The latest earnings results from Restaurant Brands International showed the major operator's two major brands struggling. While Burger King's sales have taken a hit on the road to recovery, its golden child Popeyes surprisingly showed a sales decline as well.
Here's what's happening at the beloved chicken chain, including the disruptions you may notice on your next visit. For more, check out Here's Why Popeyes Almost Disappeared From the Fast-Food Scene.
Staffing is the number one issue at Popeyes
Popeyes' same-store sales were down by 4.5% in Q2, a decline which was blamed on labor struggles felt across the industry. Popeyes is having a hard time staffing its restaurants properly, and as a result, almost half of its locations are currently operating under "reduced service modes."
Shuttered dining rooms
That's right, in case you haven't noticed, you'll now have a harder time finding an open Popeyes dining room. The chain has shuttered dinings rooms in as many as 40% of its 2,700 domestic locations. Numerous restaurants are currently operating as drive-thru, takeout, and delivery-only hubs. In some cases, even the drive-thrus have been shuttered temporarily.
Another change coming from labor shortages is reduced hours of operation. Popeyes restaurants are closing up shop earlier, which is cutting into the brand's late-night business. According to Restaurant Business, those late-night orders tend to be larger and the loss is felt in the chain's bottom line.
"Outside of late-night, we saw daily sales either flat or improving modestly throughout the quarter," CEO Jose Cil said in an earnings call. "So the real drag and the real impact from a labor standpoint was the late-night daypart."
Distrubution center disruptions
The chain was battling staffing shortages at its distribution centers, too, which supply the food to the restaurants. A shuttered distribution center in the Northeast temporarily affected some 10% of Popeyes' stores in the region. Now, the company is transitioning to a more diversified distribution setup so these kinds of disruptions don't happen again.
"While in-restaurant staffing may take time to improve, we're well into the process of further diversifying our distribution network in the region to mitigate the impact of any future distribution center disruptions on our supply chain," Cil said.
Popeyes still has plenty of momentum
Even with the labor shortages, the chain plans on continuing its aggressive domestic expansion. Since 2019, Popeyes has expanded its restaurant footprint by 10% and still sees a major opportunity in adding even more stores across the United States.
According to Josh Kobza, Popeyes chief operating officer, about half of the chain's customers travel more than 10 miles to get to one of the locations, and bridging that convenience gap for them is something Popeyes plans to do in the future.
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