What is in this article?:
- Popeyes parent lowers 4Q outlook on declining consumer confidence
- Driving growth
The company adjusts its expectations despite strong third-quarter performance.
Efforts to revitalize the Popeyes Louisiana Kitchen chicken brand continued to pay off in the third quarter, but parent company AFC Enterprises Inc. warned that declining consumer confidence could moderate sales in the fourth quarter and narrowed its expectations for the year.
In a call with Wall Street analysts on Thursday following the report of a 30-percent increase in net profit for the October-ended third quarter, Cheryl Bachelder, chief executive of Popeyes parent AFC Enterprises Inc., said the company expects same-store sales for the year to grow between 3.5 percent and 4 percent. Previously the company had expected same-store sales growth between 3.5 percent and 4.5 percent for the year.
The company does not expect sales in the fourth quarter to be as robust, she said, noting that the government shutdown took a toll — not so much on sales locally but on consumer confidence in general. Domestic sales started to slow at the end of the third quarter.
Still, Bachelder said Popeyes has outperformed the quick-service segment as a whole for the past eight quarters, and the Atlanta-based chain is on track for “a very good year” overall. The momentum stems from the company’s Roadmap to Success, which she initiated about five years ago after stepping into the CEO role in late 2007.
The initiative was built around four pillars: differentiate the brand, run great restaurants, grow profitability and accelerate quality restaurant growth. Last year a fifth pillar was added to establish a philosophy of “servant leadership” to develop talent.
As part of that overall effort the 2,187-unit chain began a remodel program in 2012 that will be 60-percent complete by the end of 2013, said Ralph Bower, Popeyes president. By the end of next year, the company expects 80 percent of domestic units will be reimaged.
Remodeled units are showing an average sales lift of between 3 percent and 4 percent, which is a considerable return on investment given the cost of the reimaging is typically less than $100,000 per unit, Bower said.
The new look includes digital menu boards, which the company expects to be in about half of domestic units before year’s end.