American fried chicken chain Popeyes Louisiana Kitchen has a new parent company, as Restaurant Brands International has scooped up the thriving chain for a cool $1.8 billion. That places Popeyes under the same corporate umbrella as Tim Hortons and Burger King, and industry observers are chomping at the bit to find out what RBI may have up its sleeve for its newest brand.
Popeyes currently has 2,600 locations – the majority of which are in the United States – so the brand obviously has quite a bit of traction. With a new corporate partner at the helm, we can expect margins to be tightened up, as well as a consolidation of duplicate corporate positions. Additionally, Popeyes supply chain and buying power stands to improve, and there could be a streamlining of the restaurant menu down the road.
“Restaurant Brands is really good at pruning items from their menu that don’t make money and adding new innovative items with higher margins. The trick isn’t to just blindly raise the price on existing items. What they do is refresh the item and have a slightly different name and slightly different size. That grows the top line, and it also grows the margin line,” according to Bruce Winder, co-founder, and partner of Retail Advisors Network.
From a big picture perspective, Popeyes could dip its toes further into the international expansion waters. While 2,600 locations are nothing to sneeze at, that number is dwarfed by the other major brands in RBI’s lineup. Tim Hortons checks in with nearly 4,500 stores, while Burger King has a whopping 15,000.
“It helps that they already have a few hundred stores internationally. And they have a product that travels well. Spicy flavors, chicken, rice – those aren’t new ingredients you’ll have to introduce to people in Asian markets, for example. They’re already growing like gangbusters in the United States. If you can now amp up the international growth, forget it. There’s a lot of potentials there,” says Michael Halen, a senior research analyst for Bloomberg Intelligence.
Halen is right on the money. Popeyes has capitalized on the chicken craze that has swept across the US, and an aggressive marketing push helped increase its profile. It’s no longer an afterthought in the world of chicken after KFC and Chick-fil-A, and it’s poised for even more growth in the years ahead. These are exciting times for the Popeyes brand, and you can be sure the corporate brain trust at RBI will translate that enthusiasm into growth.
