ATLANTA Citing an effective media campaign coupled with improved operations, AFC Enterprises Inc., parent of the Popeyes Louisiana Kitchen quick-serve chicken chain, said this week its same-store sales performance for the second quarter was its best in three years.
The company’s profit and revenue for the July 12-ended second quarter dipped, but AFC raised its guidance for the full year on its stronger sales. Its stock rose 11.9 percent Thursday to close at $8.93 per share. Its 52-week high and low has been $9.55 per share and $2.85 per share, respectively.
“We moved aggressively to grow our market share by giving our guests what they want: superior Louisiana food with compelling value for both the single and family user,” Cheryl Bachelder, AFC’s president and chief executive said in a conference call with investors. “We invested in national media with a strong spokesperson who successfully delivered that message to our core customer.”
The company said its recent decision to use national media drove ad awareness increases of 14 percentage points from a year ago, bringing positive traffic increases.
Domestic same-store sales increased 4.3 percent, compared with a 1.7 percent decrease in the second quarter a year ago. International same-store sales remained positive for the 11th consecutive quarter, up 3.9 percent. The company cited strong sales in Korea, Canada and on U.S. military bases abroad. The positive performance offset a downturn in sales at stores located in Latin America and the Middle East.
For the quarter, AFC opened 16 new restaurants including five domestic units and 11 international locations. It also closed 22 restaurants.
According to Bachelder, Popeyes, in addition to its successful ad campaign, also initiated two well-received value promotions, featuring its signature Bonafide bone-in chicken menu item, which helped drive the chain’s same-store sales performance.
She also stated that the company had made solid progress on its unit economics, reporting that operating margins had improved by 2.8 percent since the fourth quarter of 2008. Bachelder added she expects improvements through the rest of the year as commodity costs continue to improve from year-ago highs.
Going forward, Bachelder indicated that the company was committed to improving speed of service at its drive-thrus with the implementation of a new program that includes new timers and headsets, as well as improved training methods.
“Our times are coming down, and the guest experience scores are going up,” she said. “Longer term, this improved experience for our guests will translate to sales performance. For every three cars added daily to the peak drive-thru hours, Popeyes’ comp sales would increase 1 percent.”
Net income for the second quarter fell to $6.4 million, or 25 cents per share, compared with $6.6 million, or 26 cents a share, for the same quarter a year ago.
Revenues also declined, by 9.2 percent, to $35.7 million. The company attributed the revenue drop to the refranchising of 27 corporate stores in the Atlanta and Nashville, Tenn., markets, as well as the sale of nine locations in Texas.
The company now expects full-year earnings to total between 66 cents and 70 cents per share, up from previous guidance that totaled between 62 cents and 67 cents per share. In fiscal 2008, the company earned 65 cents per share.
Contact Elissa Elan at [email protected].