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FDD Talk: Popeyes Louisiana Kitchen Franchise Costs, Fees, Average Revenues and/or Profits (2022 Review)

Last updated on August 15, 2022 by Franchise Chatter Leave a Comment
in Chicken Franchises, FDD Talk: Food Franchises, Franchise Earnings

Popeyes Louisiana Kitchen Franchise Photo by michellemondays



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

  • Section I – Estimated initial investment (franchise costs) for a Popeyes Louisiana Kitchen franchise, based on Item 7 of the company’s 2022 FDD
  • Section II – Initial franchise fee, royalty fee, and marketing fee for a Popeyes Louisiana Kitchen franchise, based on Items 5 and 6 of the company’s 2022 FDD
  • Section III – Number of franchised and company-owned Popeyes Louisiana Kitchen outlets at the start of the year and the end of the year for 2019, 2020, and 2021, based on Item 20 of the company’s 2022 FDD
  • Section IV – Background information on the Popeyes Louisiana Kitchen franchise opportunity, including relevant news updates
  • Section V – Presentation and analysis of Popeyes Louisiana Kitchen’s financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2022 FDD, including information on the:
  • 2021 average sales for freestanding (company-owned and franchised), franchised in-line and convenience store, and franchised food court Popeyes Louisiana Kitchen Restaurants that were open throughout the company’s entire fiscal year ended December 31, 2021 and not closed at the end of the fiscal year
  • 2021 average sales, food and paper costs, labor costs, controllable costs, marketing costs, non-controllable costs, and restaurant operating profits for the 1,359 franchised freestanding Popeyes Restaurants that were continuously operated during the period from December 31, 2020 through December 31, 2021 and submitted properly prepared income statements for the relevant period
  • Section VI – Key ratios, comparables, computations, and analyses for the Popeyes Louisiana Kitchen franchise opportunity (exclusive content for Platinum subscribers)

Section I – Popeyes Louisiana Kitchen Franchise Costs

  • Popeyes Louisiana Kitchen (freestanding restaurants) franchise costs, based on Item 7 of the company’s 2022 FDD:
  • Initial Franchise Fee:  $50,000
  • Real Estate:  variable
  • Soft Costs:  $10,000 to $400,000
  • Site Work:  $40,000 to $650,000
  • Building:  $700,000 to $1,600,000
  • FF&E, Signage, and Technology:  $225,000 to $700,000
  • Initial Training:  $17,200 to $24,200
  • Opening Supplies:  $11,500 to $23,000
  • Insurance:  $9,000 to $18,000
  • Utility Deposits:  $3,000 to $50,000
  • Business Licenses:  $300 to $600
  • Additional Funds – 3 Months:  $20,000 to $30,000
  • Total Estimated Popeyes Louisiana Kitchen Franchise Costs:  $1,086,000 to $3,545,800

Section II – Popeyes Louisiana Kitchen’s Initial Franchise Fee, Royalty Fee, and Marketing Fee

  • Popeyes Louisiana Kitchen’s initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2022 FDD:
  • Initial Franchise Fee:  $50,000
  • Royalty:  5% of Gross Sales
  • Advertising Contribution:  4% of Gross Sales
  • Advertising Co-op:  currently 0.5% to 1.75% of Gross Sales as established by Local Advertising Co-op

Section III – Number of Franchised and Company-Owned Popeyes Louisiana Kitchen Outlets

Franchised

2019

  • Outlets at the Start of the Year:  2,327
  • Outlets at the End of the Year:  2,458
  • Net Change:  +131

2020


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  • Outlets at the Start of the Year:  2,458
  • Outlets at the End of the Year:  2,593
  • Net Change:  +135

2021

  • Outlets at the Start of the Year:  2,593
  • Outlets at the End of the Year:  2,736
  • Net Change:  +143

Company-Owned

2019

  • Outlets at the Start of the Year:  41
  • Outlets at the End of the Year:  41
  • Net Change:  0

2020

  • Outlets at the Start of the Year:  41
  • Outlets at the End of the Year:  41
  • Net Change:  0

2021

  • Outlets at the Start of the Year:  41
  • Outlets at the End of the Year:  41
  • Net Change:  0

Section IV – Background Information on the Popeyes Louisiana Kitchen Franchise

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

Parent Company Aims to Reduce Greenhouse Gases

America's Most Lucrative Franchises of the Year

1.  At the end of September 2021, Restaurant Brands International (RBI) – parent company of Popeyes, Burger King, and Tim Hortons – announced new commitments to help address climate change. RBI will collaborate with franchisees and suppliers to pursue science-based targets for reducing greenhouse gas emissions by 50% by 2030. These targets were approved by the Science Based Targets initiative (SBTi) and based on the SBTi Criteria and Recommendations.

2.  In addition, RBI has set a target to achieve net-zero emissions by 2050 or sooner. The goals are part of the company’s broader Restaurant Brands for Good strategy and seek to achieve business growth without emissions growth.

3.  José E. Cil, chief executive officer of RBI, said, “As one of the largest quick service restaurant companies in the world, we have a critical role to play in addressing the threat of global climate change, which is important for our planet and for our guests. We’ve done the hard work to determine where we stand, where we can make the most meaningful impact, and the actions we need to take to move the needle. With these ambitious targets, we are accelerating our efforts to promote a more sustainable future and continue on our journey to build the most loved restaurant brands in the world.”

4.  “We congratulate RBI on setting targets consistent with limiting warming to 1.5°C, the most ambitious goal of the Paris Agreement,” said Alberto Carrillo Pineda, executive director, Science Based Targets at CDP, one of the Science Based Targets initiative partners. “By setting ambitious targets grounded in climate science, RBI is taking action to help reduce the effects of climate change.”

5.  The company’s roadmap for achieving its targets builds on progress promoting leading environmental stewardship practices already underway in the agricultural supply chain, in partnership with suppliers, researchers, farmers, and ranchers. The roadmap also details several new milestones for the future and includes initiatives such as using renewable energy in operations, implementing energy efficient equipment, and converting to electric vehicle use.


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6.  In making these commitments, RBI joins the Race to Zero and becomes a signatory to the Business Ambition for 1.5°C campaign, a call to action from a global coalition of UN leaders, businesses, and NGOs urging companies to commit to set ambitious science-based emissions reduction targets, aligned with limiting global warming to 1.5°C.

Unveils New Digital-Centric Design as Growth Ramps Up

7.  At the end of March 2022, Popeyes announced plans to update the brand’s design and operations as the chain continues to push expansion. Over the past couple of years, as Popeyes rode its chicken sandwich fame to some of fast food’s top results, the brand kept in touch with guests, brand president Sami Siddiqui said. And surveys regularly surfaced the same notion – the No. 1 barrier to consideration for the 50-year-old brand was actually convenience. “There’s just not a Popeyes close enough to me,” Siddiqui said of consumer polls. “And we think that is a huge opportunity – I view that as my obligation – to build more Popeyes.”

8.  While Popeyes’ long-term goal is growth, in the near future, the brand is aiming to digitize Popeyes’ store models. “I think the mandate is to make the brand more convenient and make Popeyes available whenever, wherever you want it,” Siddiqui said. Historically, Siddiqui added, quick-serves viewed development through a pretty narrow lens – it’s one of the reasons fast casual erupted in the early 2000s as the category targeted real estate, namely in-line, fast-food giants avoided because of the drive-thru; the thought you needed large, freestanding buildings to chart growth. “They’re great for the right location,” Siddiqui said. “But I think if we want Popeyes to be really where all of our guests are, then we need to look at smaller footprint locations.”

9.  That includes ghost kitchens and new formats. In South Florida, where RBI has a Miami base, there was a trade area Popeyes hadn’t tried to break in before. Simply, there was no availability for a sizable, freestanding site with a drive-thru. So Popeyes opened a digital-only concept with kiosks, no registers, and a kitchen equipped to handle delivery and mobile order and pay. “And that allows us to redeploy labor,” Siddiqui said. “And it really streamlines the digital experience for our guests. I think it’s those types of formats that we’ve now become a lot more flexible with. Those are going to be the future in terms of how we deliver Popeyes to our guests. It’s not going to be all digital formats. It’s not going to be all ghost kitchens. It’s going to be a balance of everything.”

10.  Popeyes’ go-forward plan stretches well beyond shrinking footprints. “What we are thinking about is do we take some chairs out of the dining room? Do we shrink the size of the dining room and put just more of that space in the kitchen?” he said. Adding more storage space has been a target, too. As has implementing features like escape doors or third windows to improve back-of-the-house flow and give guests faster drive-thru and digital ordering experiences.

Company History

11.  Popeyes was founded as “Chicken on the Run” in 1972 by Al Copeland in Arabi, Louisiana, a New Orleans suburb. Copeland wanted to open a restaurant that could compete with KFC. Unfortunately, Copeland’s restaurant initially failed because locals felt that his chicken was too plain. After a few days of reworking the chicken recipe and adding Cajun-style seasonings, Copeland reopened his restaurant and changed its name to Popeyes. Copeland’s changes worked and Popeyes became a hit.

12.  Copeland began franchising Popeyes in 1976. Popeyes grew quickly over the next few years and by the mid-1980s, there were over 500 stores in operation. The company also opened its first international locations in Canada at that time. Although Popeyes was growing, in 1991 Copeland Enterprises, the parent company of Popeyes and Church’s Chicken, filed for bankruptcy protection. The following year, 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 and Church’s.

13.  Popeyes recovered under the new leadership and continued to grow around the world. By the 2010s, the chain had grown to over 2,000 locations. In 2014, Popeyes reacquired 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. Before this, Popeyes had been licensing the seasonings, recipes, and techniques from DF&S for a yearly “spice royalty” before buying them outright for $43 million.

14.  Over the next few years, Popeyes continued growing and in 2017, the company was acquired by Restaurant Brands International (RBI) for $1.8 billion. RBI is also the parent company of Burger King and Tim Hortons. In 2019, Popeyes shook the fast food industry with the release of its now famous chicken sandwich. The popularity of Popeyes’ chicken sandwich has further fueled the company’s success and forced other chains to release their own chicken sandwich. Today, there are Popeyes locations across 46 states, Washington D.C., Puerto Rico, and 30 countries worldwide.

Entrepreneur’s Franchise 500

15.  Popeyes ranked No. 3 on Entrepreneur’s 2022 Franchise 500 list.

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Popeyes Louisiana Kitchen Franchise (Item 19, 2022 FDD)

  • 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, 2021.
  • The tables do not include the performance of 23 Popeyes Restaurants that are located in Puerto Rico and Guam.

Part 1 – Freestanding Restaurants

  • Freestanding Popeyes Restaurants include any type of restaurant other than in-line restaurants, convenience store restaurants, mall restaurants, food court restaurants, and mobile kitchen restaurants.
  • 27 company-operated freestanding Popeyes Restaurants and 1,948 franchised freestanding Popeyes Restaurants were continuously operated during the period December 31, 2020 through December 31, 2021.
  • As of December 31, 2021, there were 147 franchised freestanding Popeyes Restaurants that had not been in continuous operation during the trailing 12-month period, including 118 franchised freestanding Popeyes Restaurants that opened after December 31, 2020. Accordingly, Popeyes has not provided any information related to the performance of those freestanding Popeyes Restaurants.

Consolidated Units

  • Average:  $1,867,766
  • Median:  $1,766,364
  • High:  $6,554,566
  • Low:  $400,108
  • Number of Units:  1,975
  • Upper Range Average ($2.0 M and up):  $2,595,936
  • Upper Range Median ($2.0 M and up):  $2,421,927
  • High:  $6,554,566
  • Low:  $2,001,708
  • Number of Units:  705
  • Middle Range Average ($1.5 M to $1.999 M):  $1,741,292
  • Middle Range Median ($1.5 M to $1.999 M):  $1,733,251
  • High:  $1,999,776
  • Low:  $1,500,188
  • Number of Units:  645
  • Low Range Average ($0 to $1.499 M):  $1,176,910
  • Low Range Median ($0 to $1.499 M):  $1,176,720
  • High:  $1,499,952
  • Low:  $400,108
  • Number of Units:  625

Company-Owned Units

  • Average:  $1,596,537
  • Median:  $1,483,855
  • High:  $2,516,248
  • Low:  $719,459
  • Number of Units:  27
  • Upper Range Average ($2.0 M and up):  $2,241,235
  • Upper Range Median ($2.0 M and up):  $2,202,905
  • High:  $2,516,248
  • Low:  $2,013,567
  • Number of Units:  8
  • Middle Range Average ($1.5 M to $1.999 M):  $1,784,167
  • Middle Range Median ($1.5 M to $1.999 M):  $1,725,191
  • High:  $1,994,254
  • Low:  $1,519,650
  • Number of Units:  5
  • Low Range Average ($0 to $1.499 M):  $1,161,128
  • Low Range Median ($0 to $1.499 M):  $1,226,817
  • High:  $1,483,855
  • Low:  $719,459
  • Number of Units:  14

Franchised Units

  • Average:  $1,871,525
  • Median:  $1,770,096
  • High:  $6,554,566
  • Low:  $400,108
  • Number of Units:  1,948
  • Upper Range Average ($2.0 M and up):  $2,600,007
  • Upper Range Median ($2.0 M and up):  $2,424,564
  • High:  $6,554,566
  • Low:  $2,001,708
  • Number of Units:  697
  • Middle Range Average ($1.5 M to $1.999 M):  $1,740,958
  • Middle Range Median ($1.5 M to $1.999 M):  $0 (Note: This can’t be right. This $0 figure is from the FDD.)
  • High:  $1,999,776
  • Low:  $1,500,188
  • Number of Units:  640
  • Low Range Average ($0 to $1.499 M):  $1,177,271
  • Low Range Median ($0 to $1.499 M):  $1,172,927
  • High:  $1,499,952
  • Low:  $400,108
  • Number of Units:  611

Part 2 – Franchised In-Line Restaurants

  • For purposes of this Part 2, in-line Popeyes Restaurants are those Restaurants located in traditional “strip style” retail shopping centers and within or attached to convenience stores. The results of operation of both types of location are similar and are shown in this Part 2.
  • 448 franchised in-line Popeyes Restaurants were continuously operated during the period December 31, 2020 through December 31, 2021.
  • As of December 31, 2021, there were 41 franchised in-line Popeyes Restaurants that had not been in continuous operation during the trailing 12-month period, including 31 in-line Popeyes Restaurants that opened after December 31, 2020. Accordingly, Popeyes has not provided any information related to the performance of those in-line Popeyes Restaurants.

Franchised Units

  • Average:  $1,725,197
  • Median:  $1,612,787
  • High:  $5,928,391
  • Low:  $0
  • Number of Units:  448
  • Upper Range Average ($2.0 M and up):  $2,531,334
  • Upper Range Median ($2.0 M and up):  $2,363,621
  • High:  $5,928,391
  • Low:  $2,002,517
  • Number of Units:  126
  • Middle Range Average ($1.5 M to $1.999 M):  $1,730,120
  • Middle Range Median ($1.5 M to $1.999 M):  $1,723,396
  • High:  $1,986,464
  • Low:  $1,501,686
  • Number of Units:  136
  • Low Range Average ($0 to $1.499 M):  $1,175,506
  • Low Range Median ($0 to $1.499 M):  $1,163,598
  • High:  $1,496,959
  • Low:  $0
  • Number of Units:  186

Part 3 – Franchised Food Court Restaurants

  • Food court Popeyes Restaurants are located within the confines of food court locations, such as freestanding food court buildings, malls, airports, travel plazas, amusement parks, military bases, and other retail areas where common seating with other food concepts is generally used. In many of the food court Popeyes Restaurants, the Restaurant has no control over the days or hours the host location is open.
  • 95 franchised food court Popeyes Restaurants were continuously operated during the period December 31, 2020 through December 31, 2021.
  • As of December 31, 2021, there were 26 franchised food court Popeyes Restaurants that had not been in continuous operation during the trailing 12-month period, including 12 franchised food court Popeyes Restaurants that opened after December 31, 2020. Accordingly, Popeyes has not provided any information related to the performance of those food court Popeyes Restaurants.

Franchised Units

  • Average:  $1,057,235
  • Median:  $983,580
  • High:  $2,471,967
  • Low:  $164,530
  • Number of Units:  96
  • Upper Range Average ($1.1 M and up):  $1,505,958
  • Upper Range Median ($1.1 M and up):  $1,447,569
  • High:  $2,471,967
  • Low:  $1,104,322
  • Number of Units:  42
  • Middle Range Average ($0.75 M to $1.099 M):  $910,187
  • Middle Range Median ($0.75 M to $1.099 M):  $921,792
  • High:  $1,069,755
  • Low:  $769,692
  • Number of Units:  26
  • Low Range Average ($0 to $0.749 M):  $520,693
  • Low Range Median ($0 to $0.749 M):  $504,840
  • High:  $716,766
  • Low:  $164,530
  • Number of Units:  28

Part 4 – Operating Expenses and Restaurant Operating Profits at Freestanding Franchised Restaurants

  • Part 4 sets forth the Food and Paper Costs, Labor Costs, Controllable Costs, Marketing Costs, Non-Controllable Costs, and Restaurant Operating Profits at 1,359 franchised freestanding Popeyes Restaurants that were continuously operated during the period December 31, 2020 through December 31, 2021.
  • Of the 1,948 continuously operating franchised Popeyes Restaurants, 589 franchised freestanding Popeyes Restaurants did not submit properly prepared income statements for the relevant period and so the franchisor excluded Food and Paper Costs, Labor Costs, Controllable Costs, Marketing Costs, Non-Controllable Costs, and Restaurant Operating Profits related to the performance of those 589 Popeyes Restaurants.
  • Food and Paper Costs consist of the total costs of food and beverage items as well as the cost of paper and packaging supplies in each sales range described.
  • Labor Costs include the cost for restaurant-level hourly and management labor including salaries, workers’ compensation insurance, workers’ medical claims, bonuses, FICA, payroll taxes, unemployment insurance, medical benefits, vacation pay, holiday pay, other pay, sick pay, contract labor, fringe benefits, and training.
  • Costs related to district managers, area managers, life insurance, maintenance labor, and auto expenses are not included in the results. However, if a franchisee did not separately report these costs on their income statements, then these costs could be included in the franchised Popeyes Restaurant results.
  • Restaurant Operating Profits are calculated by subtracting Operating Expenses from Sales. Operating Expenses consist of the following major items: Food and Paper Costs; Labor Costs; Controllable Expenses; Marketing Expenses; and Non-Controllable Expenses, excluding any lease expenses for land, building, and equipment.
  • Operating Expenses do not include any non-cash expenses such as depreciation, gains and losses on the sale of assets, impairment or disposal of assets and amortization of business value, franchise fees, or loan fees.
  • Marketing Expenses consist of all marketing-related costs including contributions to the Ad Fund, local marketing expenses, and kid’s prizes or toys.
  • Non-controllable Expenses include all royalties paid to the franchisor, general liability insurance, and other licenses or taxes. Non-controllable expenses exclude any lease expenses for land, building, and equipment. The franchisor has allocated royalties in the amount of 5% of Gross Sales, which is the typical royalty rate charged to its franchisees.

Franchised Restaurants

Average

Sales Range Average:  $1,871,018

  • Number of Restaurants in Range:  1,359
  • Number of Restaurants at or Above Average:  594
  • % of Restaurants at or Above Average:  43.7%

Food and Paper Costs Average:  $602,125

  • % of Sales:  32.2%
  • Number of Restaurants at or Above Average:  596
  • % of Restaurants at or Above Average:  43.9%

Labor Costs Average:  $477,147

  • % of Sales:  25.5%
  • Number of Restaurants at or Above Average:  566
  • % of Restaurants at or Above Average:  41.6%

Controllable Costs Average:  $136,691

  • % of Sales:  7.3%
  • Number of Restaurants at or Above Average:  589
  • % of Restaurants at or Above Average:  43.3%

Marketing Costs Average:  $86,380

  • % of Sales:  4.6%
  • Number of Restaurants at or Above Average:  590
  • % of Restaurants at or Above Average:  43.4%

Non-Controllables Average:  $171,438

  • % of Sales:  9.2%
  • Number of Restaurants at or Above Average:  566
  • % of Restaurants at or Above Average:  41.6%

Restaurant Operating Profits Average:  $397,238

  • % of Sales:  21.2%
  • Number of Restaurants at or Above Average:  599
  • % of Restaurants at or Above Average:  44.1%

Section VI – Popeyes Louisiana Kitchen Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️



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