Popeyes Louisiana Kitchen, Inc. Completes $43 Million Recipe Purchase and Extends Supply Agreement
ATLANTA - June 16, 2014 - (BUSINESS WIRE) - Popeyes Louisiana Kitchen, Inc. today announced the purchase from Diversified Foods and Seasonings, L.L.C., ("DFS") of the recipes the Company uses in the preparation of many of its core menu items. DFS is the supply company owned by the estate of Al Copeland, Popeyes founder. Popeyes also extended its exclusive supply agreement with DFS that covers the manufacturing and supply of proprietary spices and other Popeyes products provided by DFS.
Cheryl Bachelder, Chief Executive Officer stated, "With the cooperation of the Copeland family, this transaction now brings important intellectual property – Popeyes’ core recipes - under brand ownership for the first time in our Company’s history. The purchase eliminates the $3.1 million annual royalty that was previously scheduled to be paid by the Company until 2029. The supply terms beyond 2029 were uncertain. Popeyes now owns its recipes in perpetuity for use worldwide and has clarity of supply and pricing terms through the balance of the supply agreement. We thank the Copeland family for reuniting these treasured recipes with the brand Al Copeland, Sr. created."
The purchase of the recipes for $43 million was funded by drawing down on the Company’s revolving credit facility, bringing total outstanding debt to approximately $110 million subsequent to the transaction. Total remaining availability under the Company’s revolving line of credit is approximately $140 million.
"Going forward, we will convert the $3.1 million we were previously paying as a royalty into hard-working invested dollars to materially improve the Popeyes employee and guest experience. Including this reinvestment, our overall general and administrative expenses will remain among the lowest in the industry, at approximately 3% of system-wide sales," Cheryl Bachelder added. "We believe the best performing restaurant chains view their human capital as a competitive advantage. To that end, we are actively building best-in-class human resource capabilities, the goals of which will be superior service for our guests, and industry-leading financial performance over time. Popeyes is already known for the best food in the industry. With this strategy, we intend to develop an employee experience and a guest experience that is as distinctive as our food."
About Popeyes Louisiana Kitchen, Inc.
Popeyes Louisiana Kitchen, Inc. is the franchisor and operator of Popeyes® restaurants, the world's second-largest quick-service chicken concept based on number of units. As of April 20, 2014, Popeyes had 2,248 operating restaurants in the United States, three territories, and 27 foreign countries. The Company’s primary objective is to deliver sales and profits by offering excellent investment opportunities in its Popeyes brand and providing exceptional franchisee support systems and services to its owners. Popeyes Louisiana Kitchen, Inc. can be found at www.popeyes.com.
Popeyes Louisiana Kitchen, Inc.
Director, Finance & Investor Relations
Coltrin & Associates, Inc.
Senior Vice President, Operations
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