Article

Popeyes to accelerate unit reimaging

Company adds leadership development to strategic plan.

March 8, 2012 by Alicia Kelso — Editor, QSRWeb.com

Popeyes Louisiana Kitchen marked a strong 2011, with a reported net income of $24.2 million, compared to $22.9 million in 2010.

Global same-store sales increased 3.1 percent for the fiscal year, and system-wide sales were up 6.6 percent.

During the company's earnings call this morning, CEO Cheryl A. Bachelder said the brand is as energized as ever and well positioned to accelerate growth.

For the past four years, parent company AFC Enterprises has focused on four pillars as part of its strategic plan, including Build a Distinctive Brand; Run Great Restaurants; Grow Restaurant Profits; and Accelerate Quality Restaurant Openings.

The company just added a new pillar to its strategic plan: "Develop Leaders."

"Growing and promoting people is under way across our organization, to build the capability we need to support a bold growth goal. The development of talented, prepared leaders who are ready to lead a large successful QSR will help us bring our strategies to life, from the corporate office to the counters," Bachelder said, adding this work began in April 2011 with the hire of Lynne Zappone as chief talent officer.

Zappone was recently featured on CBS' "Undercover Boss" reality TV show. The company has also added Andrew Skehan as COO of international. Dick Lynch has been promoted to chief global brand officer and, earlier this week, Ralph Bower was promoted to president of U.S.

Reimaing efforts

Bower spoke about Popeyes' 2012 domestic initiatives, including a reimaging effort that will cover 600 units, and the selected development of company-owned restaurants in new and existing markets.

"Our strong financial performance in 2011 indicates that now is the time to reimage. We began last year with a stunning design that highlights authentically-prepared Louisiana home cooking," Bower said. "You can feel the festive atmosphere reminiscent of New Orleans."

The reimaging program costs less than $100,000 on average per unit, among the most cost effective in the QSR segment, according to Bachelder.

"It's been 10 to 11 years since our system has reimaged. We think it's an important investment in the brand and have an aggressive plan to move the remodel through our system," she said, predicting a two- to three-year completion goal domestically.

For company-owned restaurant growth, Popeyes will first expand its footprint in the Indianapolis market, with plans to open seven to nine outlets there in 2012, and the potential for at least 20 more down the road.

Successful LTOs, operations

As part of Popeyes' first pillar, "building a distinctive brand," the chain has featured a consecutive LTO rollout in 2011, including Bonafide bone-in Chicken, Wicked Chicken, Rip'n Chick'n and Dip'n Chick'n.

The introductions contributed to a solid performance, Bachelder said, that has outpaced the chicken QSR segment by 430 basis points, as well as the entire QSR category for the third year in a row.

"The way I think about LTOs, they are the excitement to our business," she said. "They're the reason people come back and visit us again. The LTO sells a new innovative product, and also reminds people about how much they love the everyday menu."

The chain's operational scores – measured by its Guest Experience Monitor (GEM) – yielded its highest guest experience ratings ever. By the end of 2011, the overall GEM "delighted" scores were 77 percent.

"That means that 77 percent of our customers ranked their experience to be a five out of five," Bachelder said.

Financial performance, unit openings

The company reported its fiscal 2011 and fourth quarter earnings, with the following highlights:

• Reported net income for FY 2011 was $24.2 million, or 97 cents per diluted share, compared to $22.9 million, or 90 cents per share in 2010.
• Global same-store sales increased 3.1 percent, compared to 2.6 percent in 2010.
• System-wide sales increased 6.6 percent, compared to 5.1 percent in 2010.
• The Popeyes' system opened 65 net new restaurants in 2011, compared to 39 in 2010.
• In Q4, global same-store sales were up 5.8 percent, versus 6 percent in 2010.
• In Q4, 52 new restaurants opened, compared to 48 in 2010.

For 2012, the company expects same-store sales to grow between 3 and 4 percent, and new net restaurant openings to total between 60 and 100 units.

Read more about operations management.

About Alicia Kelso

---

None

Connect with Alicia: