Don’t look now, but Popeyes is suddenly in a slump.
The fast-food chicken chain last quarter reported a 2% decline in U.S. same-store sales, the only one of the four Restaurant Brands International concepts to report a negative number.
That was the fourth decline in five quarters. Unit growth, a crucial element for the 3,500-unit chain, has also slowed, to 2.2% last quarter, compared with 4.1% in the same period a year ago.
“We’re not satisfied with our performance, and know there’s more work to do,” RBI CEO Josh Kobza told analysts this week. Two menu items introduced in the period highlighted the chain’s challenge.
Plenty of customers ordered the chain’s limited-time Chicken Dippers offer, but they did not order them again. Customers liked Popeyes’ newly reconfigured chicken wings, introduced in August, but they were only “modestly incremental,” Kobza said.
“It’s clear we need to do a better job focusing on our core offerings, especially our bone-in chicken, tenders and sandwich platforms,” Kobza said. “And we need to deliver consistent value for guests.”
Popeyes successfully navigated the difficult journey from bone-in chicken specialist to all-things chicken concept. Its Chicken Sandwich, introduced in 2019, brought new customers to the chain, giving it better sales at lunch and more drive-thru business.
That, plus aggressive unit growth, was enough for Popeyes to surpass longtime rival KFC as the country’s largest bone-in chicken chain, and second largest chicken chain period.
But the shift from bone-in to all-encompassing chicken concept has revealed operations challenges. It’s one thing to provide customers with premade chicken in boxes. It’s another to make chicken sandwiches on demand.
Comments on social media could suggest one challenge: Operations. Comments about slow service or dirty restaurants are common when we talk about the chain’s performance.
Executives at RBI clearly believe operations are key to the brand’s future. “We just got to accelerate the pace of that improvement,” Patrick Doyle, executive chairman of RBI, said in an interview with Restaurant Business. “The food is the best in the industry. The brand is terrific. We just need to accelerate the pace. It is getting better. But we need to get better faster.”
Popeyes is working to simplify and improve operations. The company is taking a page out of sister chain Burger King’s playbook, focusing investment on restaurant and kitchen upgrades on the locations where it would have the biggest impact. The company is also making sure that new units only go to the chain’s top operators, Kobza told analysts.
“We’ve got some inconsistency in our operations, and we’re making progress there,” he said. “But we need to make sustained progress.”
Marketing is another area. Popeyes’ limited-time offers (LTOs) this year have fallen flat. The company now wants to shift its focus to its core menu platforms. LTOs can make operations more complex. If that complexity doesn’t yield sales or traffic growth, that can be a problem.
And Popeyes has a history of generating sales when it focuses on its core menu. “I think this brand is amazing,” Kobza said, noting that about half of the brand’s restaurants were opened in the past decade. “It’s in exactly the right segment. It has every right to win. We’ve got relatively new assets. It gets a lot of engagement online. I think we’ve got every right to win.
“We’ve got a couple of things we need to work on, and we’re very much focused on those.”
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