Popeyes parent AFC warns of soft same-store sales this year

Nation's Restaurant News,  Sept 3, 2007  

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ATLANTA -- Citing "continued softness in same-store sales and the challenging business and competitive environment," AFC Enterprises Inc., franchisor or operator of 1,878 Popeyes Chicken & Biscuits restaurants, said late last month that its full-year, per-share profit would reach only the lower end of its previous expectation of between 81 cents and 85 cents. A year earlier, the company posted per-share profit of 74 cents.

The company also lowered its fiscal 2007 domestic same-store sales expectations to down 2 percent. Previously, the company said it expected flat to slightly negative results.

The news came as AFC posted a 29.4-percent increase in second-quarter profit on revenue that rose 11.3 percent to $38.3 million, mostly on the reopening of corporate locations that had been battered by Hurricane Katrina in 2005.

AFC's revenues also were helped by full-year sales from 13 formerly franchised restaurants that the company acquired in the second quarter of 2006.

Popeyes systemwide domestic same-store sales for the latest quarter, however, dipped 2.1 percent on lower traffic resulting from "continued pressures from value and boneless-chicken offerings by competitors," the company said.

For the quarter ended July 15, AFC posted net income of $6.6 million, or 22 cents per share, compared with year-earlier profit of $5.1 million, or 17 cents per share. The company's bottom line was aided by fewer general and administrative costs as well as continued gains from hurricane insurance recoveries.

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