Popeye's 2004 Annual Report Download - page 4

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In AFC’s case, our portfolio reduction provides us with three distinct advantages. First,
it allows us to focus on the brand that we believe has the superior growth potential, is
overwhelmingly franchised, requires lower capital expenditure, has the capacity to promote
a more diverse and contemporary menu, and provides the greatest point of differentiation
in a highly competitive arena.
Second, by consolidating our operations to Popeyes’
corporate offices, we eliminate a shared service center
that has ceased adding financial leverage. This initiative
also saves considerable expense.
And third, the transactions have allowed us to monetize
certain assets of slower growing and less profitable
businesses in a positive financial market. This has
generated cash that should provide for enhanced
shareholder value. Frankly, we feel very positive about
our strategic direction and the execution of our plan.
We believe our current structure will prove to be a better
vehicle for growth and value creation in the future.
AFC is now Popeyes Chicken & Biscuits. We have hired
Ken Keymer, the former president of Sonic Corporation, to
lead this great brand. Additionally, we have put a number
of people back in the field, decentralized our field operations, reenergized Popeyes’ marketing,
built a new management team, and strengthened the relationship between the corporate
service center and the franchisees. The result is that we have a franchise community today
that is enthusiastic and highly supportive.
It is no coincidence that Popeyes
saw an improvement in perform-
ance during the last two quarters
of the year. In the fourth quarter
of 2004, Popeyes’ domestic
same-store sales growth was 3.2
percent compared to a decrease
of 1.2 percent for the fourth
quarter of 2003. That was the
most improved year-over-year quarterly performance for Popeyes since the first quarter of
2002. Popeyes reported full-year domestic same-store sales growth of 1.3 percent for 2004,
slightly higher than what we had previously projected.
It is an exciting and invigorating time for Popeyes. There is a lot of new product activity, a lot of
new design activity, a lot of new re-imaging activity, and a lot of focused development activity.
For 2005, Popeyes expects domestic same-store sales growth of 2.0 to 3.0 percent driven by
continued operational improvements and increased food-focused advertising, as well as addi-
tional menu and promotional products focused on further driving lunch and snack day-parts.
The company expects the Popeyes system to open 120 to 130 restaurants in 2005, with a
“We evaluated and assessed
everything about AFC. Our
people. Our systems. Our
brands. Our portfolio.Then we
created and invented and
improved and fixed. The result
will be an AFC Enterprises that
is as strong and valuable as we
can make it.”
—Frank J. Belatti, AFC 2003 Annual Report
“We are setting objectives for
ourselves that are well in excess of
what many people may expect of us.”
—Frank J. Belatti, AFC 2003 Annual Report