News

New plan unveiled after AFC earnings drop

March 12, 2008

ATLANTA — AFC Enterprises Inc., franchisor and operator of Popeyes Chicken & Biscuits, has reported that earnings dropped for its fiscal year 2007 ended Dec. 30, 2007. The company also announced a new strategic plan designed to enhance shareholder value and leverage the Popeyes brand through expanded marketing and menu offerings, as well as improve guest experience and unit economics.

Total domestic same-store sales decreased 2.3 percent, compared with an increase of 1.6 percent in fiscal 2006. International same-store sales increased 1.1 percent, compared with a decrease of 3.2 percent last year. Total global same-store sales decreased 2 percent, compared to an increase of 1.1 percent last year.

Net income was $23.1 million, compared with $22.4 million in fiscal 2006. For the 12 weeks in the fourth quarter of 2007, net income was $3.6 million, compared with $5.6 million for the 13 weeks in the fourth quarter last year.

Total systemwide sales increased by 0.3 percent, compared with 7 percent last year.

The Popeyes system opened 124 restaurants and closed 109 restaurants, bringing the total unit count to 1,905.

The four key pillars of the new strategic plan include:

• Building the Popeyes brand by offering franchisees a distinctive brand and menu with clear competitive advantages. Planned steps include launching new marketing messages about Popeyes core bone-in chicken products; and rolling out fresh and relevant menu platforms focused on portable snacks, quick lunch offerings, lighter alternatives and everyday value.
• Strengthening restaurant operations and improving the Popeyes guest experience through the implemention of a guest experience monitor (GEM) to gauge guest satisfaction at every restaurant in the Popeyes system; and restructuring the field operations team to accomplish quarterly operations assessments of restaurants against Popeyes standards and procedures.
• Strengthening unit economics by identifying cost savings to improve food, labor and overhead efficiencies in the restaurants by assembling a task force to address the operating cost structure of Popeyes restaurants and to identify ways to improve restaurant operating profit.
• Aligning people and resources to deliver results by making significant investments in brand building, operational tools and talent as evidenced by making nonrecurring investments of $3.5 million in 2008 to strengthen brand building and menu innovation to drive guest traffic increases; and recruiting Ralph Bower as chief operations officer of Popeyes and Dick Lynch as chief marketing officer.