Popeye's 2005 Annual Report Download - page 4

In AFC’s 2004 annual report, I shared my expectations that
2005 would bring “alignment to brand communications, a
larger re-image presence in our existing markets, a menu
that is more consistent and relevant to our customers,
operations that are responsive to what our guests expect,
and a business that provides stronger sales and profits to
our franchisees.” I am extremely pleased to report that in
2005, the AFC team turned those expectations into realities.
Staying focused
In 2005, our company’s infrastructure went through an
incredible transition as we moved from an organization that
once managed five different brands to management of the
single brand that we felt would maximize our shareholders’
satisfaction and return—Popeyes®Chicken & Biscuits. The
AFC team remained focused on results, despite the potential
for significant distractions as brands were sold, the infrastruc-
ture was reduced, and a new management team formed.
First and foremost, we had to take the steps necessary to
set a strong foundation for 2006. These efforts included
putting in place a new credit facility that would provide
operating capital and enable the company to pay a $12 per
share dividend to our shareholders. In addition, we settled
shareholder litigation relating to the restatement of AFC’s
financial statements for fiscal years 2000 and 2001 and the
first three quarters of 2002. Finally, we closed the former
AFC headquarters and consolidated all functions and per-
sonnel into the existing Popeyes Chicken & Biscuits facility.
Next, we sharpened our focus on key business drivers and
delivered positive performance over the course of the year.
From development to marketing, 2005 saw a new approach
centered on specific objectives. As a direct result, we saw
renewed vigor and interest from franchisees, consumers,
investors, and employees.
Excellent results reflect outstanding efforts
The Popeyes team worked extremely hard during 2005 and
our efforts paid off with positive numbers across a range of
metrics. System-wide sales increased 4.8 percent versus
fiscal 2004, driven primarily by a 3.3 percent increase in
domestic restaurant comparable sales. In addition, we saw a
solid trend of positive transactions in 2005 and we fully
expect that to continue throughout 2006.
Our restaurant development pipeline improved significantly in
2005 and the results of those efforts were seen in our new
restaurant opening performance late in 2005, extending into
2006. Our development team delivered nearly 13 percent
more unit openings than in 2004, with 123 new Popeyes
restaurants opening during the year. We believe we are on
track for continued strong performance in 2006.
Our goal for 2006: continue the momentum
AFC and Popeyes made significant strides in 2005 and we have
created positive momentum that will continue the long-term
viability of this company. We have a number of important
initiatives we plan to execute in the months ahead that will keep
driving the business forwardand generate continued growth.
First, we will continue to focus on operations to make our
stores run more smoothly and provide even faster service.
We have already made progress in this area as reflected in
the 12 percentage point improvement in our operating scores
over the past year. These scores, measured by consumer
comments and mystery shop scores conducted by two inde-
pendent firms, provide a first-hand consumer perspective—a
key indicator of our performance at the operations level.
Clearly, in such a competitive environment, we must consis-
tently deliver a positive customer experience on every visit.
Wearedesignating 2006 to be the “Year of the Operator” for
Popeyes and placing significant emphasis on consistent oper-
ations across the system. We began this initiative in March
2006 with our first Popeyes Operators Summit in Atlanta.
Open to all Popeyes franchisees and
their key operators, the summit
focused solely on improving our
operations execution at the restau-
rant level. Additionally, we will place
great emphasis on consistent
national standards and
To Our Stakeholders
(Left to Right)
Bob Melberth,Vice
President, Field Services;
Ken Keymer,CEO, AFC
Enterprises, Inc., President,
Popeyes Chicken & Biscuits;
Jim Lyons,Chief
Development Officer;
Rob Calderin,Chief
Marketing Officer.