Financing

Popeyes wants its U.S. stores to operate more like its international restaurants

The fried chicken restaurant chain believes that it can get more efficient, just like its international locations and rival Chick-fil-A.
Popeyes
Popeyes believes improved efficiency could drive sales in the coming years. | Photo: Shutterstock.

So, apparently, Popeyes has its limits.

Patrick Doyle, executive chairman of Popeyes parent company Restaurant Brands International, was asked at an investor conference on Tuesday if the chain could keep the pace of international growth it achieved this year.

“System sales growth for Popeyes last quarter was up north of 40%, rolling over north of 40% the previous year,” Doyle said, according to a transcript on the financial services site AlphaSense. “If we can keep going 40% a year I think in 10 years we’re bigger than the entire global economy. So I think it compounds.”

Uh, that is unlikely to happen. But it highlights just how fast the chain’s international development has been in recent years. The chain operates nearly 1,400 restaurants outside the U.S., up by more than 30% over the past year.

All those new restaurants operate with new equipment and new operations and as a result operate more efficiently than they do in the U.S.

The chain wants to eliminate that gap. Popeyes executives believe improving operations and efficiency are the brand's biggest potential win in the coming years.

“If you visit a Popeyes outside the U.S. and look at the efficiency of their operation versus Popeyes in the U.S., there’s a big difference,” Doyle said.

For instance, Doyle said, the company could work with suppliers to pre-marinate its chicken, rather than doing so on site. And Popeyes could improve the production system inside the kitchen so it boosts efficiency. That effort is already in a small number of U.S. restaurants. “It is helping,” he said.

The company also plans investments in equipment that will similarly boost efficiency in its U.S. restaurants.

“There’s going to be some investment in equipment,” Doyle said. “And yes, there’s a high return on those.”

Popeyes isn’t just trying to keep up with its own international restaurants. It is eyeing its rival, Chick-fil-A, the country’s third-largest restaurant chain and the largest chicken concept, one more than twice Popeyes’ size.

Much has been written about why Chick-fil-A does as well as it does—is it the service? Is it the chicken?—but Doyle has his own theory.

“Everybody spends a lot of time looking at [them] and saying, ‘OK, why are they doing so well?’” Doyle said. “Chick-fil-A’s units are incredibly efficient. They have hundreds of industrial engineers in Atlanta that are finding ways to make those restaurants more efficient day in and day out. They’ve done a terrific job at creating a very efficient box.”

And Doyle noted that efficiency is one of the big growth points for the restaurant business in general.

For the most part, the industry over the years has remained relatively steady: Workers prepare food and serve it to customers who pay via point-of-sale system. In recent years, the industry has added service points and pay points. But for the most part it has largely avoided the efficiency improvements that many other industries have made.

That could change in the coming years, he said, particularly with self-ordering kiosks, which are rapidly making their way into the fast-food world. “The restaurant industry has really failed to drive efficiencies in restaurants for a long time,” Doyle said. “Most industries have gotten far more efficient. They have found interesting ways to automate.”

“I think the big, near-term opportunity that everybody is kind-of looking at is how to automate ordering. Kiosks are just a better way of ordering. Better for the customers, for the restaurant. It drives profitability.”

Overall, Doyle believes that improving efficiency inside the restaurants, particularly at Popeyes, could drive throughput and ultimately improve sales. He clearly expects that.

“If it doesn’t,” he said, “it means something has gone off the rails.”

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