FDD Talk 2016: The Popeyes Louisiana Kitchen Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

In this FDD Talk 2016 post, you’ll learn the following:

• Section I – Background information on the Popeyes Louisiana Kitchen franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Popeyes Louisiana Kitchen franchise, based on Item 7 of the company’s 2016 FDD

• Section III – Presentation and analysis of Popeyes Louisiana Kitchen’s financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:

• 2015 average sales for free-standing, in-line, convenience store, mall food court, and other food court Popeyes Louisiana Kitchen Restaurants (company-owned and franchised) that were open throughout the company’s fiscal year ended December 27, 2015 and not closed at the end of the fiscal year

• 2015 average sales, food and paper costs, labor costs, controllable costs, marketing costs, non-controllable costs, and restaurant operating profits for the 1,222 franchised free-standing Popeyes Restaurants and 62 company-operated free-standing Popeyes Restaurants that were continuously operated during the period from December 29, 2014 through December 27, 2015 and submitted properly prepared income statements for the relevant period

Section I – Background Information

This fried chicken fast-food chain was started by Al Copeland back in 1972 in Arabi, a suburb of New Orleans, Louisiana, as Popeyes Mighty Good Fried Chicken with the tag line Chicken on the Run. But the chain’s original offering of traditional mild fried chicken wasn’t doing well in New Orleans, where people like things a bit spicier than most, so that’s what they did.

Franchising started in 1976 and 500 locations were opened within ten years. Slower expansion was on tap in 1980s, and in the early 1990s the company found itself swamped in debt and filing for bankruptcy protection. What emerged from that process was a new company called America’s Favorite Chicken Company to act as the chain’s parent company, as well as the Church’s chicken chain (spun off later on in 2004).

In 2001 the parent company changed its name to AFC Enterprises and went public. The chain has been known as Popeyes Chicken & Biscuits and Popeyes Famous Fried Chicken & Biscuits, but no matter what you call it, it’s been a major player in the quick-serve chicken segment for a long time.

However, the name has nothing to do with the famous cartoon character Popeye the Sailor. Instead, Copeland claims he named the chain after detective Jimmy “Popeye” Doyle from the movie The French Connection. But the chain did make use of the cartoon character for a long time in its marketing efforts.

The number of locations has been relatively flat since the turn of the new millennium at just under 2,000. Here’s how Popeyes Louisiana Kitchen keeps the fryers hot in the competitive fast-food chicken segment:

The Menu

Its chicken dishes can be had either mild or spicy, and it definitely touts its Louisiana roots with such offerings as red beans and rice, Cajun fries, mashed potatoes with Cajun-style gravy, Cajun rice, chicken-and-sausage jambalaya, and po’ boy sandwiches.

This is not the healthiest food in the world, so it was a big deal in 2006 for the chain to introduce a trans fat-free biscuit as well as French fries containing one gram of trans fat.

In 2011 its Fried Turducken sandwich showed off the first ever Turducken patty. And in 2013 it rolled out a new entree of fried chicken strips dipped in waffle batter.

Sassy Spokesperson

Annie the Chicken Queen came on the scene in 2009. She’s a fictitious African American Popeyes chef with a sassy way of telling it like it is. Well, that’s one way to describe her ads. But a lot of people are pretty upset with them, saying the ads play into all kinds of black stereotypes.

The chain has been trying to play up its Louisiana roots, beginning in 2008 with the name change to Popeyes Louisiana Kitchen, and rolling out Annie the Chicken Queen helped cement that effort.

Love it or hate it, the campaign has worked, turning around lagging same-store sales into six consecutive years of growth.

Section II – Estimated Costs

• Please click here for detailed estimates of Popeyes Louisiana Kitchen franchise costs, based on Item 7 of the company’s 2016 FDD (updated).

Section III – Financial Performance Representations (Item 19, 2016 FDD) and Analysis

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