Popeye's 2005 Annual Report Download - page 5

Kenneth L. Keymer
Chief Executive Officer,AFC Enterprises, Inc.
President, Popeyes®Chicken & Biscuits
3
system-wide testing throughout the year, all in an effort to
improve the quality and speed of our service.
Working with our current and new franchise operators, we
have targeted 130-140 new system-wide restaurant open-
ings for 2006 with domestic new unit openings expected to
comprise approximately 60 percent of that total. The brand’s
new unit development will continue to focus on penetrating
existing markets and expanding under-penetrated areas of
the country such as the Northeast, Northwest, and
Southwest. Internationally, Popeyes will continue to focus on
developing restaurants in Canada, Mexico, Latin America,
and the Middle East. The growth of our development pipeline,
the renewed vigor of our existing franchise operators, and
the excitement surrounding the Popeyes brand make me
confident that 2006 will be another strong development year
for the brand.
Finally, in 2006 Popeyes expects domestic same-store sales
growth of 2.0-3.0 percent driven by the introduction of new
menu items, continued operational improvements, and more
effective food-focused advertising. We will communicate a
strong brand message built around food, flavor, and fun. We
call this campaign “Food with ’tude,” and you can expect
that message to come through loud and clear in every
Popeyes market. It is all part of our effort to communicate
how Popeyes maximizes flavor and choice for the consumer.
These are our most compelling points of difference and we
intend to leverage them at every opportunity—both to con-
vince new customers to try us and to encourage existing
customers to come back again and again.
Financially, 2006 will bring greater emphasis on enhancing
value and long-term growth for investors. We will continue
efforts begun in 2005 to lower operational costs and to
improve margins and overall cash flow.
When you look at the challenges we faced in 2005—both
the transitional challenges and the curves Mother Nature
threw at us—I think you’ll agree that we had a very remark-
able year operationally. We started to see things come
together very strongly toward the end of the year and I
believe that what we’ve seen in the last half of 2005 will
translate very well into 2006. As a result, I have every reason
to believe that 2006 will be a very successful year for AFC
and the Popeyes brand. It has been and continues to be an
exciting time to be part of this organization.
The 2005 Hurricane Season:
Its effect, our response.
Of all of the challenges we faced in 2005, Hurricane Katrina was
by far the greatest and the most personal. When the storm came
ashore in New Orleans on August 28, more than 800 company
employees in the New Orleans area, as well as the families and
friends of many employees at our headquarters in Atlanta, were
displaced. It was clearly a painful time in the Popeyes brand
history. It was widely recognized throughout the organization
that this would be a challenge that would test the management
team’s mettle and ability to focus on the business despite
concern for our extended family along the Gulf Coast.
Within hours after Katrina made landfall, we set up a situation
room staffed with a crisis team that contacted our employees,
operators, and vendors in the affected areas to determine their
safety. We were on the ground just days after Hurricane Katrina
assessing damage. The team quickly verified that approximately
95 to 100 restaurants, including all 36 company-owned locations
in the region, were damaged sufficiently to be closed.
Seeing the damage first hand and feeling deeply about the
devastating impact of Katrina on our friends and family, AFC and
our franchisees pledged to raise funds in support of Hurricane
Katrina relief efforts and to rebuild the city of New Orleans. This
pledge included a $500,000 cash donation to the American Red
Cross. Our commitment to the city is stronger than ever as we
make every possible effort to reopen restaurants.
As of January9, 2006, we had 25 restaurants temporarily
closed due to the effects of Hurricane Katrina, which included 21
company-owned restaurants in New Orleans and four franchised
restaurants in other areas of the Gulf Coast region. We have
reopened 12 company-owned restaurants in New Orleans and
during 2006 we expect to reopen an additional eight to 12 of the
21 company-owned restaurants that were temporarily closed as
of January 9, 2006. We expect the four closed franchised restau-
rants to reopen during fiscal 2006. Hurricane Katrina was followed
in quick succession by Hurricanes Rita and Wilma. They too had
significant impact on communities on the Gulf Coast as well as
the southern portion of Florida.
Our commitment to the entire region continues and we keep
those struggling to rebuild their lives in our thoughts.
Popeyes employees sort goods that were donated to hurricane
victims in the New Orleans area.