ATLANTA Popeyes Chicken & Biscuits will invest $3.5 million this year in new menu and marketing initiatives in hopes of boosting traffic to the 1,905-unit chain, which posted a same-store sales drop of 2.3 percent for 2007. It also will spend an additional $2.5 million to recruit talent and improve customer service, bringing the revamp plan for Popeyes to a total of $6 million.
Cheryl Bachelder, chief executive of AFC Enterprises Inc., the parent company to Popeyes, outlined on Thursday a plan to focus not only on the chain’s core bone-in chicken offerings but also to develop snack items, lunch offerings, “lighter alternatives” and “everyday value” options. Bachelder did not provide details or a timeframe for the new product rollouts, although she said in a statement that “implementation of this plan is under way.”
The menu activity comes as Popeyes adjusts to the departure of its longtime director of culinary development, chef Billy Jacob, who resigned to join a Five Guys Burgers and Fries franchise in Louisiana.
The focus on snacks and value deals mirrors the moves many quick-service chains, from McDonald’s to KFC, have made this year and last year to boost sales during tough economic times. A number of major quick-service chains, including Taco Bell and Jack in the Box, have recently disclosed plans to add a bevy of new menu items during 2008.
Popeyes also plans to restructure its field operations, develop a new customer service monitoring system and identify cost savings to help improve restaurant-level margins. Parent company AFC also said it would start to sell an unspecified number of its 65 corporate restaurants to franchisees and that it expects to garner proceeds between $38 million and $42 million. The new strategies are expected to drive AFC toward long-term goals of per-share earnings growth in the 12 percent to 15 percent range, net unit growth of between 4 percent and 6 percent, and same-store sales growth between 2 percent and 3 percent.
This year, however, the company said it expects same-store sales to be flat to up 1 percent because of the “difficult consumer environment.” Also in 2008, AFC plans to open between 115 and 130 restaurants. However, with the closures of underperforming units, the chain will expand overall by 5 to 15 locations, according to the company.
For its latest quarter ended Dec. 30, AFC’s net income fell to $3.6 million, or 13 cents per share, from $5.6 million, or 19 cents per share, in the year-earlier fourth quarter. Revenues for the latest quarter dipped 2.3 percent to $39.1 million. Same-store sales fell 7.4 percent at corporate domestic restaurants and dropped 1.6 percent systemwide for U.S.-based locations. Globally, systemwide same-store sales fell 1.2 percent.
For the year, AFC earned $23.1 million, or 80 cents per share, on revenues of $167.3 million. A year earlier, the company earned $22.4 million, or 75 cents per share, on revenues of $153 million.