In the early 1970s, Louisianan Al Copeland had an idea. He wanted to create a restaurant to compete with KFC. In June 1972 he followed through on the idea, opening “Chicken on the Run” just outside of New Orleans in Arabi. Unfortunately, it closed a number of months later. Undeterred, Copeland reportedly reopened the restaurant a few days later with a new, spicier recipe and a new name: Popeyes Mighty Good Chicken.
Over the years Popeyes has gone through many ownership and name changes, but it’s now known as Popeyes Louisiana Kitchen and is owned by Restaurant Brands International (also parent company of Burger King and Tim Hortons). It’s currently the second biggest chicken franchise in the world, trailing only its inspiration: KFC.
On its website, Popeyes specifies no less than 19 steps in its franchise process. One major hurdle prospective Popeyes franchisees will have to clear is showing they have enough credit to build a restaurant.
The estimated opening costs for the initial setting up and first three months of operation for a new Popeyes restaurant ranges between $383,500 and $2,620,800 (excluding the purchase of real estate/land). The estimate in the chart below comes from the FDD of Popeyes, dated 2020. The estimates are provided by Popeyes based of its years of experience in franchising its brand.
|Name of Fee||Low||High|
|Real Estate and Improvements||Variable|
|FF&E Signage and Technology||$165,000||$485,000|
|Additional Funds (3 months)||$20,000||$30,000|
The estimated initial range covers from an “in-line” restaurant size up to “free standing” restaurant size. In-line and freestanding are the two main restaurant types Popeyes offers for its brand.
In-Line restaurants are the smaller version of the franchise and include restaurants located in or at “strip-style” retail shopping centers, premises with convenience stores, travel plazas (or similar locations that sell gasoline), shopping malls, and other food court locations.
Free standing restaurants are the larger version of the franchise and include restaurants located in a single purpose, single tenant building. According to the franchisor, “free standing restaurants may also include ‘Build to Suit’ projects, which can substantially lower [the franchisee’s] initial investment costs.” As described in the FDD, in a typical “build-to-suit” scenario, the landlord will deliver a complete building ready for the franchisor to customize the interior. Free standing restaurants don’t include restaurants located in food courts, any in-line restaurants or any restaurants located in co-branded buildings.
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Like any similar business, Popeyes opening costs include acquiring real estate, renovation and/or construction costs, equipment, signage, professional fees (which can include license, accounting and lawyer fees), and more. Variations in initial investment depend on area real estate costs, the size of outlet being opened, the construction that needs to be done, and additional factors such as the amount of traffic the restaurant gets in its opening months. As you can see, though, the range given above doesn’t include real estate costs. A number of franchisors don’t provide a real estate cost estimate because of its price variability from place to place.
In addition to the “normal” costs, the most common fee in buying a franchise is the franchise fee.
The franchise fee is basically a cover charge for entry into a franchise system, and for taking advantage of the expertise the franchisor has acquired. It typically covers the right to use the franchisor’s system (including trademarks and operating system), and services the franchisor provides to franchisees like help finding a location, training materials, etc.
Incoming Popeyes franchisees may be eligible to pay a reduced franchise fee of $27,500 if they qualify for the franchisor’s Veterans Development Incentive Program or its Women and Minorities Development Incentive Program. A reduced franchise fee is available for limited other circumstances as well.