Popeyes Louisiana Kitchen, Inc. Completes $43 Million Recipe Purchase and Extends Supply Agreement
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."
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.
Gardy, Director, Finance & Investor Relations
Coltrin & Associates, Inc.
Senior Vice President, Operations
212-221-1616 ext. 111
Source: Popeyes Louisiana Kitchen, Inc.
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