In 1972, Al Copeland of Louisiana wanted to compete with Kentucky Fried Chicken, so he opened a new restaurant “Chicken on the Run.” At first, the restaurant failed after several months. Not giving up, Al renamed the restaurant Popeyes Mighty Good Chicken after being closed for four days. By 1975, he once again renamed it to Popeyes Famous Fried Chicken.
Shortly after coming up with a new name, Popeyes began franchising in Louisiana in 1976 and had 500 locations by 1985.
Over the ensuing years, the brand struggled to gain footing but continued to grow. Today, it is thriving on the back of a new chicken sandwich and has more than 3,000 locations.
So you love the chicken and want to be a Popeyes franchisee but also don’t know the cost involved? We reviewed the Popeyes Franchise Disclosure Document, and the total estimated investment cost to start a Popeyes Louisiana Kitchen franchised business is between $423,800 and $2,620,800 for a new free-standing facility and between $383,500 and $1,254,800 for a new in-line facility (excluding real estate). This includes an initial franchise fee of $50,000 for each restaurant.
The ongoing royalty rate is 5% of gross sales paid to the franchisor. The ongoing advertising fund contribution is 4% of gross sales and the advertising co-op fees range from 0.25%-2.6% of gross sales.
How Much Money Does a Popeyes Franchisee Make?
After the initial investment, the thing that most people want to know next is how much money can I make with a Popeyes restaurant? According the Popeyes FDD, the average operating profits per store was $312,782. This is typically a store-level number, but this is the profit you can expect before paying interest on debt, taxes or a other administrative costs (above the store level)
So is $312,000 a good return on the original $2,600,000 investment. That equates to a 12% return on invested capital. You will have to decide if that is a good enough return which will be based on other available investment opportunities.
Popeyes Estimated Initial Investment Cost
The estimated initial investment for a Popeyes freestanding restaurant ranges from $423,800 – $2,620,800. Like most restaurant investments, the majority of these costs are associated with the land, building equipment and improvements. Here is how the costs break down:
- Franchise Fee: $50,000
- Real Estate: Variable
- Soft Costs: $7,800 – $265,000
- Site Work: $40,000 – $650,000
- Building: $100,000 – $1,025,000
- FF&E, Signage, Technology: $165,000 – $485,000
- Initial Training: $17,200 – $24,200
- Opening Supplies: $11,500 – $23,000
- Insurance: $9,000 – $18,000
- Utility Deposits: $3,000 – $50,000
- Business Licenses: $300 – $600
- Additional Funds: $20,000 – $30,000
- Total Estimated Initial Investment: $423,800 – $2,620,800
Popeyes Net Worth Requirement
Maybe you can find the money to build a new Popeyes, but along with that Popeyes is also going to check out your net worth. The current net worth requirement to become a Popeyes franchisee is a liquidity requirement of $500,000 with net worth of $1,000,000.
Number of US Popeyes Locations
At the end of 2018, there were 2,368 US Popeyes locations. This was up from 2,220 at the end of 2017. Of the 2,368 locations, 2,327 were franchised locations and 41 were company-owned locations.
The ongoing royalty rate is 5% of gross sales paid to the franchisor. This is paid weekly based on gross sales for the prior week. Gross sales means all revenue related to the restaurant, less sales taxes.
Popeyes Advertising Fund Contribution
The ongoing advertising fund contribution is 4% of gross sales. Like royalties, this amount is paid weekly on the gross sales for the prior week. Popeyes reserves the right to waive the Advertising Fund contribution for restaurants located in alternative venues.
Popeyes Advertising Co-Op
The ongoing advertising co-op ranges from 0.25% to 2.6% of gross sales. This amount is established by the Local Advertising Co-op. Similar to royalties. co-op payments are due weekly. The amount of the contribution is voted and determine byt he members of the co-op.