Popeyes Franchise AUV, Costs & Profits (2023)

With a hefty initial franchise fee of $50,000 and a total investment of over $1 million on average, Popeyes isn’t the most affordable franchise opportunity.

Yet, with an Average Unit Volume (AUV) of $1.4 million, do Popeyes’ profits justify its price?

That’s something we’ll look into in this article. We’ll have a look at whether it makes sense to open a Popeyes franchise in light of its cost and its profits. Let’s dive in!

Key stats

Franchise fee	$50,000
Royalty fee	5.0%
Marketing fee	5.0%
Investment (mid-point)	$1,327,000
Average sales	$1,673,000
Sales to investment ratio	1.3x
Payback period	5 years
Minimum net worth	$1,000,000
Minimum liquid capital	$500,000

About Popeyes

Popeyes is an American multinational fast food chain restaurant specializing in fried chicken. Apart from fried chicken, Popeyes sells fried chicken, seafood, Cajun cuisine, vegetables, and biscuits.

The company was established in 1972 and today, it operates in 46 US states, Puerto Rico, District of Columbia, and 30 other countries. 

Of the 3,705 restaurants operating globally, only about 50 of them are company-owned and the rest are franchised.

Popeyes franchises pros and cons

Buying a Popeyes franchise comes with various advantages and disadvantages, and they include:

Pros

• Popeyes is a reputed brand and hence, it won’t be difficult to attract new customers
• The company offers limited territory guarantee
• Franchisors get access to detailed training
• The company allows owning multiple franchisee stores

Cons

• Popeyes has a high franchise fee of $50,000 in addition to $1 million net worth per restaurant of which $500,000 must be in liquid assets
• The royalty fee of 5% is also high and there is a recurring 4% fee for advertisement
• Limited territory guarantee means that Popeyes can reduce the protected or guaranteed territory to less than 1 mile radius. This can eat into your profits

How much does it cost to start a Popeyes franchise?

You need to invest $1,327,000 to open a Popeyes franchise. This amount also includes an initial franchise fee of $50,000.

Yet, this number is just an average. The investment amount varies depending on many factors like location, the format of the restaurant, etc. For example, as per the latest FDD, opening a free-standing restaurant is far more costly than a delivery restaurant:

Type of restaurant	Low	High	Average
Free-Standing Restaurants	$1,086,000	$3,695,800	$2,390,900
In-Line Restaurants	$383,500	$1,870,800	$1,127,150
Delivery Restaurant	$109,500	$819,300	$464,400
Total			$1,327,483

The initial investment covers all type of expenses a fast-food restaurant would incur in the beginning. For example, costs of building, site work, technology, initial training, opening supplies, insurance, business licenses, and additional funds for bearing the losses of the first 3 months, etc.

Here’s a summary of the different costs you should pay for:

Format of restaurant	Free standing	In-line	Delivery
Initial franchise fee	$50,000	$50,000	$2,500
Formation costs	$992,500 – $3,374,200	$300,500 – $1,744,800	$96,000 – $774,800
Operating expenses	$43,500 – $121,000	$33,000 – $76,000	$11,000 – $42,000
Total	$1,086,000 – $3,695,800	$383,500 – $1,870,800	$109,500 – $819,300

What is the turnover of a Popeyes franchise?

On average, a Popeyes franchise makes $1,673,000 in sales per year. This amount is the average of all Popeyes’ 2,621 restaurants annual median sales.

Of course, the number can change depending on the type of restaurant. For example, a free-standing or in-line restaurant generates more revenue than a food court restaurant:

Restaurant format	Number of Restaurant	Median Sales
Free-standing	2,042	$1,720,896
In-line	468	$1,594,068
Food court	111	$1,134,589
Total	2,621	$1,673,420

How profitable is a Popeyes franchise?

As per the latest FDD, the average Popeyes franchised restaurant makes $187,000 in profits per year (10.8% EBITDA margin).

The good thing with Popeyes is that their FDD is actually more detailed vs. most other franchise disclosure documents. Therefore, we can easily assess the profitability of Popeyes franchises by looking at the financials disclosed in the FDD.

Profit and loss	AMount	% sales
Sales	$1,736,130	100%
Food and paper costs	$590,284	34.0%
Labor costs	$460,074	26.5%
Other costs	$498,269	28.7%
EBITDA	$186,887	10.8%

Is a Popeyes franchise a good investment?

As per our estimates and the information available in the FDD (the 10.8% EBITDA margin), we estimate that the average Popeyes franchise has 8 years payback, in line with quick-service restaurants.

Indeed, it takes on average franchisees and their investors 8 years to recoup their original investment of $1,327,000.

Disclaimer

Disclaimer: This content has been made for informational and educational purposes only. We do not make any representation or warranties with respect to the accuracy, applicability, fitness, or completeness of the information presented in the article. You should not construe any such information or other material as legal, tax, investment, financial, or other professional advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, advertisement, or offer to buy or sell any franchises, securities, or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the franchise and/or securities laws of such jurisdiction.

All content in this article is information of a general nature and does not address the detailed circumstances of any particular individual or entity. Nothing in the article constitutes professional and/or financial and/or legal advice, nor does any information in the article constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other content in this article before making any decisions based on such information or other content.

Disclaimer: This content has been made for informational and educational purposes only. We do not make any representation or warranties with respect to the accuracy, applicability, fitness, or completeness of the information presented in the article. You should not construe any such information or other material as legal, tax, investment, financial, or other professional advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, advertisement, or offer to buy or sell any franchises, securities, or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the franchise and/or securities laws of such jurisdiction.

All content in this article is information of a general nature and does not address the detailed circumstances of any particular individual or entity. Nothing in the article constitutes professional and/or financial and/or legal advice, nor does any information in the article constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other content in this article before making any decisions based on such information or other content.