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FDD Talk 2017: What You Need to Know About the Popeyes Louisiana Kitchen Franchise Opportunity (Financial Performance Analysis, Costs and Fees)

by Franchise Chatter on May 15, 2017

in Chicken Franchises, FDD Talk 2017: Food Franchises, Franchise Earnings



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Popeyes Louisiana Kitchen Franchise Photo by michellemondays

In this FDD Talk 2017 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 2017 FDD
  • Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Popeyes Louisiana Kitchen franchise, based on Items 5 and 6 of the company’s 2017 FDD
  • Section IV – Presentation and analysis of Popeyes Louisiana Kitchen’s financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:
  • 2016 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 25, 2016 and not closed at the end of the fiscal year
  • 2016 average sales, food and paper costs, labor costs, controllable costs, marketing costs, non-controllable costs, and restaurant operating profits for the 1,206 franchised free-standing Popeyes Restaurants and 49 company-operated free-standing Popeyes Restaurants that were continuously operated during the period from December 28, 2015 through December 25, 2016 and submitted properly prepared income statements for the relevant period

Section I – Background Information

11 Things You Need to Know About the Popeyes Louisiana Kitchen Franchise

Acquired by Burger King’s Parent Company for $1.8 Billion

1.  In late February, Restaurant Brands International (RBI), the parent company of Burger King and Tim Hortons, confirmed that it would be purchasing Popeyes Louisiana Kitchen for $1.8 billion. At the time of the announcement, Restaurant Brands International said that Popeyes would continue to be managed independently.

2.  In RBI’s recent Q1 report, the company said that Popeyes faced relatively flat sales growth as RBI continues to plan Popeyes’ international growth. During the first quarter, Popeyes increased its restaurant count by 6 percent.

3.  RBI CFO Josh Kobza said that the company feels that Popeyes can become a much larger player globally in the chicken category. According to Kobza, Popeyes already has a large global business that RBI can continue to grow.

CEO to Step Down After Sale Finalized

4.  Soon after RBI acquired Popeyes Louisiana Kitchen, CEO Cheryl Bachelder announced that she would be leaving the company after the sale closes. The sale was supposed to be completed in early April, but RBI has yet to announce a new CEO.

5.  Bachelder has been CEO of Popeyes for about a decade and under her leadership, the company has expanded its global presence and franchise community. Under Bachelder, Popeyes improved its relations with franchisees, which enabled the chain to promote unit growth and encourage operators to remodel locations quickly.

Another Year of Strong Performance

6.  In the press release accompanying Popeyes’ earnings report for fiscal 2016, CEO (at the time of the report) Cheryl Bachelder said, “In 2016, we delivered global same-store sales growth of 1.7 percent, our eighth consecutive year of positive same-store sales growth, and 216 new restaurant openings around the world.”

7.  Some other highlights from the report include:

  • Global system-wide sales increased 7.4 percent, for a two-year compounded growth rate of over 20 percent.
  • Global same-store sales increased 1.7 percent in 2016, compared to 5.9 percent in 2015, for a two-year compounded growth rate of 7.7 percent.
  • Domestic same-store sales increased 1.4 percent, compared to 5.7 percent in 2015, the eighth consecutive year of positive same-store sales growth.
  • International same-store sales increased 4.4 percent, compared to 7 percent in 2015, the 10th consecutive year of positive same-store sales growth.
  • Popeyes opened 216 restaurants (118 domestically and 98 internationally).
  • Total revenues increased approximately 3.8 percent to $268.9 million in 2016, from $259.0 million in 2015.
  • Operating profit for company-operated restaurants was $20.7 million, or 19.1 percent of sales, compared to $21.9 million, or 20 percent of sales, in 2015.

Company History

8.  The first Popeyes Louisiana Kitchen was opened in 1972 by Al Copeland in Arabi, Louisiana, a suburb of New Orleans. Copeland opened his restaurant to compete against Kentucky Fried Chicken. Franchising began in 1976 with the first franchised location opening in Baton Rouge, Louisiana.

9.  Over the next decade, Popeyes opened 500 more locations in the U.S. In the early 90s, Popeyes filed for bankruptcy and in order to save the company, the court approved a plan by a group of Popeyes’ creditors that resulted in the creation of America’s Favorite Chicken Company, Inc. (AFC) to serve as the new parent company for Popeyes and Church’s Chicken.

10.  AFC continued to own Popeyes until the recent acquisition by Restaurant Brands International. Today, there are over 2,600 Popeyes locations around the world.

Entrepreneur’s Franchise 500

11.  Popeyes has only appeared on Entrepreneur’s annual Franchise 500 list twice in the past decade. The company’s highest rank was No. 57 in 2011, while its lowest rank was No. 85 in 2008. Popeyes also ranked on Entrepreneur’s Fastest Growing Franchise list in 2008 at No. 81.

Section II – Estimated Costs

  • Please click here for detailed estimates of Popeyes Louisiana Kitchen franchise costs, based on Item 7 of the company’s 2017 FDD (updated).

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

  • Please click here for detailed information on Popeyes Louisiana Kitchen’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2017 FDD.

Section IV – Financial Performance Representations (Item 19, 2017 FDD) and Analysis



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