(c) 2013, The Washington Post.
(c) 2013, The Washington Post.
WASHINGTON — Over the past few years, on the once-dingy midtown strip of 14th Street in Washington, corner stores and carryouts have yielded to upscale bars and boutiques. You can walk for blocks without finding so much as a sandwich for less than the price of a movie ticket. Until, that is, you hit Popeyes, the greasy chicken and biscuits fast-food joint that's been around for three decades — and feels increasingly out of place as vintage clothing stores, glistening condos and farm-to-table restaurants spring up on all sides.
Inside, however, the franchise is undergoing its own transformation.
Joon Kim, a South Korean emigre who went to culinary school and worked in restaurants before deciding to buy one of his own, took over the place in 2007. It was barely profitable. Soon after, though, he started getting help from corporate headquarters: staff training, a refreshed menu, high-tech systems to manage inventory, Webinars to learn how it all works. Revenues have been steadily rising, and even though a developer bought his building, Kim was able to find new space in a remodeled building across the street, deciding to stay in the neighborhood that many legacy businesses had fled.
"Everybody knows that Popeyes is here," he said, explaining his decision to stay. At the same time, trading spaces will also give Kim the chance to fully realize the biggest key to Popeyes's evolution: Instead of "Chicken 'n Biscuits," the franchise will become a "Louisiana Kitchen."
To see what the future looks like, check out the "re-imaged" Popeyes in another hyper-gentrified District of Columbia neighborhood, Barracks Row. On a warm Thursday evening, it's bustling. Shrimp-shack wood paneling, faux granite benches, colorful tiles and a wrought-iron sign give the interior a plasticky hint of Big Easy grace. There's even a rack with jars full of what one presumes are spices that could, theoretically, be used in food. (The menu is the same, as is the Bayou jazz track that plays on a loop overhead.)
Kim has never been to New Orleans, but he figures the schtick works, for good reason: The 60 percent of Popeyes locations that have remodeled are doing markedly higher sales. The franchise is growing faster than any other chicken brand, expanding its footprint from urban centers in the Southeast to suburbs all over the country.
The repositioning is a gift for the franchisees who have stuck with the brand for decades — and a textbook case for taking a brand that meant one thing and turning it into another.
In 2007, Popeyes's parent, AFC Enterprises, got a new CEO in Cheryl Bachelder, who had risen through the ranks at Domino's Pizza in the 1990s and been president of Popeyes's biggest competitor — KFC — in the early 2000s. She put in place the strategy that executives now speak of in reverential tones.
Five years later, restaurant operating profits have increased by 40 percent, and 74 percent of franchisees are happy with their cash flow, up from 44 percent in 2009. More and more stores open every year. And Wall Street loves it: AFC's stock is up more than 50 percent in 2013.
Here's how you turn around a fast-food brand, according to the Popeyes playbook.
1. Figure out how people think of you.
Popeyes franchisees had perception issues. Surveys, though, showed two major things: Customers thought of Popeyes as a spicier KFC, and one with bad service. "It enlightened us," says Mark Rinna, chairman of the Popeyes International Franchisee Association. "Maybe that enlightenment wasn't all that welcome."
2. Decide how you want them to think of you.
The new Popeyes team knew they wouldn't succeed just by being another fried chicken chain. So they decided to dig up the original identity for the place, when it opened as Popeyes Mighty Good Fried Chicken in 1972: a down-home, cajun-style eatery, which happens to have the bolder flavors that have started to become more popular in the fast-food world.
"It's so rich, it's so real. Nothing is more authentic than authenticity," says chief marketing officer Dick Lynch. He refers to Michelangelo's stated methodology for sculpting David, by chipping away everything that wasn't David. "I don't want to compare Popeyes to that masterpiece, but it is true, we've removed everything that isn't authentically Louisiana."
Sometimes, the pitch can feel a little cartoonish, like the "Louisiana leaux, get up and geaux" campaign, and the Mardi Gras signs that adorn the interiors year-round. But hey, that's probably how most Americans imagine New Orleans anyway.
3. Introduce new stuff.
In its pitches to investors, Popeyes executives talk about their process of coming up with ideas: About four times a year, they go to their ad agency's offices in Austin, Texas and start ideating with a proprietary computer model.
"The magic is, everybody is thinking up ideas at their computer screen that only they can see, they get thrown up on the screen so the brainstorming is completely anonymous," Lynch explained a couple of weeks ago. "You got to have an environment where you come up with the crazier ideas the better."
Over the next year and a half, those ideas — like the "Wicked Chicken" product — go through extensive testing, graphic design and rollout stages. Since they're not actually straying that far from the staple chicken and shrimp, the marketing is the most important part.
4. Weed out bad stores.
Some of the Popeyes franchises have been around since the chain started and aren't inclined to take up new ideas — or put in the cash necessary to implement them. Those franchises have been underperforming and have gradually been persuaded to close shop or relocate. As Bachelder put it to investors: We have "a good process of running through that conversation with the owner and provoking a bolder outcome than they would be inclined to pursue."
5. Get good ones to expand into new markets.
Traditionally, Popeyes has been focused on the "urban" market, which in retail parlance can be code for "black." The leadership decided to reach beyond that demographic, into the mostly untouched suburbs, such as Sparks, Nev., and Vineland, N.J.
They don't take just any new spot, though: Using a site selection model called Birchwood, they predict traffic patterns and earnings potential of new locations, and only franchise to people with a track record in food service — usually existing Popeyes franchisees. "We say 'no' more often than we say 'yes' today," says Popeyes President Ralph Bower, another KFC veteran. They'll also take over bankrupt KFC locations, when given the chance.
6. Figure out Pepsi vs. Coke.
This may sound like a small issue, but splitting your beverage strategy between two companies — as Popeyes had done in the past — misses all kinds of synergies through advertising, purchasing power and distribution. The company decided to go exclusively with Coke and started getting 40 to 50 percent more profits per gallon on their drinks, which adds a lot to the bottom line.
7. Go national.
Popeyes now has 1,721 locations in 47 states, which can support a nationwide television presence.
At this point, Popeyes can play in all sorts of markets: Overseas, in markets such as Turkey, where its spice profile and rice-based side dishes tend to resonate even if the New Orleans pitch doesn't. And in the fast-casual category, going up against newer concepts such as Panera and Chipotle that have been taking a chunk out of both fast-food and the sit-down chains such as Applebee's and Olive Garden.
Should the reigning chicken behemoth KFC be worried?
"Yes," answers restaurant analyst John Gordon. "Very scared."