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Tuesday
Jul022019

Popeyes

Popeyes' Louisiana bold/spicy menu profile emphasizes its slow cooking techniques which are unique to QSR. Its core bone-in chicken is infused with a Louisiana-inspired seasoning dry rub that is applied to fresh chicken which marinates for 12 – 72 hours and is then hand-breaded. Its Louisiana heritage provides the brand permission to extend its menu beyond bone-in chicken to boneless chicken products as well as seafood (particularly shrimp). The brand's growth strategy for bone-in: expand its unique flavor profile (adopting boneless flavors); enhance its price-point promotions; and better leverage media. Its growth strategy for boneless: build awareness; drive hand-held innovation; and gain traction for its new chicken sandwich which is doing very well in test markets. The brand's value equation is driven by a steady layer of $5 meal promotions (protein, biscuit & side) along with periodic deals at the $3.99, $10 & $20 price points. Its value equation is also supported by boxes of bone-in family home meal replacement dinner options and deals promoted in store windows. Fortunately, its new product news has started to rebound during 1H19 after sharply declining in 2018 (which is notable given that innovation has historically represented a key brand equity). In any case, the system's 2-year stacked comp of -1.3% through 2018 reflected ineffective marketing/promotions, KFC's strengthening position and heightened QSR discounting. Resultantly, corporate recognizes its need to better balance its calendar with more impactful LTOs consisting of stronger single guest (particularly around boneless) and family bundle offerings as the brand seeks to compete around value without diminishing its premium positioning. In any case, its last remodel program was completed in 2016 (with an updated system providing another point of distinction in the QSR chicken space) and the system benefits from store-level dollar profits which outperform and a strong development outlook. In conclusion, Popeyes challenge has to do with finding a way to leverage its distinctly unique Louisiana flavor positioning to re-establish comp outperformance in a market marked by heightened competition and a resurgent KFC.

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