Popeyes Franchise Cost Detailed (2024)
This article is based on the video featured above, originally recorded for Vetted Biz Youtube Channel.
Popeyes Louisiana Kitchen, Inc, also known as Popeyes and formerly named Popeyes Chicken & Biscuits and Popeyes Famous Fried Chicken & Biscuits, is an American fried chicken chain of fast-food restaurants that was founded in 1972 in New Orleans, LA and headquartered in Miami, FL. It is currently a subsidiary of Toronto-based Restaurant Brands International. As of 2020, Popeyes has 3,451 restaurants, which are located in more than 46 states and the District of Columbia, Puerto Rico, and 30 countries worldwide. In 2021, 2,736 locations in the US were franchised and 41 were company-owned.
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Popeye’s was founded in Arabi, LA, a suburb of New Orleans in St. Bernard Parish. It first opened doors on June 12, 1972, as “Chicken on the Run”. Owner Al Copeland wanted to compete with Kentucky Fried Chicken, but his restaurant failed after several months. Copeland then reopened the restaurant four days later as Popeye’s Mighty Good Chicken. By 1975, the company had been renamed Popeye’s Famous Fried Chicken. Copeland started franchising his restaurant in 1976, beginning in LA. The chain expanded to Canada in 1984 and opened its 500th restaurant in 1985.
Restaurant Brands International signed a master franchise and development agreement with Indian company Jubilant FoodWorks in 2021, to operate Popeyes restaurants in India, Bangladesh, Nepal, and Bhutan.
How Is Popeye’s Franchise Positioned in the Food and Beverage Industry?
The Food and Beverage industry in the USA accounts for 13% of all manufacturing employment in the country. Around 1.46 million people are employed in this industry. Food franchises make up to 36% of the total franchise establishments in the USA and it is expected to create 1.6 million more jobs by 2027. The annual growth rate in the industry is around 2% and the EBITDA multiplier is around 3x.
The chicken industry is a significant contributor to regional economies and to the U.S. economy. It is a relatively stable industry, and the market size has been steadily increasing over the past five years, reaching around 36.49 billion USD in 2020, a 6% growth compared to the previous year’s 34.4 billion USD. The food sector accounts for about 5% of gross domestic product (GDP) and the chicken sector accounts for around 8% of that. In addition, the chicken restaurant industry employs over 525,000 workers in over 21,000 businesses. It is an industry that has developed important innovations over time, quickly responding to the changes in consumer demand and meeting the needs of 320 million American consumers.
The first thing that comes to mind when most people hear of “franchising” is notable food concepts like McDonald’s, Popeye’s, and KFC. In fact, many people are not very familiar with franchise concepts outside of the food and beverage industry, and fried chicken is a particular favorite of the American population. Chicken has been increasing in popularity as a franchise in recent years. Though this trend was initially driven by the relatively low cost of chicken compared to other meats, the chicken trend has expanded as consumers have developed a taste for the brands associated with it. Even franchises that have traditionally been burger businesses have added chicken options to their menus.
Popeye’s competes in the Fried Chicken market against big brand companies such as KFC, Raising Cane’s, etc.
How Much Is a Popeye’s Franchise?
The initial Popeye’s Franchise Fee is $50,000 for an In-Line or Free Standing Restaurant and $2,500 for a Delivery Restaurant. You have to pay this upfront fee when opening a Popeye’s franchise.
Popeye’s Franchise Cost
The estimated total investment necessary to begin the operation of a Popeye’s Franchise ranges from $109,500 to $3,545,800. The following costs are part of the upfront costs included in the initial investment for Popeye’s. Many of these are one-time fees that are needed to launch the franchise. Review the chart below to see how much it costs to buy a Popeye’s franchise in 2022.
All three types of locations, Delivery, In-Line, and Free Standing have different fees. Let’s have a look:
| Type of Expenditure | Free Standing Estimated Range | In-Line Estimated Range | Delivery Restaurant Estimated Range | |||
|---|---|---|---|---|---|---|
| Low | High | Low | High | Low | High | |
| Initial Franchise Fee | $50,000 | $50,000 | $50,000 | $50,000 | $2,500 | $2,500 |
| Real Estate | Variable | Variable | Variable | Variable | Variable | Variable |
| Soft Cost | $10,000 | $400,000 | $8,000 | $85,000 | $1,000 | $5,000 |
| Site Work | $40,000 | $650,000 | Typically not required | Typically not required | $2,500 | $25,000 |
| Building | $700,000 | $1,600,000 | $100,000 | $627,000 | $0 | $250,000 |
| FF&E, Signane and Technology | $225,000 | $700,000 | $165,000 | $500,000 | $75,000 | $500,000 |
| Initial Training | $17,200 | $24,200 | $17,200 | $24,200 | $17,200 | $24,200 |
| Opening Supplies | $11,500 | $23,000 | $11,500 | $23,000 | $3,000 | $15,000 |
| Insurance | $9,000 | $18,000 | $9,000 | $18,000 | $3,000 | $12,000 |
| Utility Deposits | $3,000 | $50,000 | $2,500 | $5,000 | $2,500 | $5,000 |
| Business Licenses | $300 | $600 | $300 | $600 | $300 | $600 |
| Additional Funds – 3 months | $20,000 | $30,000 | $20,000 | $30,000 | $2,500 | $10,000 |
| Total Estimated Initial Investment | $423,800 | $3,545,800 | $383,500 | $1,362,800 | $109,500 | $849,300 |
Popeye’s Franchise Requirements
The initial Popeye’s Franchise Fee is $50,000 for an In-Line or Free Standing Restaurant and $2,500 for a Delivery Restaurant. You have to pay this upfront fee when opening a Popeye’s franchise.
Owning a Popeye’s Franchise Requires Ongoing Fees
Royalty: 5% of Gross Sales
Advertising Fee: 4% of Gross Sales
Advertising Co-Op: Currently, 0.5% to 1.75% of Gross Sales as established by Local Advertising Co-op
Additional Ordering System / Additional Digital System (Consumer Ordering Technology Fee): 1% of Digital Sales
At 4%, the advertising fee is 2% over the market standard and 5% royalty is just less than the market standard royalty of 5.3% for Food and Beverage franchises.
How Much Do Popeye’s Franchise Owners Make?
Let’s have a look at In-Line and Free-Standing Restaurants – we will not cover Delivery Restaurants as Popeye’s does not provide data for them.
In-Line restaurants:
| Franchised | ||
|---|---|---|
| Arithmetic Average | $1,725,197 | |
| #/% of Restaurants that Met or Excedeed Average | 43.1% | 193 |
| Arithmetic Median | $1,612,787 | |
| High | $5,928,391 | |
| Low | $0 | |
| Number of Units | 448 |
2021 Popeye’s Median Franchise Sales for In-Line Restaurants: $1,612,787
| Initial Investment (midpoint) | % Profit Margin of Average Franchise Sales | Estimated Profits | Time to Recoup Investment |
|---|---|---|---|
| $873,150 | 15% | $241,918 | 5 years |
| 20% | $322,557 | 4 years | |
| 25% | $403,196 | 3.5 years |
Based on the median sales provided by Popeye’s In-Line franchise locations, at an average of a 20% profit margin it will take around 4 years to recoup your investment (includes time to open and break even) This is significantly better than most quick service restaurant franchise opportunities. You may not get a 15% profit margin which would elongate getting a return on your investment.
Popeye’s Free-Standing Restaurants:
2021 Popeye’s Median Franchise Sales for Free-Standing Restaurants: $1,770,096
| Initial Investment (midpoint) | % Profit Margin of Average Franchise Sales | Estimated Profits | Time to Recoup Investment |
|---|---|---|---|
| $2,315,900 | 15% | $265,514 | 10.25 years |
| 20% | $354,019 | 8 years | |
| 25% | $442,524 | 6.75 years |
Based on the median sales provided by Popeye’s Free-Standing franchise locations, at an average of a 20% profit margin it will take around 8 years to recoup your investment. This is pretty standard for quick service restaurant franchises. You may not get a 15% profit margin which would elongate getting a return on your investment. Most franchisees who own and operate Popeye’s free-standing locations make a faster return from selling the real estate and/or taking out a loan to increase their cash-on-cash ROI.
Many factors affect the sales, costs, and expenses of your Franchised Store. Such as the Franchised Store’s size, geographic location, menu mix, and competition in the marketplace. The presence of other Fried Chicken stores; the extent of market penetration and brand awareness that Popeye’s stores have attained in your market. Also, the quality of management and service at your Franchised Store are major factors.
Is the Popeye’s Franchise Profit Worth the Franchise Cost?
When you go to sell a Popeye’s In-Line Restaurant franchise based on the EBITDA multiple of 7x and cash flow in 2021 of $322,557, it would sell for $2,257,901. This is much higher than the midpoint investment of $873,150.
When you go to sell a Popeye’s Free-Standing Restaurant franchise based on the EBITDA multiple of 7x and cash flow in 2021 of $354,018, it would sell for $2,478,134. This is slightly higher than the midpoint investment of $2,315,900.
The more franchises you own, the more earning potential you have as private equity firms become interested in your business instead of individual owner-operators.
Looking at the figures, we definitely recommend In-Line Restaurants if you want to profit off the sale of your network.
Let’s have a look at some existing Popeye’s locations whose owners are wanting to sell on BizBuySell:
Popeyes Franchise – $900K+ Cash Flow
Santa Barbara County, CA
| Asking Price: | $6,800,000 | Cash Flow: | $945,181 |
| Gross Revenue: | $4,189,525 | Inventory: | N/A |
| EBITDA: | N/A | Established: | 2015 |
| FF&E: | $0 |
Popeyes For Sale – High Volume With Fantastic Cash Flow
Snohomish County, WA
| Asking Price: | $2,800,000 | Cash Flow: | $501,641 |
| Gross Revenue: | $1,977,374 | Inventory: | N/A |
| EBITDA: | N/A | Established: | 2018 |
| FF&E: | $0 | Rent: | $3,000 |
Popeyes Franchise For Sale In Jersey
New Jersey
| Asking Price: | $4,250,000 | Cash Flow: | $632,733 |
| Gross Revenue: | $3,246,128 | Inventory: | N/A |
| EBITDA: | N/A | Established: | N/A |
| FF&E: | $200,000 |
Established Popeyes Franchise
Orange County, CA
| Asking Price: | $930,000 | Cash Flow: | $218,643 |
| Gross Revenue: | $1,492,100 | Inventory: | N/A |
| EBITDA: | N/A | Established: | 1994 |
| FF&E: | $0 | Rent: | $7,425 per Month |
Great Entrepreneur Popeyes Franchise Opportunity
San Bernardino County, CA
| Asking Price: | $1,699,000 | Cash Flow: | $333,180 |
| Gross Revenue: | $1,823,581 | Inventory: | N/A |
| EBITDA: | N/A | Established: | 2007 |
| FF&E: | $0 | Rent: | N/A |
Looking at these listings, it can be seen that the EBITDA multiple for Popeye’s franchises is around 7x. Also, while some franchisees are asking for a price higher than their gross revenue, it does not mean that that is what they sell for. Do research in your market if you plan on buying an existing Popeye’s franchise.
Restaurant Brands International (Franchisor) Income Statement Key Insights:
Restaurant Brands International Inc. And Subsidiaries Consolidated Statements of Operations
| (In millions of U.S dollars, except per share data) | Fiscal Year Ended | |||
|---|---|---|---|---|
| 2021 | 2020 | 2019 | ||
| Revenues: | ||||
| Sales | $2,378 | $2,013 | $2,362 | |
| Franchise and Property Revenues | $2,452 | $2,121 | $2,381 | |
| Advertising Revenues | $909 | $834 | $860 | |
| Total Revenues | $5,739 | $4,968 | $5,603 | |
| Operating Costs and Expenses: | ||||
| Costs Of Sales | $1,890 | $1,610 | $1,813 | |
| Franchise And Property Expenses | $489 | $515 | $533 | |
| Advertising Expenses | $962 | $870 | $865 | |
| General And Administrative Expenses | $508 | $407 | $406 | |
| (Income) Loss From Equity Method Investments | $4 | $39 | $(11) | |
| Other Operating Expenses (Income), Net | $7 | $105 | $(10) | |
| Total Operating Costs And Expenses | $3,860 | $3,546 | $3,596 | |
| Income From Operations | $1,879 | $1,422 | $2,007 | |
| Interest Expense, Net | $505 | $508 | $532 | |
| Loss On Early Extinguishment Of Debt | $11 | $98 | $23 | |
| Income Before Income Taxes | $1,363 | $816 | $1,452 | |
| Income Tax Expense | $110 | $66 | $341 | |
| Net Income | $1,253 | $750 | $1,111 | |
Since Popeye’s is part of Restaurant Brands International, we will have a look at the income statements of the parent. Restaurant Brands International is a very profitable business with retained earnings of $1,253 million in 2021. Compared to $1,111 million in 2019, they saw an increase of about 12.8% from 2019 to 2021. This is a good indication of high growth as a company overall.
The following graph shows Restaurant Brands International’s (NYSE: QSR) shareholder returns between 2015 and 2020. The graph depicts the total return relative to the performance of the Standard & Poor’s 500 Index and the Standard & Poor’s Restaurant Index, a peer group. QSR stock was performing higher than both till 2020 when it fell below both indices.
| 12/31/2015 | 12/31/2016 | 12/31/2017 | 12/31/2018 | 12/31/2019 | 12/31/2020 | |
|---|---|---|---|---|---|---|
| Restaurant Brands International (NYSE) | $100 | $129 | $169 | $149 | $186 | $186 |
| S&P 500 Index | $100 | $112 | $136 | $130 | $171 | $203 |
| S&P Restaurant Index | $100 | $103 | $130 | $143 | $178 | $210 |
How Have Popeye’s Stores Performed?
One of the most staggering stats in recent quick-service history arrived courtesy of Popeye’s and its famed chicken sandwich this past year. Back in February, executives said the product helped push $400,000 in added sales, per restaurant, across Popeye’s entire mature base. The company plans to open “hundreds” of stores in South Asia and Mexico, and also recently inked a deal to expand in Saudi Arabia. Popeye’s same-store sales increased 1.5% in Q1 or 27.7% on a two-year basis. Digital mixed 17% in Q1, more than double last year’s total.
How Many Popeye’s Units Have Opened and Closed?
| Outlet type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised | 2019 | 2,327 | 2,458 | +131 |
| 2020 | 2,458 | 2,593 | +135 | |
| 2021 | 2,593 | 2,736 | +143 | |
| Company-Owned | 2019 | 41 | 41 | 0 |
| 2020 | 41 | 41 | 0 | |
| 2021 | 41 | 41 | 0 | |
| Total Outlets | 2019 | 2,368 | 2,499 | +131 |
| 2020 | 2,499 | 2,634 | +135 | |
| 2021 | 2,634 | 2,777 | +143 |
Over the last three years, the company has been constantly expanding. Company-owned units have remained stable at 41 while 131 new franchised locations opened in 2019, 135 in 202, and 143 in 2021. Over the last three years, franchises have opened at a rate of 135 units a year. This is an indicator that these stores are performing well. The total growth rate is 17.57% in that period.
What Are Alternatives to a Popeye’s Franchise?
Kentucky Fried Chicken was founded by Harland Sanders in 1930 when he inaugurated the first Sanders Court & Café in Corbin, Kentucky. After six years of success, Sanders was awarded the Kentucky Colonel position for supplying extensive resources to his community. By 1952, his business had outgrown itself. It had expanded to such an extent that he decided to grant KFC’s first franchise to his friend, Pete Harman. In turn, he opened the first KFC franchise later that year in Salt Lake City, Utah.
Throughout these 68 years, the franchise has expanded to over 20,000 stores in 145 countries which are committed to spreading the unique Colonel Sanders chicken dinners both domestically and internationally. KFC is currently headquartered in Plano, Texas, and is run by CEO, Sabir Sami. As of 2021, KFC has 3900+ locations across the USA.
The initial KFC Franchise Fee is $135,000 to $540,000 and is called the Development Fee. The estimated total investment necessary to begin the operation of a KFC Franchise ranges from $1,440,600 to $3,163,550. Based on the median sales provided by KFC’s franchise locations, at an average of a 15% profit margin it will take around 13.5 years to recoup your investment. This is longer than other franchise opportunities. You may not get a 15% profit margin which would elongate getting a return on your investment.
KFC offers people the opportunity to be a part of a business that has established itself firmly in the industry. Fried chicken and KFC are terms that are becoming synonymous in parts of the U.S.A. and the world. KFC is a strong franchisor and depending on location, you might make much more than the median sales.
2. Zaxby’s
Zaxby’s a private fast-casual restaurant chain in the United States. The first Zaxby’s opened in 1990 in Statesboro, GA by co-founder and CEO Zach McLeroy. Today, Zaxby’s has 908 (as of 2021) stores in the U.S., and aims to “bring encore experiences that enrich lives, one person at a time”. In recent news, CEO Zach McLeroy also bought out his partner, Tony Townley, the share of the company in early 2021.
Its popular menu items include chicken wings, chicken fingers, sandwiches, and salads. It is a growing business with 908 stores in the US as of 2021.
Overall, the initial investment ranges from $351,000 to $718,500. The average gross revenues of the franchised stores in 2020 were $2,248,862, a 3.8% change from last year. Considering that COVID had negatively impacted the food and beverage industry during that year, it is impressive that the average sales increased since the previous years. The highest gross revenue was about 90.52% above the average. And the lowest gross revenue was about 71.97% below the average for franchise stores.
Based on the 2020 average gross revenues for a Zaxby’s franchise of $2,248,862, and a midpoint initial investment of $534,750 it will take around 3.5 years to reach breakeven.
Zaxby’s is a growing business within the food and beverage industry. The initial investment ranges from around $351,000 to $718,500. With ongoing fees like royalty of 6% as well as marketing and advertising fees to consider.
However, the net worth requirement of $1,000,000 and liquid cash requirement of $500,000 might not be affordable for some.
3. Dave’s Hot Chicken
Dave’s Hot Chicken was created by friends Dave Kopushyan, Arman Oganesyan, and Tommy and Gary Rubenyan. Dave, a chef trained in Thomas Keller’s (French Laundry) organization wanted to create the perfect Hot Chicken. The four friends scraped together $900 to put a tiny stand in an East Hollywood parking lot with a simple menu.
A year later, the boys had the money to open a shop in a strip mall with décor by local street artists, where the crowds continued to grow with wait times of an hour and more.
Today, there are 37 Dave’s Hot Chicken Locations with 24 of the 25 franchises opening in 2021.
The initial investment to start a Dave’s Hot Chicken Locations ranges between $626,300 and $1,413,500. Being a relatively new concept, Dave’s Hot Chicken has not disclosed any financials. Nevertheless, we estimate their Average Unit Volume to be $793,885. At an average profit margin of 15%, it will take around 10 years for you to recuperate your initial investment.
Dave’s Hot Chicken could be a big concept in the future. However, considering that it has only seen growth in 2021, we recommend waiting for it to prove the concept successfully.
Conclusion
Popeye’s is a growing restaurant chain in the fast-food industry. It offers people the opportunity to be a part of a business with strong returns if you get in properly. Our suggestion is to thoroughly study potential locations for your Popeye’s restaurant and to speak to at least 3 – 5 franchise owners before opening a franchise.
While this may be the business for you, make sure also to check out other companies offered on Vetted Biz and in the Food and Beverage Industry.
