The Popeye’s Pivot: Invigorating a Stagnating Business

When Cheryl Bachelder took over as CEO of Louisiana-style chicken franchise Popeyes in 2007, things weren’t looking good. The 42-year-old company had been in decline for close to a decade and faced plummeting sales, aging restaurants, and a falling consumer base. A mounting economic recession only made a bleak situation seem all the more hopeless. Bachelder, however, didn’t resign herself to an inevitable decline. Instead, she took drastic action.

With Bachelder at the helm, the Atlanta-based franchise made some truly radical changes, shaking up its brand image, its offerings, and its business model. The company engaged in what is commonly called a “pivot.” This entails a shift in company direction that allows a brand to reposition itself in the market. A pivot, when done well, can dramatically boost abusiness’ profitability.

The goal of Popeyes’ pivot was to reinvigorate customer interest and boost profits. The key to success? Diversification. Long renowned for its chicken, the company worked to emphasize its excellent seafood and jambalaya offerings. “We knew Popeyes had some of the best food around, but we had to build awareness,” Ralph Bower, the company’s U.S. president, explained. “We changed our name from Popeyes Chicken & Biscuits to Popeyes Louisiana Kitchen. Everyone knew about our chicken, but they don’t realize we have great jambalaya and seafood. Calling ourselves a kitchen gives us the latitude to go beyond chicken.”

But the name change and shift in focus was really just the beginning of this truly remarkable pivot. The company dramatically changed its unit placement policy. “If you go back 10 or 20 years, there was a belief in the company that Popeyes was a destination brand. You could build almost anywhere and people would show up,” Bower said. “But we’ve evolved past that.” Today, Popeyes rigorously evaluates potential unit locations to ensure that traffic and demographics can support units. The company now pays more for prime real estate costs and insists the move has been a smart one. “In the last five years, no one has come to me to say they wished they had bought a worse piece of real estate,” Bower said. “We continue to invest in higher and higher quality real estate.”

The company also rolled out a national advertising campaign, worked to boost unit profitability, and conducted a total restaurant remodel. The payoff has been astounding: In the past six years, profits are up 60 percent, and the company’s share of the chicken market jumped 20 percent to 22 percent. “I think customers and our competitors have always known we have the best food in all of quick-serve,” Bower said. “We just had to start showing some pride in our Louisiana heritage.”

 

Sources:

http://www.entrepreneur.com/article/236430

Article by Jason Duncan, CEO/Founder of ManagerComplete.com. ManagerComplete is an online software application that helps multi-unit franchises manage operations effectively. Follow him on Twitter for latest updates.