Restaurant Brands International (RBI) will be the first to admit that it has yet to take full advantage of the potential sales opportunity in Popeyes, the relatively small fried chicken chain.
RBI bought the 2,600-unit chain for $1.8 billion in February 2017. Since then, Popeyes has grown to 3,120 restaurants globally, but it has yet to truly outperform on key sales metrics.
Popeyes generated system-wide sales of $955 million in the first quarter of 2019, up 7 percent from the same period last year. Comparable store sales came in at just 0.6 percent growth. For comparison, in the first quarter of 2018, Popeyes’ overall sales were up by 11 percent and comparable store sales were up by 3.2 percent.
RBI’s leadership continued to hammer on the brand’s potential on the company’s first-quarter earnings call, saying that the chain is still in the early days of a strong growth period.
Popeyes has just started to modernize: 1,300 restaurants now offer delivery, up from practically zero restaurants one year ago. In mid-April, the chain launched an official partnership with delivery service Postmates to better integrate the delivery sales channel at participating restaurants.
“Over the years we’ve made hundreds of thousands of deliveries from Popeyes, so we are thrilled to officially partner and work closely with them to continue to drive growth,” Dan Mosher, SVP, Merchant Lead at Postmates, said in a statement at the time of the announcement.
Franchisees are just now receiving standardized practices around which point-of-sale systems they can install in their restaurants, and how to implement back-office technology.
“Technology at Popeyes remains the key focus for us and we’re really excited about the opportunity both near term and long-term,” RBI CEO José Cil said on the company’s first-quarter earnings call with analysts.
Once the chain’s operational system is appropriately streamlined, RBI hopes to start seeing big returns on its investment.
“Our global network of proven, well-capitalized operating partners combined with the strength of the brand and product offering gives us conviction that Popeyes can be one of the fastest growing quick-service brands in the world,” Cil said on the call.
First Quarter Earnings Results
RBI’s total sales for the quarter were $1.27 billion, up slightly from $1.25 billion in the same period last year.
Coffee chain Tim Hortons dragged on the company’s overall sales growth, reporting just 0.5 percent growth in system-wide sales in the quarter, and a 0.6 percent decline in comparable store sales.
Out of RBI’s three brands, Burger King reported the highest system-wide sales growth, generating an 8.2 percent bump in the quarter. Comparable store sales were up 2.2 percent.
RBI’s shares were trading down slightly immediately after the call, as Tim Hortons’ low sales caused the company to miss analysts’ earnings estimates for RBI.
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