Popeyes Louisiana Kitchen wants its franchisees to improve operations. So the company is taking matters, and restaurants, into its own hands.
The Miami-based chicken chain has struggled with sales challenges lately, including a 4% decline in same-store sales in the first quarter. And that’s coming off a surprisingly pedestrian year in which its sales grew 4%, despite a strong start to 2024 buoyed by the introduction of chicken wings and the debut of its first Super Bowl ad.
The brand has struggled to gain a consistent level of sales growth five and a half years after the introduction of its now-famous Chicken Sandwich, and despite a spate of new products designed to burnish its hand-held chicken menu.
Popeyes is now betting that better-run restaurants will do the trick. So the chain has accumulated its own restaurants to show franchisees the way.
“Our company and restaurant portfolio has expanded to approximately 100 locations, which we aim to make the example for the entire system,” Josh Kobza, CEO of Popeyes parent company Restaurant Brands International (RBI), told analysts this month. “There’s a lot of energy in the Popeyes system today.”
The company has also slowed its unit growth domestically to give the company’s restaurants a chance to adopt better operations practices. But Popeyes is increasing its advertising spending, which should increase the chain’s visibility this spring and provide a sales boost.
Popeyes traditionally doesn’t operate many of its own restaurants. And RBI doesn’t believe that’s a key part of its long-term plan, either. But it has been more willing to own restaurants to accomplish its operations goals.
The chain finished 2023 with just 41 locations. By the end of 2024 it operated 98, according to data from Restaurant Business sister company Technomic.
That’s not quite to the level of its sister chain Burger King, which has been on a multi-year effort to improve operations, including the acquisition of 1,000 restaurants that had been owned by giant franchisee Carrols. Burger King’s improved operations standards, restaurant ownership and remodel incentives have all been credited for helping the chain outperform rivals McDonald’s and Wendy’s recently.
In Popeyes’ case, however, there is the added complexity of the menu. The chain’s chicken sandwich, chicken wings and chicken tenders are all made differently than its traditional bone-in chicken. They are also more popular during lunch, rather than dinner.
The chain’s sales since the sheen wore off its sandwich boost suggest operations challenges could be playing a role. Popeyes has averaged less than 1% quarterly same-store sales growth since the fourth quarter of 2020.
Popeyes is implementing kitchen upgrades in the coming years designed to improve back-of-house operations.
That kitchen is now in a couple hundred restaurants and will be progressively added to additional locations in the next few years. The kitchens have a more standardized operating system, Kobza said, and new technology.
The company is also pushing more remodels, hoping to get most of its 3,100 U.S. locations under a modern image, which can provide a tailwind to sales as consumers prefer eating in newer restaurants.
Popeyes is also moving more of its restaurants to its top “A” operations level. “Much like we have at Burger King, we’re being more intentional about prioritizing operational consistency over new development by prioritizing top operators who share our focus on operational excellence,” Kobza said.
Popeyes believes that it can return to a more traditional rate of unit count growth in the U.S., about 150 locations per year. But first it has to get the operations right.
“I think you add that on top of what is already by far the best culinary team and the best food in the chicken space, if we can bring all that together, we should see progressively better performance over the coming quarters and years at Popeyes,” Kobza said.
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