Popeye's 2009 Annual Report Download - page 8

6 AFC ENTERPRISES, INC.
At Popeyes, we’re all about the food. In 2009, we served up
distinctive, slow-cooked Louisiana recipes for today’s fast-paced
lifestyle in more than 1,900 restaurants around the world,
outpacing the competition in a troubled economic environment.
Popeyes is one of a select few brands in our industry
that ended the year on a positive note. By driving more guest
traffic into our restaurants in 2009, we saw positive same-store
sales, leading Popeyes to outperform both the quick-service
restaurant (QSR) and the chicken QSR segments. Many factors
fueled our performance, including a national media advertising
campaign, successful “limited time only” product promotions
and value offers, our feisty new spokesperson Annie, and a
positive guest experience at the restaurant level.
Each quarter, adjusted earnings per diluted share met or
exceeded expectations, and we ended 2009 at $0.74 per
diluted share, up 14 percent over the prior year. EBITDA
margins remained above the industry average, at more than
29 percent. Our highly franchised business model continues
to generate strong, steady free cash flow—approximately
$24 million in 2009.* Our balance sheet remains solid, and
we reinforced our position by amending our credit facility,
which gives the brand greater financial flexibility and stability
for long-term growth. We also repaid $36.6 million in debt,
an appropriate use of cash in these times.
Positive Same-Store Sales
Our global same-store sales grew 0.7 percent in 2009.
Domestic same-store sales were up 0.6 percent, which is a
strong result in today’s economic climate when most in the QSR
industry experienced traffic declines and weak same-store sales.
This increase reflects our ability to drive guest traffic into our
restaurants. We have the products our guests want to eat—and
crave—and we offer value meals that make eating out easier
on family budgets. We’ve raised the visibility of the Popeyes
brand by stepping up our media presence on a national level.
We’ve also improved restaurant operations to make the whole
experience more enjoyable so that people want to come back
more often. Additionally, international same-store sales grew for
the third consecutive year, up 1.9 percent in 2009.
Positive Guest Traffic
In both domestic and international markets, we are working with
franchisees to introduce distinctive new products and core menu
value promotions to drive traffic gains in Popeyes restaurants.
We are building awareness and excitement for the Popeyes
brand, as evidenced by our ability to grow average weekly
traffic. Our broad appeal and value offerings continue to draw
a diverse domestic customer base: both men and women,
and people of all cultures and ethnic backgrounds. We serve
both individual and family meals at lunch and dinner. About
80 percent of our guests take their food off site, eating
anywhere and everywhere—in their cars, at home, at the
office, at picnics and parties.
In 2010, our brand-building efforts will include a number
of initiatives designed to bring more guests through our
doors. We will be exploring innovations in food, packaging,
and value to see what resonates best with guests for lunch,
dinner, and snack occasions. We will offer more beverage
choices, and we will continue to hone our national media
advertising strategy to gain greater impact.
Positive Guest Experience
We can improve what we can measure. In 2008, we
implemented a Metric Moving Scorecard, which tracks
restaurant performance on multiple levels, and a Guest
Experience Monitor (GEM), which encourages guests to rate
their restaurant experience by participating in an interactive
survey. We’re now expanding these systems internationally.
In 2009, Popeyes GEM scores improved significantly, with
guests “delighted” by their experience—rating it a five out
of five points—now at 70 percent, up significantly since the
program was first implemented. We have also seen improving
guest scores with “intent to return” and “speed of service.”
The scorecard and GEM measurements sound simple and
basic, yet they’ve been transformational. Whenever I walk
into a Popeyes restaurant these days, the manager shows off
these wall charts, points out the latest results, and tells me
To Our Stakeholders
Cheryl A. Bachelder
Chief Executive Officer, AFC Enterprises, Inc.
President, Popeyes® Louisiana Kitchen
Popeyes is one of a select few
brands in our industry that ended
the year on a positive note.
“
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* For adjusted earnings per diluted share, EBITDA, and free cash flow, see Financial Highlights & Key Operational Metrics on page 8 for definitions, computations, and reconciliations to GAAP measures.