Popeyes is a part of Restaurant Brands International Inc.; this company also owns Burger King and Tim Hortons. With more than 3,500 franchise units, Popeyes is one of the leading brands in the Fast Food industry.
This franchise has been operating on the market since 1972, and currently, they have restaurants in the USA, Canada, and more than 30 other countries in the world.
Popeyes franchise cost is very high, so this opportunity will only be available to investors with high start-up funds. But for the cost of this investment franchisee will get training, franchisor support in all business segments, and a proven business model with a large base of loyal customers.
How Much Does The Popeyes Franchise Cost
The cost of starting the Popeyes franchise is $ 423,800 to $ 2,620,800 for a new Free-Standing Restaurant, and for a new Inline Restaurant, this cost goes in the range of $ 383,500 to $ 1,254,800. This financial calculation includes an initial fee that is $ 50,000 regardless of which type of facility is started.
Also, it is possible to buy an existing Popeyes franchise from another franchisee. The so-called ” second-hand ” franchises are very affordable. Opening this kind of restaurant is much easier because the investor buys a turnkey business that is ready to make money immediately after the franchise transfer is closed.
As we mentioned above, the cost of a Popeyes franchise will depend primarily on the type of location that investors choose.
The more affordable option is to start an Inline Restaurant; (locations as shopping malls, premises with convenience stores, travel plazas, and other food court locations). Higher starting cost has Popeyes Free Standing franchises (single purpose, single-tenant building).
These cost predictions do not include the expense of leasing Real Estate or the expense of building a new facility. Also, the franchisee must find the location of the new franchise and apply for the site review process.
Popeyes representatives are very strict regarding franchise location, so investors must be prepared that franchisor can dismiss their proposed restaurant location.
Popeyes franchise cost list:
- Building Improvements: $ 100,000 – $ 1,025,000
- Site Work: $ 40,000 $ 650,000 only for free standing locations
- Signage & Technology: $ 165,000 – $ 485,000
- Initial Training: $ 17,200 – $ 24,200
- Opening Supplies: $ 11,500 – $ 23,000
- Insurance: $ 9,000 – $ 18,000
- Soft costs: $ 7,800 – $ 265,000 (architects, engineers, gov. Agencies, etc,)
- Additional Funds: $ 20,000 – $ 30,000 (as a support for franchise operational ongoing expenses in the first 3 months)
Popeyes Franchise Fee
The initial Popeyes franchise fee is $50,000; this is a one-time cost that each franchisee must pay. All ongoing fees in total are 9% of the franchise unit Gross Revenue; the Royalty Fee is 5%, and Ad/Marketing Fee is 4%.
Honorably discharged U.S. Army Forces Veterans, women, and investors who are Native American, Hispanic, or African-American have the right to Popeyes Initial fee discount and the first six months of reduced Royalty Fee.
For these groups of investors, the initial fee cost is $27,500, and Royalty Fee is only 2% of the gross revenue for the first six months.
Also, the Popeyes franchises in locations such as hospitals, military bases, educational facilities, and other institutional sites can negotiate with the franchisor about how much will be a percentage of the Royalty Fee in the Franchise Agreement.
For the revenue that the franchise unit makes thru the online ordering systems(website, app, etc.) franchisee must pay a Consumer Ordering Technology Fee that is 1% of the gross ”digital” revenue.
In some cases, it is necessary to pay Impact Study that costs $4,000 to $6,000. This study is required when the franchisee has proposed to review the franchise location near one or more existing Popeyes restaurants.
It would be wise that the franchisee proposes a site location that in the immediate surrounding area doesn’t have an already existing Popeyes franchise; if Impact Study shows negative results, that will result in rejecting the proposed site, and the franchisee will have costs that could have been avoided.
Popeyes franchise fee list:
- Royalty Fee: 5% of Gross Revenue – an ongoing cost
- Ad Fee: 4% of Gross Sales – an ongoing cost
- Consumer Ordering Technology Fee: 1% of Digital Sales (online ordering)
- Transfer Fee: $5,000 – $7,500 – only if the franchisee sell the unit
- Training Platform Maintenance Fee: $300 every six month
- PLK Scholarship Foundation: $1,000 – Each franchise must finance at least one $1,000 scholarship per year
Popeyes Franchise Profit
The average gross revenue that Popeyes franchises make is $ 1,650,451. After paying labor costs, franchise fees, and all other operational expenses, the owner of this franchise can expect a profit in a range somewhere between $ 150,000 and $ 300,000.
According to Item 19 of the Popeyes Franchise Disclosure Document, the Operating Profit Margin that franchises from this brand produce are 15.6% to 23.3% of the annual gross revenue.
This is without tax, so every future franchisee must reduce the percentage of taxes charged in a state where the business is run.
Popeyes Franchises average gross sales by type of facility:
- Free Standing Popeyes Restaurants: $ 1,633,883 per year
- Inline Locations Restaurants: $ 1,658,626 per year
- Convenience Store Restaurants: $ 1,283,076 per year
- Food Courts Restaurants: $ 1,207,297
Every investor must be aware that these are the average earnings that existing Popeyes franchises are currently producing. This does not mean that this is guaranteed annual gross revenue if you start a franchise from this brand.
The top 10% of the Popeyes franchise make $ 4,000,000+ in annual revenue, but the bottom 10% earners generate total sales of only $ 500,000.
Also, these franchises have a lot of operational costs, so we will now show how much each expense takes from the gross revenue.
The Popeyes franchise on going operational costs:
- Food and Paper Costs: 32.0% – 32.4%
- Labor Costs: 25.7% – 29.1%
- Controllable Costs: 7.5% – 10.3%
- Marketing Costs: 4.6%
- Non-Controllable Costs: 8.1%
Most of the costs go to the purchase of raw materials and the expenses related to the employees’ salary.
But when we analyze the overall profitability potential of this business opportunity, we can summarize that Popeyes is a high profitable franchise. The success of each restaurant will depend on the franchisee and his managerial skills.
Popeyes History and Informations
Al Copeland opened the first Popeyes outlet in 1972 in New Orleans, Louisiana. Since 1976 they started with franchising operations, and currently, they have more than 3,500 franchise units across the whole world.
Orange, Inc acquired this company in 2017, and Popeyes became part of Restaurant Brands International Inc.This company has changed thru history a few times name. Still, when we mention ”Popeyes” everybody knows who they are.
This brand is especially well known in the U.S and Canada, so they have a large base of regular customers in these countries. Although Popeyes franchise cost is high, more and more investors want to start one of these restaurants, which says a lot about this business opportunity.
Throughout history, the Popeyes franchise has grown every year, and today they are the main competitor of KFC.
They are especially popular in Georgia and Florida, but they have at least one franchise in every state. This business opportunity is attractive because these restaurants make a high gross revenue per year with a good Operating Profit Margin.
About 2,500 franchise units are in the U.S, and more than 1000 restaurants are located abroad. This franchisor only has 40 company-owned restaurants, and all other outlets are franchisee-owned.
Popeyes Franchise Agreement has a duration of 20 years; this means that franchisee can plan his long-term business future in partnership with this brand.
All investors who become franchisees of this brand can expect high-quality initial training and franchisor support in every business segment. So this franchise can be a good opportunity even for investors who are starting their first business venture.
This brand is focused on growth through franchising operations, which means that the franchisor will consider the application from every investor.
Although the Popeyes franchise will not be available to everyone primarily because of its cost, all investors who own $ 500.000 in liquid assets (non-borrowed funds) can apply to start this franchise.
Buying a franchise is always a complex investment, however with the help of Popeyes Franchise development agents, starting these restaurants is much easier than launching an independent restaurant.