“At Popeyes, We Deliver Results As Good As Our Food. Enjoy.”
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POPEYES LOUISIANA KITCHEN, INC. 2013 ANNUAL REPORT “At Popeyes, we deliver results as good as our food. Enjoy.” Cheryl A. Bachelder Chief Executive Officer, Popeyes Louisiana Kitchen, Inc. THE INGREDIENTS DRIVING OUR GROWTH. 15consecutive 20.8percent market share quarters of positive of the domestic chicken same-store sales quick service restaurant category We have 1 ,769 Domestic Units 365 new within last 5 years NATIONAL MEDIA COVERAGE DOMESTIC REMODELING Within the next 2 years, almost all of our domestic restaurants will feature the new Popeyes Louisiana Kitchen image. In 2013, approximately 550 domestic restaurants were remodeled in the new Popeyes Louisiana Kitchen image, bringing the total to over 1,100 restaurants, or 60% of the domestic system. 90% by year-end 2015 2015: 10% 2012: 25% On average, remodeled restaurants enjoy a 3% to 4% sales lift. 80% by year-end 2014 2014: 20% 2013: 35% 60% at year-end 2013 INTERNATIONAL RESTAURANT FOOTPRINT NATIONAL MEDIA COVERAGE Canada 70 in Ontario Latin America/Caribbean 65 in 9 countries and 2 territories Europe 107 in 6 countries Middle East 69 in 6 countries North Asia 119 in 2 countries and 1 territory Southeast Asia 26 in 4 countries “The most important ingredient in our growth is building trust with our franchisees. We began by investing in advertising, menu innovation, and tools to improve restaurant-level profitability. We’ve gained momentum in the remodeling of domestic restaurants, and accelerated the expansion of our footprint around the world. Ours is a shared enterprise, and we need to serve our franchisees, our guests, our people and our shareholders to succeed long-term.” John M. Cranor, III, Chairman, Popeyes Louisiana Kitchen, Inc. Check out our online annual report at http://popeyes.com/investors/annual-reports/2013/ “Our rich Louisiana heritage inspires everything we do. But it’s our passion for performance that’s given us five straight years of growth in domestic same- store sales, profitability, restaurant count and market share. Today, we’re hungry for more.” Cheryl A. Bachelder Chief Executive Officer, Popeyes Louisiana Kitchen, Inc. Adjusted Earnings Per Diluted Share $1.43 $1.24 $.99 $.86 $.74 2009 2010 2011 2012 2013 Check out our online annual report at http://popeyes.com/investors/annual-reports/2013/ To view a copy of our Cautionary Note Regarding Forward-Looking Statements, refer to the inside back cover of this document. To Our Stakeholders In 2013, we grew our market share of the domestic chicken quick service restaurant category to 20.8 percent. We opened 194 new restaurants around the globe—our highest opening count in 15 years. 2013: What a Year! Outstanding Results It was especially exciting to see over Our 2013 results speak to the success of 550 restaurants remodeled in the new our team and our franchise owners. Popeyes Louisiana Kitchen image, bring- Domestic same-store sales grew for the ing the total to more than 60 percent of fifth consecutive year and international the domestic system. Most importantly, same-store sales grew for the seventh we continued to execute on our strate- consecutive year. gic plan and build on our exceptional rapport with our franchisees. Our adjusted earnings per diluted share were $1.43, up 15.3 percent from $1.24 For five years running, our strategic per diluted share in 2012. roadmap has been the foundation for our consistent industry-leading results. With our highly franchised business It encompasses the four things that a model, we generated free cash flow of great chain restaurant company must do $42 million as a result of our strong to be successful: Build a Distinctive sales, new restaurants and increased Brand; Create Memorable Experiences; restaurant profitability. Grow Restaurant Profits; and Accelerate Altogether, we added 126 net restaurants Quality Restaurant Openings. to our global footprint for a total of By remaining focused on these four 2,225 and a system growth rate of pillars, we continue to deliver excep- approximately 6 percent. Our newest tional results. It’s this discipline that has locations are not only beautiful — they allowed us to continue to grow, take are performing well, with high sales and market share from our competition, and high returns. drive continuous improvements in our guest experience. Meanwhile, our menu, message and media are driving sales. We continue to offer tools to help our franchisees control costs and increase sales. When our franchisees succeed, they open more restaurants — which allows us to grow the Popeyes brand and expand our footprint. It all adds up to sustainable growth. Cheryl A. Bachelder Chief Executive Officer, Popeyes Louisiana Kitchen, Inc. Leadership Team (left to right): H. Melville Hope, III, Lynne Zappone, Harold M. Cohen, Ralph W. Bower, Cheryl A. Bachelder, Alice LeBlanc, Andrew G. Skehan, Richard H. Lynch “Looking forward, we will continue to invest in building leader capabilities to support our ambition of becoming a best-in-class employer, consistently delivering superior service to our guests.” We expanded our development of More Growth Ahead opportunities for our franchisees to company-operated restaurants by Today, we continue to invest in building grow profit and expand our brand. adding six new restaurants in two new leader capabilities to support our I could not be more proud of the markets, Indianapolis and Charlotte, plus ambition of becoming a best-in-class three restaurants in our heritage Popeyes team or more excited about employer, consistently delivering Popeyes’ future. I look forward to markets of Memphis and New Orleans. superior service to our guests. We also opened two new franchise inter- serving you, our people, guests and national markets, Vietnam and Chile. In fact, our No. 1 strategic initiative for franchisees in the years ahead. the next five years is to transform Sincerely, In 2013, Popeyes’ system-wide sales ourselves into a company known increased 8.2 percent, driven largely by throughout our industry for a superior global same-store sales performance branded employee and guest experience. and the sales in our new restaurants. This is a deliberate investment in human Global same-store sales increased 3.7 capital that we believe will strengthen Cheryl A. Bachelder percent, compared to 6.9 percent last our performance over the long term. Chief Executive Officer, year. Marking the fifth consecutive year Popeyes Louisiana Kitchen, Inc. of growth, domestic same-stores sales Looking ahead, we expect to deliver were up 3.6 percent on top of a 7.5 per- even stronger results — with more new cent increase last year. restaurant openings and more 2 Check out our online annual report at http://popeyes.com/investors/annual-reports/2013/ PURPOSE & PRINCIPLES POPEYES’ PURPOSE: INSPIRE SERVANT LEADERS TO ACHIEVE SUPERIOR RESULTS By inspiring our people to serve, we are becoming a high-performing company that delivers not only the best food but also the best place to work and the best guest experience around. PRINCIPLES: HOW WE DO BUSINESS POPEYES LOUISIANA KITCHEN, INC. 2013 ANNUAL REPORT 3 PRIORITIES “At Popeyes, we have a fanatical focus on the basics. For five years running, we’ve had the same easy-to- understand strategic plan. Our consistency has allowed us to drive sustained success that sets us apart in the quick service restaurant segment.” Ralph W. Bower, President-U.S. 5Years of steadily increasing market share BUILD A DISTINCTIVE BRAND Popeyes Louisiana Kitchen is a 42-year-old brand that is behaving like a whole new concept. Over the past five years, we have excelled by building our brand and highlighting the quality of our food. Today our menu, message and media continue to drive sales. Annie, our warm and approach- able spokesperson, drives traffic every time she goes on the air across the nation, now almost year-round. Our image is as fresh, spicy and fla- vorful as our food, and it keeps guests coming back again and again. 4 Check out our online annual report at http://popeyes.com/investors/annual-reports/2013/ consecutive quarters POPEYES DOMESTIC SAME-STORE SALES 23 HAVE BEAT DOMESTIC c-QSR* segment *C-QSR = Chicken Quick Service Restaurant CREATE MEMORABLE GROW RESTAURANT ACCELERATE QUALITY EXPERIENCES PROFITS RESTAURANTS For the last five years, Popeyes has steadily One of the things that we are most proud of, In 2013, the Popeyes system opened 194 loca- improved our guest experience — with an emphasis and that we think differentiates Popeyes as a tions globally, the most new restaurants we on speed of service at the drive-thru. Our Guest brand, is a fanatical focus on restaurant profit- have opened in any single year in the last 15 Experience Monitor, which we call GEM, and our ability. The operating profits before rent of years. Our 124 domestic openings put Popeyes Metric Moving Scorecard tools have served us Popeyes’ domestic restaurants remain among third among growing QSR brands that are build- well. This summer we will launch a new guest the best in the industry and continued to grow ing domestic freestanding restaurants. And, experience tool, a next-generation resource to in 2013 to 21.6 percent, from approximately 18.0 these new restaurants are opening at higher help restaurant managers focus on action steps percent in 2008. A prime example: we now average unit volumes than the system average. to further improve the guest’s experience. require common back-of-house functionality The first-year sales of our new domestic system-wide, allowing franchisees to track data The biggest improvement to our guest freestanding restaurants opened in 2012 were like waste, labor and theoretical food costs. This experience this year will continue to be our approximately $1.6 million per year, outperform- better tool, combined with coaching on consis- beautiful new restaurant remodels, which are ing our total domestic system average unit tent routines and core restaurant processes are benefitting our franchisees with an average volume by approximately 30 percent.