capital, focused on both employees and guests, is a compelling, profit-driven strategy.

September 10, 2014 by Alicia Kelso — Editor, QSRWeb.com

Since 2008, Popeyes has been riding an upward trajectory of sales and unit growth. The trend is the direct result of a meticulous focus on the company's "four pillars" – "build a disctinctive brand, run great restaurants, grow profits and accelerate quality openings."

CEO Cheryl Bachelder said during Tuesday's CL King Best Ideas Conference that this strategy isn't rocket science.

"But it's hard to do consistently over time," she said.

Bachelder said many investors have asked how the brand will be able to sustain such growth (17 consecutive quarters of same-store sales increases), especially in the highly competitive QSR category. The first strategy will depend on development, both domestic and international.

The second depends on people – employees and guests.

"Human capital – some call it fuzzy. I call it a hard, compelling, profit-driving strategy. When employee engagement statistics are high, there is high retention and high productivity and high guest satisfaction," Bachelder said. "When guest satisfaction is high, they come back and they spend more money.

"It works every time."

The company's goal is to elevate the guest and employee experiences to same levels of its food, she said.

"Brands that invest in their people have the highest AUVs in our sector. That is what you can look forward to in the future (from Popeyes)," Bachelder said.

Leveraging seafood for more distinctiveness

Popeyes also continues to gain market share – in both the chicken QSR and overall QSR categories – thanks in large part to its shift to national marketing, part of its "building a distinctive brand" pillar. When the company first introduced its pillar strategy, it changed all of its ad materials to reflect the new name – Popeyes Louisiana Kitchen, from the former Popeyes Chicken and Biscuits. The new name, Bachelder said, allows the chain to take advantage of its Louisiana culinary roots and provides Popeyes with a competitive advantage.

"The menu has been the leading actor or actress in our play for the last few years. We're famous for our bone-in chicken. But we're building the platforms of our boneless chicken and seafood. Boneless is preferred by consumers today. And seafood is unique and has been a great sector to our brand," Bachelder said. "Our food is a strategic point of difference for us. It always has been and it always will be."

The shift to national media began in 2008, when the company employed its new spokesperson – Annie. Her presence in ads has helped double brand awareness and trial within the past five years.

"She tells our story with huge credibility. We went from local, that only reached about 50 percent of our restaurants, to national, that touches all restaurants and it even builds interest in markets where we don't have restaurants," Bachelder said.

These brand initiatives have led to the 17 consecutive quarters of positive same-store sales growth within a range of 3 to 5 percent, or "very strong during a time when there have been headwinds," Bachelder said. In that same time, Popeyes has gone from having 14.6 to 23 percent market share in the chicken QSR category.

Because of the focus on all of these pillars, Popeyes' AUVs average $1.3 million, up from about $1 million six years ago. Bachelder said speed of service and guest satisfaction ratings have also improved.

"We have also gone from 18 percent operating profits to 22 percent, which we hit at the end of 2013. Each restaurant is making about $100,000 more than they did in 2008," she said.

Bachelder also said newer restaurants, those built in 2012 and later, are averaging $1.6 million compared to the typical freestanding restaurants $1.3 million average. This increase is due in large part to higher quality real estate using real estate predictive software that profiles current customers and gauges how many more are out there.

Popeyes plans to double its system and is opening about 100 to 130 new restaurants domestically per year. Strategies are also in place to grow internationally, where Popeyes is finding solid footing in markets such as Peru and Chile.

 "Our food travels well. The favorite proteins of the world are seafood and chicken, and rice is the world's favorite starch," Bachelder said. "Our pace of growth, we think, is sustainable."

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