AFC Enterprises, the franchisor and operator of Popeyes restaurants, said sales and profits rose in the fourth quarter. But the Atlanta-based company warned that it would encounter higher costs this year for commodities such as bone-in chicken.
Revenue rose 5.2 percent to $34.2 million, and net income rose 10 percent to $4.4 million or 18 cents per share in the fourth quarter. The company earned $4 million or 16 cents per share in the same period a year ago.
Sales at restaurants open at least a year jumped 6.2 percent in the fourth quarter. The company said sales at established Popeyes restaurants will grow 1-3 percent in 2011.
"We had a phenomenal fourth quarter," chief executive Cheryl Bachelder told The Atlanta Journal Constitution. "Our market share has been building straight through the recession. Our sales have outpaced the category for 11 straight quarters."
But the company warned investors that its commodity costs would rise 2-3 percent this year. It said selective price increases, cost savings in the supply chain and better controls in restaurants would help counter that trend. Last year, Popeyes restaurants saved $16 million in food costs by renegotiating vendor contracts, finding alternate suppliers and other methods.
"There will be some commodity and fuel tick up this year," Bachelder said. "We're putting aggressive work plans in place to offset that."
Investors may have been spooked by the cost warnings. As of 2:15 Thursday afternoon, the company's shares were down $1.32 or 8.7 percent on the NASDAQ Global Market.
The company plans to add between 40 and 80 net restaurants this year, for net unit growth of 2-4 percent. The company said that pace should quicken in 2012. The company also plans to build a new research and development center.
Guest satisfaction scores have improved at Popeyes, with more than 75 percent of customers giving scores of ‘5′ out of 5 for a "delightful experience." Service is 12 percent faster than 18 months ago, with about 60 percent of the restaurants taking 180 seconds or less to deliver drive-through orders.
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