A deeper financial look shows positive change as well. The top-line growth, Schwartz said, coupled with the “effective cost disciple” of RBI’s operational model and systems to scale, resulted in double-digit profitability growth for Popeyes in each quarter of 2018. The chain’s adjusted EBITDA was $157 million, representing a 31 percent organic increase versus the prior year.
But is growth about to ramp up? Following Q4’s results, Schwartz said RBI would “establish partnership to meaningfully accelerate net restaurant growth for Popeyes, including through new international master franchise agreements.”
Last year, RBI signed its first international master franchise deal for Popeyes in Brazil and the Philippines. Schwartz said the full impact of recent partnerships did not reflect in last year’s figures. “In addition to these agreements beginning to translate into further net restaurant growth in the future, we are in active discussions of several prospective partners to develop the brand all around the world,” he said.
The Brazil partner opened their first eight Popeyes in Q4. Schwartz said current and future deals would “set Popeyes up to be one of the fastest growing, global [quick-service restaurant] brands in the world.”
Schwartz said Popeyes’ deceleration in comps on the backend of 2018 was twofold. One, it reflected less impactful limited-time offers. Second, Popeyes experienced “softness in our family layer,” he said.
In December 2018, the brand launched a $20 Holiday Feast to address gaps in Popeyes’ family offerings (an area KFC thrives in). And it saw better same-store sales, as the chart shows, in the month relative to October and November. Heading into 2019, Schwartz said, Popeyes would try to strike a balance across its menu with product and platform innovation “that highlights our culinary traditions, which we believe will drive sustainable comparable sales growth over the long run.”
Popeyes rolled off that deal with no immediate replacement, RBI’s new CEO, Jose Cil said. The brand corrected that in December, and “the business reacted well.” Popeyes is currently working on maintaining a balanced calendar, he added, defined by more impactful LTOs, while maintaining stronger single guest and family bundle offerings. “We think that’s the right formula for the business going forward,” he said.
This past year also saw big change on the tech front. Popeyes rolled out delivery to more than 1,100 U.S. restaurants, or about 50 percent of its system—in just one year. “We have found delivery to be particularly incremental for the Popeyes business. And while delivery now represents a more meaningful portion of our sales in the U.S., we think it could be much bigger still,” Schwartz said.