Dive Brief:
- Popeyes will overhaul much of the equipment and technology in its system by the end of 2026, Restaurant Brands International CEO Josh Kobza said on the company’s Q4 2024 earnings call Wednesday.
- About 85% of Popeyes franchisees have committed to amend their franchise agreements to allow for higher marketing spend and a new remodel/reimage program that will overhaul the brand’s U.S. system by 2030, Kobza said on the earnings call.
- The average profitability for a franchised Popeyes unit in the U.S. has increased from $210,000 in 2022 to $255,000 in 2024, according to RBI’s most recent earnings release.
Dive Insight:
The equipment changes at Popeyes are part of its “Easy to Run” initiative, which “standardizes processes, enhances technology and introduces new kitchen equipment and a new production line,” Kobza said. The company has foreshadowed such changes for a while on its earnings calls, and the overhaul initiative is strategically similar to the ongoing “Reclaim the Flame” initiative at Burger King, which is intended to modernize the brand and improve franchisee profits. Reclaim the Flame has driven significant sales improvements at renovated Burger King stores.
RBI tested equipment changes over 18 months at 200 Popeyes locations, Kobza said. Within 22 months RBI intends for all Popeyes in the U.S. to have “cloud-based point of sale systems, digital drop charts, sticky label printers, order-ready boards, kiosks and upgraded back-of-house equipment, including auto batter-makers and improved hot holding units,” he said.
Franchisees can opt to install a redesigned production line during the addition of the new equipment or when they next remodel their stores, Kobza said.
The cumulative impact of this modernization should reduce wait times, improve order accuracy and enhance the employee experience, Kobza claimed. Hub markets where the Easy to Run initiative is already well-advanced, like Houston and Orlando, Florida, have seen significant performance gains, he said.
Patrick Doyle, the executive chairman at RBI, said that the company wants Popeyes to reach $300,000 in four-wall franchisee profits and that the brand is well on its way to hitting that mark. An emphasis on the health of franchisees is key to RBI’s long-term strategy, he said.
“At the end of the day, it's franchisee profitability that fuels our ability to hit our growth targets,” Doyle said.
Popeyes saw weak comparable sales growth in the U.S. in 2024, just 0.1% in Q4 and 0.6% in the whole year, according to the earnings release, and in Q3 a lack of value promotions led U.S. sales to stumble. But RBI is planning to increase ad spend, which could help drive sales.
To finance this, the company is bumping up the national advertising rate from 4.5% to 5% this year, and eventually to 5.5% — subject to profitability thresholds — through the amendments to Popeyes franchise agreements, Kobza said. But RBI will offset some of the initial marketing expenses with a $4,000-per-restaurant credit.
