Before the fried chicken sandwich tweet-storm between Popeyes and Chick-fil-A erupted in mid-August and sent people flooding Popeyes restaurants across the U.S., there was veteran foodie Amy Alarcon.
Alarcon, Popeyes head of culinary innovation since October 2007, has been tasked with preserving the chain’s Louisiana roots by using ingredients inspired by that zesty down under cooking scene. Without Alarcon and her army of three other food ninjas (as she calls them) trying out all sorts of fast food possibilities in the HQ test kitchen, Popeyes wouldn’t have a fried chicken sandwich blowing up social media and parent company Restaurant Brands’ (QSR) sales.
“For us, to watch something like this you created come to life, it’s just an indescribable feeling,” Alarcon told Yahoo Finance.
What took so long for this delicacy?!
Despite being one of America’s most beloved fast food chicken chains since it was founded in 1972 by entrepreneur Al Copeland, Popeyes hasn’t had a chicken sandwich on its U.S. menus until now. The focus has always been on serving up flavorful chicken breasts, thighs and legs alongside a host of sides, just like heated rival KFC (which has never been big on sandwiches, either).
And that has been a missed opportunity for Popeyes and its rival KFC (YUM).
“[Restaurant Brands International] has indicated the boneless chicken category makes up ~20% of Popeyes’ entrée sales mix, highlighting chicken sandwiches could be a meaningful unlock to grow the boneless chicken mix,” Credit Suisse analyst Lauren Silberman told Yahoo Finance.
So after two years of finally tinkering with a chicken sandwich that would cater to a more on-the-go U.S. population, the Popeyes team was ready to release its long-awaited creation to the public on August 12. The sandwiches would be offered in two versions: the regular and spicy and retail for $3.99.
It was time for Popeyes to power up its sales. It was a debut that Alarcon, her veteran team and Popeyes executives didn’t take lightly. After all, Popeyes fans have long clamored for a chicken sandwich — Alarcon wasn’t about to let them down.
“The challenge at the time was to come up with something transformational. We set out to say ‘sandwiches are simple’ but with four ingredients, they have to be the best that they can be,” Alarcon explained.
Challenge won.
With four seemingly simple ingredients — a buttered brioche bun, cajun-inspired mayonnaise, a crispy fried chicken filet and naturally-brined pickles, Popeyes had no idea it was about to change the fast food chicken sandwich game in America. Its sandwich blew up the tried and true fast food product release model and most notably how an item is marketed for the first time.
(Yahoo Finance/David Foster)
“This is a big moment for our brand. This has been the biggest launch in the history of Popeyes, if not QSR,” Popeyes America’s President Felipe Athayde told Yahoo Finance in an interview. “It’s going to be a cultural phenomenon. We just launched the iPhone of chicken sandwiches.”
Let the chicken wars begin
With all due respect to KFC, Popeyes’ most heated rival through the years has proven to be Chick-fil-A. With an extensive menu of fried chicken sandwiches, Chick-fil-A has a cult-like following and a fan base that swears it is the best chicken sandwich in the U.S.
Chick-fil-A’s sandwiches are also simple but the chicken chain doesn’t compromise on quality. The Chick-fil-A sandwiches boast chicken that has no added fillers or hormones, and is breaded daily by hand in its restaurants rather than pressure fried.
“Top quality has always been our approach to food, and because chicken is at the center of our menu, that means serving only whole, boneless breasts of chicken — no fillers or artificial preservatives,” reads Chick-fil-A’s website. “We source our chicken from farms in the USA, in accordance with our Animal Wellbeing Standards, and our pledge to serve No Antibiotics Ever by the end of 2019.”
Every Chick-fil-A sandwich that sells, means one less box of Popeyes Louisiana infused chicken in the mouths of humans for lunch or dinner. Chick-fil-A has more than 2,000 locations in the U.S. The chicken chain has seen skyrocketing growth over recent years.
In 2018, Chick-fil-A raked in $10.2 billion in total revenue in the U.S., which was a 13.5% jump from 2017, according to restaurant research and consulting firm Technomic. Last year was the first time that Chick-fil-A’s total revenue topped $10 billion. Popeyes generated $3.2 billion in total revenue, a 5.1% growth from 2017, and KFC brought in $4.4 billion in total revenue, up just 0.4% from the year prior.
But then Popeyes enters the grand stage dominated by Chick-Fil-A, and to a lesser extent Wendy’s (sorry, Wendy’s).
To promote its new chicken sandwich, Popeyes took to Twitter August 12 and posted what seemed like a harmless photo of the fried, portable delicacy. Exactly one week later, Chick-fil-A tweeted a passive-aggressive response, and thus, the chicken sandwich wars ensued on Twitter, with Wendy’s and other restaurants joining in on the action.
In short, all hell broke loose.
The aftermath
“It was an organic conversation. It was the power of the people, and the power of natural organic conversations,” Popeyes America’s Marketing Chief Bruno Cardinali told Yahoo Finance. “It’s been quite exciting. I think it adds a different level and different perspective on how we do marketing.”
More like the power of fried chicken, a pickle, cajun sauce and a buttered brioche bun.
The number of people that follow Popeyes on Twitter jumped noticeably after the online battle, according to alternative-data company Thinknum. Before the Twitter fight, Popeyes had about 107,000 followers, which is decent but nowhere near sister brand Burger King’s 1.8 million strong legion of fans. But in the span of just about one day, Popeyes’ Twitter follower count rose by 25,000, or 25%. Popeyes currently has about 190,000 Twitter followers as of Monday evening.
More followers, more people ready to discuss whatever product Popeyes drops next. Not a bad place to be in such a competitive space.
Unfortunately for Popeyes, the borderline insane social media response has come with some downside: Not enough supply of chicken breasts. Cardinali explained that Popeyes knew it had a good product on its hands, but the reception was unprecedented.
During the two years leading up to the nationwide launch, Popeyes studied and prepared for several different responses among consumers. The company was prepared to supply all of its more than 2,300 U.S. stores through the end of September. Instead it sold out just two weeks after launch.
However, the demand blew past even the most extreme best-case scenario, according to Athayde.
“We knew we had a very high quality product at a very attractive price point. One thing is to predict high demand, the other thing is when you have 50 people lined up outside of the restaurant at 9 a.m. when the restaurant opens at 10 a.m.,” Athayde said to Yahoo Finance.
Popeyes executives told Yahoo Finance supply shortages have persisted into September.
“We are working furiously,” Athayde said. “We use a very strict specification for the chicken and it’s not easy to procure. So we are working with our supply chain partners and vendors, and we hope to launch it as soon as we can.”
No chicken breast means missed sales opportunities for Popeyes franchisees. They appear to be taking it in stride though, just happy to be at the tip of the tongue of U.S. fast food fans. The sense among Popeyes franchisees is that once the chicken starts flowing again for the sandwiches, the sales floodgates will return in spades.
Joe Haberkorn has been a Popeyes franchisee for nearly 39 years and currently owns six stores in Chicago and the surrounding areas. He told Yahoo Finance that this has been the most explosive launch in his career.
“I had never seen anything like this. This was bigger than the biscuit,” Haberkorn explained. “We are adding eight to 10 additional employees at each restaurant and more equipment. We’ll be back!”
Haberkorn’s spirits are so upbeat after this launch, he said he may open more Popeyes restaurants soon. That’s good news for his recently graduated son, who will be joining his dad shortly to help run the family business.
Making that money
Finally a sales-driving major food win for the Restaurant Brands team that signed off on buying Popeyes.
Restaurant Brands snatched up Popeyes in 2017 for $1.8 billion. Since then, it would be fair to say the brand has been in development mode across the board as Restaurant Brands sets the stage to earn a fat return on its investment. Churning out fried chicken sandwiches that sent Twitter into a tizzy has not been the norm at Popeyes post acquisition.
Popeyes has installed new point of sales systems at about two-thirds of its 3,100 U.S. restaurants, while at the same time expanding into delivery mostly with GrubHub and Uber Eats. New Restaurant Brands CEO Jose Cil has inked a deal to open 1,500 Popeyes locations in China over the next 10 years. It will put Popeyes head-to-head with the fried chicken standard bearer in China, KFC.
The new Popeyes chicken sandwich should travel well to China.
The chain has also had other solid culinary wins, notably a limited-time chicken with waffles offering. Nothing like the latest though.
Restaurant Brands’ slow and steady approach to building out the Popeyes brand has yielded pretty good results. Popeyes same-store sales rose 1.6% in 2018, the best showing among Restaurant Brands’ other brands Burger King and Tim Hortons.
Popeyes saw same-store sales rise 3% in the second quarter, rallying back from a 0.6% gain in the first quarter. Rival KFC delivered 2% same-store sales growth in the U.S. in the second quarter.
Keybanc Capital Markets analyst Eric Gonzalez estimated the Popeyes chicken sandwich accounted for about 20% of the company’s sales during the six to seven day availability period. “Our analysis of geolocation data implies the chain doubled its share of fast food industry traffic at its peak,” Gonzalez wrote in a note Sunday. He raised his third-quarter same-store sales growth estimate to 8% from 2%.
Staying ahead of food trends
Alarcon explained that she and her team are overwhelmed and full of pride over the chicken sandwich’s amazing reception and popularity. She said Popeyes will continue innovating to bring the best products to its customers. “We like to be in front of the trend and ahead of the trend rather than follow the trend.”
“The tremendous response from Popeyes’ Chicken Sandwich launch last month gives us confidence that the product is resonating with customers, and we would expect chicken sandwiches to become a meaningful part of the company’s sales mix going forward,” Silberman said.
Silberman explained that while there may not be a “crowned winner” in the chicken sandwich wars, new menu innovations are important for restaurants. “The social media banter between a few of the fast food chains likely helped drive the magnitude of success of the Popeyes’ Chicken Sandwich launch (creates a ‘need to try right now’ culture to be part of the conversation). The combination of strong new menu innovation and effective communication/marketing should help drive engagement/relevancy in the competitive fast-food environment,” Silberman said.
Silberman isn’t too worried about Popeyes’ supply chain disruption issue, as the company struggles to bring back the in-demand chicken sandwich. “I think the media coverage related to the shortage would sufficiently offset any negativity, and likely could generate even more demand when the brand brings back the sandwich. Popeyes is a top global chicken brand, and we have no concerns this will be an issue long-term.”
Though Popeyes didn’t give an exact date for the return of the chicken sandwich, the company confirmed that it is slated to be a permanent menu item.
All in the name of the mighty fried chicken sandwich.
Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.
Brian Sozzi is an editor-at-large and co-host of The First Trade at Yahoo Finance. Follow him on Twitter @BrianSozzi.
