In the quick service restaurant sector, sales of 34% year over year are incredibly abnormal, but that is exactly what Popeyes generated in the quarter following the launch of its thin chicken sandwich. 2019.
This kind of momentum had to slow down at some point. Parent company Restaurant Business International’s first-quarter earnings report on Tuesday suggests we may actually be past that point. Same-store sales for Popeyes fell 4.6% in the quarter, marking its fourth consecutive quarterly decline.
Credit a cascade of copycat sandwich launches – including giants McDonald’s and KFC – for dissipating Popeyes’ market share for a product clearly in demand. In the first quarter, Popeyes was also hampered by continued labor issues that reduced store hours, as well as overlapping 2021 stimulus benefits, José Cil, CEO of RBI said during Tuesday’s call.
That’s not to say Popeyes doesn’t have a plan to regain some of its momentum. The company is working on operational improvements, including adding dual drive-thru lanes at more than half of its North American locations to speed up throughput, for example. It is also reconfiguring and launching new backend technology solutions, rolling out new restaurant concepts and expanding its mobile ordering and payment, curbside pickup, digital order pick-up shelves, self-ordering kiosks. -service and the Popeyes Rewards program.
This week, the chain also launched a new iteration of its signature sandwich – the Buffalo Ranch Chicken Sandwich is available nationwide for $4.99.
The offer supports a growing demand for the Buffalo Ranch flavor profile that has made its way from sauce to Hummus for seasoning. It also illustrates Popeyes’ desire to generate new news from a wildly successful platform and Buffalo Ranch should not be expected to be the last variant.
The chicken chain is also expanding its footprint at an aggressive rate, including more than 150 locations in the United States last year. A few weeks ago, Popeyes announced that more than 200 restaurants were set to open this year, including a new flagship site in New York’s Times Square in June (which is sure to attract lots of foot traffic).
Additionally, Popeyes recently reopened its flagship New Orleans location on Canal Street in March. The company boasted that this location is prominently displayed on the Mardis Gras parade route for “maximum brand presence.”
The chain sandwich created a sort of domino effect that not only increased unit economics, but also increased brand equity. As such, Popeyes is also pressing gas for its overseas expansion.
Among the markets targeted by Popeyes is China, where there is a clear demand for fried chicken, as evidenced by rival KFC. Popeyes entered China in 2020, reporting its most successful debut for new market entry in its 48-year history and indexed to more than 3,400 restaurants in 25 countries. The long-term plan is to have 1,500 locations in China.
Additionally, Popeyes is targeting hundreds of restaurants in India, Bangladesh, Nepal and Bhutan, as chicken remains one of the largest and fastest growing categories in the region. The chain is also betting on the protein’s popularity in the UK, South Korea and Mexico, with plans to open “several hundred” restaurants in those markets “in the coming years”.
During the first quarter, Popeyes posted record unit growth and the highest number of net openings in the first quarter since acquiring RBI five years ago, but the company has made it clear that this was only the beginning.
“Our existing international markets, including Spain, the Philippines, Turkey, Mexico and Brazil, have grown significantly year-over-year, reinforcing our excitement for future growth as we expand our offerings to more customers globally. We expect to continue to see this growth trajectory play out as the year progresses and we are on track to deliver record net unit growth in 2022, including opening more than 200 new locations. in North America this year, while also launching into new markets like Romania and France,” said Cil.
Popeyes has every reason to be optimistic, despite its recent negative results exceeding abnormal quarters. The channel’s system-wide sales are now about $5.5 billion, up from $3.2 billion in 2016.
Of course, such growth indicates the willingness (confidence) of franchisees to invest more in the system and is usually supported by a strong unit economy. For Popeyes, much of that strength can be attributed to his sandwich. Aaccording to QSRaverage unit volumes are approximately $400,000 higher than before product launch.
Notably, this growth comes as Popeyes prepares to celebrate its 50and birthday in June. Despite such longevity, however, it’s clear there’s plenty of trail left for the brand.