As we mentioned last week, chicken brands are on the rise amongst QSR restaurants. In this vein, Restaurant Brands International has recently jumped on the chicken bandwagon with their acquisition of Popeyes for $1.8 billion. The question is: is RBI planning on riding the chicken trend or accelerating Popeyes faster than the category? Our look at customer retention data suggests it could be the latter.

RBI is a sector of a huge private equity company based in Brazil. Their typical operating model is to rip out costs. The playbook for Popeyes could be different however: chicken is a high-growth category, Popeye’s has an opportunity in customer retention, and their operating margins are already ahead of their major competitor Yum! Brands (owner of KFC and Taco Bell).

Brand Loyalty

When it comes to customer loyalty, about 30% of existing patrons return to Popeyes within one month of a visit, yet only about 10% of new visitors return. While this is in line with KFC’s stats, it’s well below that of Chick-fil-A, which has over 40% for existing customers and about 15% of new patrons return.

It’s interesting to note that since the acquisition in March of this year, aggregate customer retention at Popeyes has actually dipped, again highlighting the need and opportunity for customer retention initiatives like loyalty programs, promotions, etc. at the chain.

Anecdotally, it doesn’t seem to be a lack of popularity that’s keeping Popeyes smaller than peers, as numerous news stories from the past few years show customers lining up for as much as two hours for newly opened locations.

Location, Location, Location

Popeyes restaurants, known for their New Orleans-style spicy chicken, are currently concentrated in only 11 states. Internationally, the focus has been in expansion in just a few countries. If you look at Popeyes market share in comparison to other QSR chicken restaurants like KFC, there’s clearly room for share gain. 

So, what’s RBI’s potential game plan? They could follow their previous model and cut costs. But given their already healthy margins, it seems that they may be more likely to focus on better customer retention and expanding geographically.