Popeyes names new CFO following strong 2Q

Popeyes Louisiana Kitchen Inc. has named former KFC executive William Matt chief financial officer, the company said Thursday.

The appointment comes after the Atlanta-based quick-service operator reported a solid second quarter, with a global same-store sales increase of 3.6 percent, the 17th consecutive quarter of positive comps. Domestic same-store sales rose 3.8 percent, lapping a 4.3-percent increase a year ago.

Matt replaces interim CFO Tony Woodard, who filled in following the departure of H. Melville Hope III. Hope resigned in April to pursue other opportunities.

Matt was most recently chief operating officer of La Senza Global, an arm of L Brands Inc., parent to the Victoria’s Secret and Pink retail brands. He also served as chief financial officer of Victoria Secret Direct while at L Brands.

Before that, he spent nine years at PepsiCo/KFC, leaving there as vice president of planning.

Popeyes chief executive Cheryl Bachelder said Matt’s broad, relevant experience in leading growth at evolving brands will be instrumental to the company’s success.

“Spanning beyond finance to real estate, technology and operations, Will’s experience collaborating in cross-discipline teams makes him a strong cultural fit for Popeyes, and we are pleased to have him join our company,” she said in a statement.

Popeyes has had other executive changes in recent months. The chain’s U.S. president Ralph Bower left earlier this month to become CEO of Pei Wei Asian Diner.

In July, Popeyes named Todd Burke vice president of corporate communications.

While the cost of executive transitions during the second quarter took a one-time toll on net income, which fell 2 percent, to $8.3 million, adjusted earnings rose more than 11 percent.

Outperforming competitors

Bachelder said Popeyes has a story of consistent growth, as the chain continued to outperform the industry and gain market share within the quick-service chicken category.

In a call with analysts Thursday, Bachelder said Popeyes’ domestic same-store sales have outpaced the quick-service chicken segment for 25 consecutive quarters, and outpaced quick service overall for 11 consecutive quarters.

According to outside research, Popeyes has grown its market share to 23.1 percent of the chicken category, compared with 20.5 percent a year ago, Bachelder said. Five years ago, Popeyes’ market share was estimated at 14 percent.

While Bachelder declined to specify the chain’s traffic trends, which the company typically does not disclose, she noted that the brand’s market share gain comes at a time when traffic trends across quick service in general have been “remarkably flat” for two years.

“That’s stressing a lot of our competitors,” she said. “We’ve distinguished ourselves. We’re bucking the trend in that we’ve gained market share steadily for six straight years at a time that’s been anything but robust.”

Bachelder credited Popeyes’ run of menu innovation this year, including limited-time offers such as Louisiana Trios in May, featuring Cajun Fish, Handcrafted Tenders and Bonafide Chicken, for $3.99; the return in June of Chicken Waffle Tenders, for $4.99; and in July Cracked Pepper Butterfly Shrimp with Blackened Tartar dipping sauce, for $4.99.

The chain is currently promoting Tear’n Tenderloin Chicken with Cajun Creamy Garlic Dipping Sauce, for $3.99.

Popeyes has also increased its media budget, with ads focusing on spokeswoman “Annie,” who spotlights the brand’s Louisiana heritage.

Unit growth lifts market share gains

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New unit growth has also contributed to market share gains, Bachelder noted. Popeyes added a net 21 new restaurants in the second quarter, and is on track to open a net 100 to 130 locations in fiscal 2014, including 10 to 15 company-owned units.

At the end of the quarter, Popeyes operated or franchised 2,262 restaurants, including 56 company-owned units.

Popeyes has also remodeled about 71 percent of its restaurants as of the end of the quarter. Bachelder said Popeyes is on track to reach its goal of remodeling 80 percent of its restaurants by the end of this year.

New restaurants are recording average unit sales of about $1.6 million, compared with the system average of about $1.3 million, an increase that in part reflects better site selection, she said.

Bachelder reiterated the company’s global same-store sales guidance for the year of between 3 percent and 4 percent. Earnings per share for the year are projected between $1.58 and $1.63.

In June, Popeyes spent $43 million to purchase recipes for its core menu items from Diversified Foods and Seasonings LLC, the supplier owned by the estate of Popeyes’ founder Al Copeland. The move eliminated an annual $3.1 million royalty fee that the company had been scheduled to pay through 2029.

That money will be reinvested in the brand, with about $1.4 million to be devoted this year to building Popeyes’ human resource capability, including programs to develop leadership and training, as well as tools to measure the chain’s HR performance.

The first step will be building infrastructure and tools for management performance. A second phase will focus on developing leaders within each restaurant, Bachelder said.

“We are giving them today fabulous food training, and tomorrow we hope our leadership training will be of the same caliber,” Bachelder said. “Highly engaged employees lead to highly engaged guests, which leads to sales and profit.”

Contact Lisa Jennings at [email protected].
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