In this FDD Talk 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 2020 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 2020 FDD
- Section IV – Number of franchised and company-owned Popeyes Louisiana Kitchen outlets at the start of the year and the end of the year for 2017, 2018, and 2019, based on Item 20 of the company’s 2020 FDD
- Section V – Presentation and analysis of Popeyes Louisiana Kitchen’s financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:
- 2019 average sales for free-standing, in-line, convenience store, and food court Popeyes Louisiana Kitchen Restaurants (company-owned and franchised) that were open throughout the company’s entire fiscal year ended December 31, 2019 and not closed at the end of the fiscal year
- 2019 average sales, food and paper costs, labor costs, controllable costs, marketing costs, non-controllable costs, and restaurant operating profits for the 1,285 franchised free-standing Popeyes Restaurants that were continuously operated during the period from December 31, 2018 through December 31, 2019 and submitted properly prepared income statements for the relevant period
Section I – Background Information
21 Things You Need to Know About the Popeyes Louisiana Kitchen Franchise
Sales Growth Not Hampered by Ongoing COVID-19 Pandemic
1. In May 2020, during the ongoing COVID-19 pandemic, Popeyes said that its sales were still producing “eye-popping” results. The chicken chain reported a 30 percent comparable sales bump in the U.S. in the first quarter, according to parent Restaurant Brands International’s (RBI) earnings report. Popeyes’ global system-wide sales increased over 32 percent to $1.3 billion, split between 26 percent in global comparable sales growth and nearly 7 percent unit growth.
2. According to RBI CEO Jose Cil, “We are fortunate to have drive thru, takeout, mobile order and payment, curbside, and delivery options in many of our restaurants that have allowed us to be a safe, trusted, and convenient choice for millions of guests who have had to change their routines or stay at home in these extraordinary times. The groundwork our technology teams have put in place over the last two years allowed us to rapidly accelerate valuable improvements to our loyalty, CRM, and mobile app platforms that ultimately improve guest engagement and differentiate our iconic brands.”
3. Popeyes’ Q1 success is staggering considering the broader state of the restaurant industry, which, while improving, is struggling to regain pre-coronavirus sales levels, especially without dining rooms in most parts of the country. It’s a testament to the power of Popeyes’ Chicken Sandwich, which debuted in August 2019 and led to comparable sales jumps of 10.2 percent and 37.9 percent, respectively, in Q3 and Q4 of 2019.
4. Cil noted on the earnings call that Popeyes’ performance before and after the COVID-19 outbreak varied greatly. In January, February, and the first two weeks of March, comparable sales were up in the 30s thanks to the Chicken Sandwich as well as other menu staples. After mid-March, he said, sales were essentially flat year-over-year – still impressive when compared with the rest of the industry.
5. Cil said, “Popeyes’ success last year was unlike anything any of us have seen in our careers, but its resilience in the face of COVID-19 with dining rooms closed across the country has been equally remarkable.” He added that Popeyes has seen an increase in average order size and ticket in its off-premises channels, particularly for dinner because of its family meal bundles. “Comparable delivery sales are up in the triple digits year-over-year, and we continue to see delivery as a huge opportunity to reach new guests and enlarge the trade area of our stores as the brand builds on the momentum it has sustained from last year,” he said.
6. Cil pointed out the steps RBI has taken since the pandemic started to ensure the safety of its team members and guests, and to emphasize the new methods of business for customers so they can still conveniently order from the brands. He said RBI was among the first restaurant companies in North America to close its dining rooms before governments mandated, and to install social distancing measures in the back and front of house. The company mandated masks, gloves, and contactless procedures, and began conducting temperature checks for team members.
7. Further, RBI increased the hourly wages for crew members at corporate locations by $3 in the month of April to thank them for their service. Cil and members of RBI’s board of directors, meanwhile, have all redirected half of their compensation to fund charitable foundations providing relief for team members throughout this season.
8. Cil said the company has also been adapting its marketing strategy to redirect attention to its off-premises business opportunities – some of which, he said, RBI hasn’t highlighted for a long time. “In particular, the availability and utility of our drive thrus,” he said. “In this environment, a drive-thru window is a great option for so many people who want to limit physical contact. And for guests that can’t access our drive thrus, we’re rolling out new curbside pickup options on our mobile apps in North America. We’ve also adjusted our recent marketing to highlight the benefits of home delivery, and how accessible our products are, both through our own app and through third-party delivery partners.”
Announces Plans to Donate Over 1 Million Meals to NOLA Community
9. In late April 2020, Popeyes announced that it was on a mission to help support families in its hometown community of New Orleans, Louisiana. The brand launched a “NOLA STRONG MEAL,” an offer with all proceeds going to one of the most affected areas in the United States from COVID-19, providing over 1,000,000 meals to families in need.
10. The “NOLA STRONG MEAL” comes with 12 pieces of Popeyes fried chicken, two classic sides, 6 biscuits, a Popeyes brand “NOLA STRONG” t-shirt and hat as part of the purchase. The new offering is available through the Popeyes app nationwide for a limited time while supplies last at a starting price of $28.
11. Fans can also purchase the “NOLA STRONG” swag items, such as t-shirts and hats, at www.nola-strong.com. For every “NOLA STRONG MEAL” and any apparel purchased, 100 percent of the proceeds will go to Second Harvest Food Bank, the largest anti-hunger network in Louisiana, to feed over 1,000,000 meals to families in need.
12. Further, in support of its hometown, the Popeyes brand will make a donation to Feed the Front Line NOLA to support their mission to feed the New Orleans community, and New Orleans Popeyes restaurants will also make weekly Sunday meal donations to the organization.
13. To launch this program, the Popeyes brand released a film highlighting the resilient spirit and solidarity that makes the “Big Easy” so unique. Narrated by New Orleans native, actor Wendell Pierce, the film is an anthem to the values of the city and its people. “Our greatest role to play in difficult times like these is to support those in need in our communities, which is why I am excited to be a part of this NOLA STRONG movement,” says Pierce about supporting his home city.
14. According to Bruno Cardinali, head of marketing North America for Popeyes Louisiana Kitchen, “At Popeyes we are proud of our New Orleans heritage, and we are dedicated to supporting those in our community who need help during these difficult times. We heard from guests that they are eager to help, so we are excited to create a program that makes it easy for them to do so alongside us. We are so appreciative of the amazing work that these local organizations have already done, and we will continue to support the NOLA Strong movement. Although we can’t physically be together, the spirit of New Orleans unites us all.”
15. From contactless pick-up, drive thru, and delivery experiences to increased cleaning procedures, the Popeyes Louisiana Kitchen brand is working hard to provide guests with food safely and quickly. The brand has also partnered with No Kid Hungry to help feed the children of America during these trying times and beyond. Guests can simply add a $1 donation to their contactless delivery order when checking out on the Popeyes app, and the brand will match the donation 100 percent.
16. Popeyes was founded as “Chicken on the Run” in 1972 by Al Copeland in Arabi, Louisiana, a suburb of New Orleans. Copeland wanted to open a restaurant that could compete with KFC, but his concept initially failed. To stand out from KFC, Copeland decided to revamp his recipe and sell New Orleans-style spicy chicken, and he renamed the restaurant Popeyes.
17. The new version of Copeland’s restaurant was a hit and a few years later, in 1976, he started franchising the Popeyes concept. Popeyes continued to expand across the U.S. over the next decade, and the first international store opened in Canada in 1984. The following year, the chain hit a milestone with the opening of its 500th location.
18. Despite its earlier success, Popeyes filed for bankruptcy protection in 1991, and the court approved a plan by a group of Copeland’s creditors that resulted in the creation of America’s Favorite Chicken Company, Inc. (AFC) to serve as the new parent company for Popeyes. Under the new ownership, Popeyes recovered and continued to expand around the world. By 2011, Popeyes had grown to 2,000 locations and celebrated its 40th anniversary the following year.
19. On June 17, 2014, Popeyes announced that it had re-acquired full control of its seasonings, recipes, and other proprietary food preparation techniques from Diversified Foods & Seasonings, which remained under the control of Al Copeland and his estate after the creditor sale of Popeyes to AFC. Until that time, Popeyes had been licensing the seasonings, recipes, and techniques from DF&S for a yearly “spice royalty,” before buying them outright for $43 million.
20. A few years later, in 2017, Popeyes was acquired by Restaurant Brands International for $1.8 billion. Today, there are Popeyes restaurants across 40 states and more than 30 countries worldwide.
Entrepreneur’s Franchise 500
21. Popeyes Louisiana Kitchen did not rank on Entrepreneur’s 2020 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Popeyes Louisiana Kitchen franchise costs, based on Item 7 of the company’s 2020 FDD.
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 2020 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 2,029
- Outlets at the End of the Year: 2,167
- Net Change: +138
- Outlets at the Start of the Year: 2,167
- Outlets at the End of the Year: 2,327
- Net Change: +160
- Outlets at the Start of the Year: 2,327
- Outlets at the End of the Year: 2,458
- Net Change: +131
- Outlets at the Start of the Year: 55
- Outlets at the End of the Year: 53
- Net Change: -2
- Outlets at the Start of the Year: 53
- Outlets at the End of the Year: 41
- Net Change: -12
- Outlets at the Start of the Year: 41
- Outlets at the End of the Year: 41
- Net Change: 0
Section V – Financial Performance Representations (Item 19, 2020 FDD) and Analysis
- The following tables present information about the annual sales and certain operating expenses and profits of Popeyes Restaurants in the United States (excluding U.S. territories) that were open throughout the company’s entire fiscal year ended December 31, 2019 and not closed at the end of the fiscal year.
- The tables do not include the performance of 23 Popeyes Restaurants that are located in Puerto Rico and Guam.
Part 1 – Average, High, and Low Annual Sales at Free-Standing Restaurants
- Free-standing Popeyes Restaurants include any type of restaurant other than in-line restaurants, convenience store restaurants, mall restaurants, food court restaurants, and mobile kitchen restaurants.
- 38 company-operated free-standing Popeyes Restaurants and 1,720 franchised free-standing Popeyes Restaurants were continuously operated during the period December 31, 2018 through December 31, 2019.
- As of December 31, 2019, there were 138 franchised free-standing Popeyes Restaurants that had not been in continuous operation during the trailing 12-month period. Accordingly, Popeyes has not provided any information related to the performance of those free-standing Popeyes Restaurants. None of those Popeyes Restaurants permanently closed after being open for less than 12 months.