Popeyes was founded in the New Orleans suburb of Arabi in 1972 by serial entrepreneur Al Copeland,

Fantastic news! We've Found the answer you've been seeking!

Question:

Popeyes was founded in the New Orleans suburb of Arabi in 1972 by serial entrepreneur Al Copeland, who wanted to compete with fried chicken giant KFC. The first Popeyes restaurant initially found little success until it introduced a spicier, Cajun recipe to appeal to flavor-seeking Louisianan customers. The new recipe became a hit, and Popeyes began franchising its concept, with the first franchise opening in New Orleans four years later. Within 10 years, Popeyes had aggressively expanded throughout the United States and opened over 500 restaurants. Popeyes had become the third largest fried chicken chain, after KFC and Church's.

In 1989, Popeyes merged with competitor Church's when Copeland purchased a majority of that company's shares. Although Popeyes continued to expand throughout the United States, it was not able to keep up with its massive debt. Unable to pay off the nearly $400 million used to finance the merger, Copeland filed for bankruptcy two years later. Shortly thereafter, Popeyes reemerged as America's Favorite Chicken Company, Inc. Continuing to grow the company, AFC purchased Cinnabon and Seattle's Best Coffee and went public in 2001. The company's growth wasn't supported by its sales figures, and Church's was sold to Arcapita in 2004. Years of declining transaction would also cause AFC to sell Cinnabon and Seattle's Best Coffee; Popeyes was the last entity left in 2007.

The company hit an all-time financial low in 2007 when its stock dropped from $34 to $14 per share. Popeyes turned to Cheryl Bachelder to turn the company around. Previously president and chief concept officer at KFC, Bachelder was no stranger to franchising. In trying to understand the reasons behind the poor financial performance of Popeyes, Bachelder attributed it to franchise operations. For years, franchisees had reported low satisfaction with management. At one point, one frustrated group stormed into an executive board meeting to demand changes. Popeyes had also lacked new-product innovation in previous years. Consumer awareness of the restaurant was low because of the company's lack of a national advertising campaign. These issues had strained Popeyes's relationship with its franchisees.

Popeyes began meeting with franchise leaders to draft a new business plan and identify the company's biggest issues. The pivotal moment in the company's turnaround occurred at a meeting in Chicago, when management and franchise leaders agreed to increase investment in national advertising. At the time, each franchise contributed 3 percent of its sales to pay for ads, with all advertisements local. The franchisees agreed to raise that number to 4 percent, with the stipulation that management would increase investment in advertising by $6 million and take its advertisements to the national level. The new advertisement campaign featured a new Popeyes spokeswoman named Annie. Speaking with her characteristic drawl and tones of Southern hospitality, the advertisements differentiated Popeyes from competitors by embedding the company's Louisiana roots in its messages. The campaign was integral to building Popeyes's brand identity.

Popeyes changed its name to Popeyes Louisiana Kitchen in 2008 to embody the new identity. To address franchisees complains about the "Salvador Dali-esque" design of Popeyes restaurants, Popeyes made a significant investment to give restaurants a new, revitalized look. The interior of restaurants embraced Cajun spices and classic Southern cooking. Glass jars filled with chili peppers decorated restaurant shelves, with signs displaying New Orleans-style artwork featuring Cajun cooking. New-product launches also reflected Popeyes's return to its Louisiana identity.

Taking Popeyes's advertising national was one of the first steps the company took with its franchisees to increase sales. Popeyes also began focusing on restaurant-level profitability, which was what mattered most to franchise owners. Investing in data analytics software, Popeyes helped franchisees open new restaurants in more profitable locations. Prior to using modeling, Popeyes had traditionally focused on opening locations in predominantly African American neighborhoods. The use of data-driven modeling changed this by predicting traffic patterns and the earnings potential of Popeyes locations. Franchisees began opening new locations in areas with more mainstream demographics, which increased their restaurant success rates.

The collaboration with franchisees brought immediate results to Popeyes, which enjoyed massive sales increases and began delivering profits for the first time in years. Popeyes reported that franchisees showed a dramatic increase in their satisfaction rate. This was reflected in the increase of new locations. Over a third of Popeyes stores had opened in the five years after Popeyes reinvented its franchising strategy. Nor was Popeyes's success limited to the United States; the company began opening hundreds of global locations following the turnaround. The number of Popeyes restaurants grew to over 2,600 worldwide. Recent successes demonstrated that the relationship between Popeyes and its franchisees was the key to company success.

Questions

1. What are the key aspects of Popeyes's franchise model?

2. What are the key benefits of franchising for Popeyes franchisers and franchisees? What are the drawbacks of franchising?

3. How much leeway should Popeyes offer to individual franchisees in deciding on the menu, restaurant appearance, and advertising? Should Popeyes take a centralized approach, or should it let franchisees adapt their strategy to local conditions?