It would take more than 50 years, several name changes, a weird acquisition, a bankruptcy filing, multiple sales to different owners, who knows how many CEOs and the introduction of a particularly famous chicken sandwich, but last year Popeyes Louisiana Kitchen finally realized its founder’s dream: To overtake KFC.
Popeyes’ journey to becoming the country’s largest bone-in chicken chain was certainly not linear, which makes its accomplishment even more remarkable.
For most of its history, Popeyes was an unlikely candidate to overtake its longtime rival, even one that has been stagnant like KFC.
Yet throughout that period, its franchisees always felt it had the potential to do so, and for a simple reason.
“We always knew we could surpass KFC,” said Mike Burke, who has worked with 43-unit Popeyes operator Janjer Enterprises since 1984. “We have a much better product. It was just about out-operating them.”
This story is about how this once-struggling regional chain with a history almost as colorful as its founder finally realized its vision of becoming a nationwide chicken powerhouse, and what Popeyes has in store to top that.
A brief history of Popeyes
The genesis for Popeyes’ takeover of the bone-in chicken market came in a Minneapolis courtroom in 2012.
Al Copeland, a former doughnut shop franchisee, founded the brand in 1972, then called Chicken on the Run. It lasted just a few months, closed and then reopened as Popeyes Famous Chicken—after the Gene Hackman character in the 1971 movie “The French Connection,” and not after the spinach-loving sailorman.
It would take off. But in 1989, Copeland bought rival Church’s Chicken, and one year later, debt from that deal forced the company into bankruptcy. The resulting company, AFC Enterprises, emerged with different owners. But Copeland controlled the recipes until Popeyes finally bought them back in 2014.
The company went public in 2001. But by 2003, Popeyes started to stagnate, and the next year sold Church’s.
System sales reached $2.2 billion in 2003, with more than 1,700 U.S. locations, according to data from Restaurant Business sister company Technomic. And that’s roughly where the brand would stay over the next decade.
By 2012, the brand operated 40 fewer locations, while annual system sales shrunk by $100 million. KFC was more than twice its size, despite its own stagnation over that same period.
But in 2007, Popeyes named Cheryl Bachelder CEO. The former KFC president joined the board a year earlier, three years after she was ousted by her former employer. Bachelder provided consistency in leadership at a brand that was shuffling through CEOs during that period.
She rebuilt relations with franchisees and improved marketing, putting Popeyes on national cable TV, focusing on its Louisiana heritage. “We wanted to highlight the Louisiana Kitchen aspect that makes us stand out from KFC and other QSRs in general,” said David Damato, whose company operates 228 Popeyes restaurants in the Southeast. “And Popeyes and its franchisees did a great job of reimaging the restaurants to go along with the rebranding.”
Which brings us to that courtroom. By 2012, the brand started focusing more on unit growth. That year, a bankruptcy court judge overseeing the sale of an 81-unit KFC franchisee awarded 27 of those locations in Minneapolis and Northern California to Popeyes.
The move was akin to Burger King buying out a bunch of McDonald’s restaurants, and it enabled Popeyes to take over two substantial markets from its rival. The move announced Popeyes’ intent to grow unit count, and it has expanded aggressively since then.
The brand opened another 500 locations by 2017, when the chain was sold to Burger King owner Restaurant Brands International for $1.8 billion, a valuation of 21 times EBITDA, or earnings before interest, taxes, depreciation and amortization.
It was a multiple that demanded growth. But to get there, RBI had to fix Popeyes’ Chick-fil-A problem.
... y’all good? https://t.co/lPaTFXfnyP
— Popeyes (@Popeyes) August 19, 2019
Y’all good?
U.S. consumers have shifted away from bone-in chicken concepts to handheld, boneless chicken. Unless they are eating chicken wings, that is.
Chick-fil-A is at the head of this trend. It has surged over the past two decades, easily surpassing KFC in the U.S. It is now the country’s third-largest chain and is the top competitor to giant McDonald’s.
Bone-in concepts have long wanted a piece of the action. But for whatever reason, they couldn’t get consumers interested. The restaurant world is littered with their failed attempts at chicken sandwiches.
Amy Alarcon, Popeyes’ VP of culinary, started with the brand in 2007. One of her first projects was The Big Easy, a sandwich with lettuce, tomato and a “Delta Sauce” with Cajun seasonings on a diamond-shaped bun.
“It was a wonderful product,” she said. “We had the right components. But sometimes, it’s so critical to marry the message with the product. And we were maybe not positioned or named right.”
Popeyes needed a successful chicken sandwich if its parent company was going to generate the type of return it expected on its acquisition. Shortly after that deal was complete, company executives met to figure that out.
“We sat down and looked at the menu and we realized it was time to evolve,” said Sami Siddiqui, former Popeyes president who’s now CFO of RBI. “Bone-in chicken is our core. We have the best bone-in chicken in our market. But the category is declining.”
Popeyes had been tinkering with a chicken sandwich. “In 2016, we started playing around with it,” Alarcon said. The original sandwich featured lettuce and tomato, with hand-breaded chicken dipped in a buttermilk batter. They removed the lettuce and tomato and replaced them with the magic ingredient, barrel-cured pickles. “We needed something to offset it,” she said. “That was it.”
The company tested the sandwich and validated it with customers. But it also needed the right name. A bad product name can be the difference between winning and losing. Just ask Burger King, which named its short-lived chicken sandwich the Ch’King.
“You’ve got to avoid kitschy,” Alarcon said. “When we got to naming, we wondered, ‘Why does it even need a name?’ For us it wasn’t just a chicken sandwich. But it was the chicken sandwich.” The name stuck.
The sandwich did well in test and received strong reviews when it was introduced in August 2019. But then Popeyes sent out a single tweet, aimed at Chick-fil-A, that now sits as the single most impactful bit of digital marketing the restaurant had ever seen.
The stratosphere
It’s difficult to get a sense of just how much of an impact that sandwich had on Popeyes and its brand.
Reaction to the tweet spread swiftly. Consumers flocked to stores, waiting 45 minutes in line to get one of the sandwiches, and then they’d come back the next day. The chain ran out of product in just 10 days.
“Test markets are usually a good gauge of how a product will perform,” Siddiqui said. “We were selling over 10 times what we were selling in test market. No one had ever seen a test market to national launch [that had] such a big jump.”
Nobody expected it.
“We were beating ourselves up” for not expecting it, Siddiqui said. “But not too much.”
Burke’s restaurants were expecting to sell 150 sandwiches per day at the most. “When it went to full market, we had stores selling over 1,000 a day,” he said.
Popeyes spent the subsequent two months reconfiguring its supply chain and training employees to handle the new business. Making chicken sandwiches at a chain that typically sells bone-in chicken is a different process, and employees needed additional training.
“We had to blow up everything we knew about running a Popeyes pre-chicken sandwich and figure out how to run it an entirely new way,” Damato said, noting that his restaurants added workers to each shift and had someone solely responsible for making sandwiches. “We had to get creative around the ordering, delivery and storage of the new sandwich products.”
That delay was a risk, however. Some industry experts outside Popeyes expected the return to die down, given the two-month wait. Yet that didn’t happen. When it was introduced, customers returned in droves.
Popeyes’ same-store sales jumped 40% that quarter, even though the sandwich was only available for 60% of the period.
Average unit volumes rose 30%. Popeyes added more than $2 billion in U.S. system sales since the sandwich’s introduction. The brand has also added another 600 U.S. restaurants.
The sandwich exposed Popeyes to new dayparts and enabled the brand to move into new markets and new neighborhoods. It also gave the brand permission to roll out other products, like chicken nuggets and chicken wings.
“We went from a regional, niche brand to something mainstream, hip and culturally relevant,” Siddiqui said.
But Popeyes still had another challenge to conquer: Operations.
Wings and operations
The Chicken Sandwich carried Popeyes through the pandemic. But as more brands offered their own sandwiches, including KFC, the chain’s sales stumbled. The chain recorded negative same-store sales in six of seven quarters starting in the fourth quarter of 2020.
At least some of that is blamed on operations. Popeyes has worked to improve that over the past couple of years, which has helped those sales accelerate over the past seven periods, including 5.6% same-store sales growth in the first quarter. That result looks better and better as more brands report sluggish or nonexistent sales growth.
“As we’ve grown over the years, our focus has been on making the kitchen easier to use, easier for team members,” said Jourdan Daleo, Popeyes’ chief operating officer. “We’ve put in a lot of work operationally in our kitchens.”
Operations aren’t always sexy but improving them is key for a brand that has bigger ambitions beyond chicken sandwiches. Popeyes designed a new kitchen that integrates more digital, improves the layout and streamlines order packaging to improve speed.
Popeyes worked with its franchisees on the kitchen, which is being tested in company and franchisee locations. “We want to make it more efficient, effective and fun,” Daleo said.
The brand now has big ambitions for its chicken wings. Last year, Popeyes added Sweet ‘n Spicy Wings as a limited-time offer. It was so successful the brand made wings a permanent menu item with five different flavors, and then backed it up with its first Super Bowl ad.
Similar to the way in which it priced its chicken sandwich at $3.99, Popeyes sold the wings at $5.99 to get into the conversation.
“We had a sense that wings would be a hit,” said Jeff Klein, who has replaced Siddiqui as president of Popeyes in North America. “When we first launched Sweet ‘n Spicy in September 2023 as an LTO, it became the highest performing product since the chicken sandwich. That was a significant tell-tale sign that we were doing something right, and it’s going to be a category that we continue to grow and expand.”
Popeyes probably won’t be finished with chicken wings, either. Siddiqui suggested it could expand dayparts next, including late-night, where fried chicken sells well, and even breakfast.
Add it all up, the operational improvements, the daypart expansion, its new focus on hand-held products and its legacy bone-in chicken, and Popeyes appears poised to be a well-rounded chicken powerhouse at a time when people are eating more chicken than ever.
And, while the brand has conquered one hurdle, it has plenty of others that are far larger: Chick-fil-A is four times its size. And while Popeyes overtook KFC in the U.S., that brand remains far larger globally, where it is immense.
But it wasn’t all that long ago when you would have been shocked to see Popeyes as large as it is today. So, who knows where its growth will lead?
“Popeyes is still so early in its journey toward leadership,” Siddiqui said. “We’re excited about where we can take this brand.”