Popeyes to invest in unit-level employeesPopeyes to invest in unit-level employees

Popeyes Louisiana Kitchen Inc. is investing in human capital this year by targeting restaurant general managers to be “servant leaders” who will help create an improved employee experience, the company said Thursday.

The company will work with a select group of “early adopter” franchisees to develop new management routines, training support and a curriculum, with a focus on restaurant general managers, Popeyes CEO Cheryl Bachelder said in a call Thursday with analysts. Franchisee input will help build a program that will roll out systemwide in 2016 and 2017, with the goal of “creating an employee experience as legendary as the food,” Bachelder said.

The focus on human capital is one of five strategic pillars that Bachelder credited with delivering yet another strong quarter for the Atlanta-based quick-service operator.

Popeyes’ global same-store sales increased 7 percent in the first quarter ended April 19, compared with a 4.5-percent increase a year ago, resulting in a two-year compounded growth rate of 11.8 percent, the company said.

Domestic same-store sales grew 7.1 percent during the quarter. The company has outpaced the quick-service chicken segment for 28 consecutive quarters, and the overall quick-service segment for 14 consecutive quarters, according to independent data, Bachelder said.

Popeyes’ domestic market share of the quick-service chicken category grew to 24.6 percent, compared with 22.3 percent a year ago, she added.

International same-store sales increased 6.1 percent. The company said it expects global same-store sales growth for the year to be at the top of its previously anticipated range of between 3.5 percent and 4.5 percent.

First-quarter same-store sales were boosted by strong results from promotions, like Ghost Pepper Chicken, a Butterfly Shrimp Tackle Box, Cajun Surf & Turf and, in particular, the Red Stick Chicken campaign launched in March, which resulted in record weekly average unit volumes, Bachelder said.

This week, Popeyes rolled out its latest limited-time offer, Smoky Garlic Chile Chicken, served with a side, biscuit and garlic-herb dipping sauce, priced at $4.99.

To offset higher bone-in chicken commodity prices, the company worked with franchisees to recommend conservative menu pricing in a way that had the least impact on customers, Bachelder said.

“It minimizes traffic impact if you can minimize the increases on the most frequently bought items,” she said.

First quarter net income was $13.6 million, or 58 cents per share, compared with $11.1 million, or 46 cents per share, a year ago.

Revenue increased 13 percent, to $79.5 million, compared with $70.1 million a year ago, primarily as a result of a $5.3 million increase in sales by company-operated restaurants and a $4.4 million increase in franchise royalties.

The company raised its earnings guidance for the year, increasing adjusted earnings per share by 1 cent, to between $1.84 to $1.89, compared with previous guidance of between $1.83 to $1.88.

Popeyes ended the quarter with 2,420 corporate and franchised locations, an increase of more than 7 percent over the past 12 months.

For the year, Popeyes expects to open 200 to 225 units, for net restaurant openings of 115 to 150 locations, including 85 to 95 international locations and three to five corporate units.

Contact Lisa Jennings at [email protected].
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