AFC Enterprises: LTOs boost Popeyes 4Q sales

AFC Enterprises Inc., parent company of Popeyes Louisiana Kitchen, credited successful limited-time offers for driving same-store sales increases during its fourth quarter and its fiscal year 2012.

For the quarter ended Dec. 30, Popeyes reported a same-store sales increase of 6.2 percent, compared with a 5.8-percent increase during the year-earlier quarter. During the full year, global same-store sales rose 6.9 percent, compared with a 3.1-percent increase in 2011.

The company attributed the rising sales to the company’s marketing of popular limited-time offers and products in 2012, including garlic and pepper Wicked Chicken, Rippin’ Chicken and Zatarain’s Butterfly Shrimp.

“Customers like new news,” said Ralph Bower, president of Popeyes’ U.S. division, in an interview. “One of the advantages we have at Popeyes is our Louisiana heritage. That gives us a little different twist from other quick-service brands.”

AFC Enterprises chief executive Cheryl Bachelder noted that 2012 marked the fourth consecutive year of domestic same-store sales increases — and the sixth consecutive year of international sales increases — for the Atlanta-based brand. “Popeyes is now establishing a track record of growth, and we've positioned ourselves to sustain it well into the future,” she said during a call with analysts.

Bachelder added that during the past several years, Popeyes has increased its share of the quick-service chicken market to 19.2 percent in 2012 from 14.8 percent in 2008 — a significant amount, she said.

“We have to deliver on the food, we have to deliver on the experience, and we have to deliver on the restaurant experience,” she said, adding that guest loyalty to the brand has been key to Popeyes’ success. “Our greatest opportunity is to offer service that matches the quality of the food.”

Marketing driving growth

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Bachelder said local and national advertising and marketing campaigns have helped fuel the company’s growth. “We, internally, say that we’re in what we like to call a virtuous cycle,” she said, noting that marketing initiatives grow brand awareness, which contributes to increased sales, which leads to more dollars to be spent marketing the Popeyes brand.

“Our strategy will continue to be what it has been, which is to use those dollars to drive awareness, to drive the distinctiveness of our brand and continue to build our brand with innovative, limited time offers like you've seen us do,” she said.

Additionally, Bower said the company’s reimaging campaign, which began a few years ago, has been a success so far. The redesigns, which cost about $100,000 each, include reworked interiors, with new paint color schemes, food-centric art such as spice racks and cast-iron detailing.

So far, about 25 percent of the Popeyes system has been refreshed, he said. By this time next year, the company hopes to have 60 percent of the stores redesigned.

As of the earnings report, sales figures for redesigned restaurant versus its left-alone counterparts were not available, Bower said. However, he noted that franchisees have been pleased so far.

“In order to compete in quick service today, you have to have a comfortable restaurant,” he said. “That’s becoming the price of admission.”

During the fourth quarter, net income for the company was $8.6 million, or $0.35 per share, compared with $5.7 million, or $0.23 per share, during the year-earlier quarter. Total revenue for the quarter was $47.5 million, up from $36.3 million the year prior.

For the full year 2012, net income was $30.4 million, or $1.24 per share, compared with $24.2 million, or $0.97 per share the year prior. Popeyes reported 178.8 million in total revenue for the year, up from $153.8 million in 2011.

Bachelder said 2013 should be a banner year for Popeyes. The company expects same-store sales to grow by about 3-4 percent during 2013, she said, which is ahead of current trends in the chicken quick-service segment. Adjusted earnings per share in 2013 are expected to be in between $1.37 and $1.42, a 10- to 14-percent increase over 2012.

During 2013, Popeyes plans to open a net of 85-115 new stores, Bachelder said.

AFC Enterprises operates and franchises more than 2,100 Popeyes locations systemwide.

Contact Erin Dostal at [email protected].
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