Dive Brief:
- Popeyes U.S. comparable sales were down by 3.8% while net restaurant growth was up 3.6% and systemwide sales decreased 0.8% during the third quarter, Restaurant Brands International CEO Josh Kobza said Tuesday during an earnings call.
- Sales were impacted by a value-sensitive environment, and Popeyes was missing some of the promotions that have become attractive to consumers, Kobza said.
- The comp sales decline marks a shift in sales momentum for Popeyes U.S., which has had positive same-store sales and systemwide sales growth since Q1 2023, according to RBI financials.
Dive Insight:
Popeyes’ sister company, Burger King, also struggled with its comparable sales within this environment. Its summer promotions couldn’t cut through the QSR value messages, leading to softer than expected sales last quarter.
Chains from McDonald’s to Taco Bell, meanwhile, all have implemented value menus during the past few months to try and reverse traffic declines seen across the fast food industry. A focus on value is moving the needle at some chains, and both Taco Bell and McDonald’s made sales gains during the third quarter.
“We’ve reoriented our marketing strategy to better align with the needs of consumers today, while reminding guests what makes Popeyes so special,” Kobza said. “We know we need to provide better value, which we can deliver through better price points and a better experience.”
In mid-September, Popeyes added a three piece chicken offer for $5 followed by a $6 Big Box in early October, Kobza said. Both of these offers have already helped drive traffic and sales improvements, he said.
While a focus on value will help with short-term improvements, RBI is also working on creating a better experience at Popeyes with more consistent operations and by incorporating its “easy to run” kitchen conversions into its system. The company started rolling out these conversions, which include a simplified back of house and automated ordering, in some markets in California during the first quarter and already saw “encouraging results,” Kobza said during RBI’s first quarter earnings call.
Popeyes comparable sales Q1 2023 to Q3 2024
The kitchen-improvement strategy is part of the chain’s multi-year plan to improve operations and the guest experience, Kobza said. The company found easier and faster ways to install upgrades to its stores and continues to incorporate feedback until it rolls out these changes to its system.
“We also need to make Popeyes easier to access, and we're exploring new formats to infill in key markets and improve build costs,” Kobza said.
The chain has also been enhancing its digital capabilities, leading to a 21% increase in digital sales. Digital made up 28% of total sales last quarter, he said.
“Popeyes is fundamentally doing all the right things,” RBI Executive Chairman Patrick Doyle said during the call. “We simply need to entice more people to try our food.”
