CSFB Retail and Restaurant Conferencelibrary.corporate-ir.net/library/12/125/125194/items/155206/AFCE... · CSFB Retail and Restaurant Conference June 13, 2005. 2 Building Momentum

1 Building Momentum

®

CSFB Retail and Restaurant ConferenceJune 13, 2005

2 Building Momentum

Forward-Looking Statement: Certain statements in this presentation, and other written or oral statements made by or on behalf of AFC or its Popeyes Chicken & Biscuits brand are "forward-looking statements" within the meaning of the federal securities laws. Statements regarding future events and developments and our future performance, as well as management's expectations, beliefs, plans, estimates or projections relating to the future, are forward-looking statements within the meaning of these laws. These forward-looking statements are subject to a number of risks and uncertainties. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are adverse effects of litigation or regulatory actions arising in connection with the restatement of our previously issued financial statements, the loss of franchisees and other business partners, failure of our franchisees, the loss of senior management and the ability to attract and retain additional qualified management personnel, a decline in the number of new units to be opened by franchisees, the need to continue to improve our internal controls, our ability to successfully implement new computer systems, limitations on our business under our credit facility, our inability to enter into new franchise relationships, a decline in our ability to franchise new units, increased costs of our principal food products, labor shortages, or increased labor costs, slowed expansion into new markets, changes in consumer preferences and demographic trends, as well as concerns about health or food quality, unexpected and adverse fluctuations in quarterly results, increased government regulation, growth in our franchise system that exceeds our resources to serve that growth, supply and delivery shortages or interruptions, currency, economic and political factors that affect our international operations, inadequate protection of our intellectual property and liabilities for environmental contamination, and other risk factors detailed in our 2004 Annual Report on Form 10-K and other documents we file with the Securities and Exchange Commission. You should not place undue reliance on any forward-looking statements, since those statements speak only as of the date they are made.

Forward Looking Statement

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Agenda

Ken Keymer – Popeyes President • Strategic and Operational Review

– Popeyes Today– Growth Opportunities– 2005 Operational Expectations

Fred Beilstein – AFC Chief Financial Officer• Financial Summary

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• Highly Franchised– Over 97% franchised globally, domestically

over 96%

• Low Capital Needs

• Brand Expansion Potential

• Equity in a Highly Differentiated Brand

Popeyes Today

®

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Popeyes Today

• New Orleans is “Ownable”

• It’s the Food!– Louisiana Cooking

• Differentiated Brand– “Heritage” Appearance

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Shifting the Segment

861

944

$ th

ou

sand

s

Bone-in ChickenQSR

Popeyes

AUV's

49.7

75.7

48.8

82.4

45.6

87.3

43.7

98.2

serv

ings

per

10,

000

eate

rs

2001 2002 2003 2004

Chicken Consumption

Bone-inChickenBonelessChicken

Source: Restaurant Trends, Midyear 2004

Source: Crest data

• BIC Consumption Declining• Boneless Chicken Consumption

grew 30% since 2001

• In a Challenged Sector, Popeyes Does Well, but…

Bone-In Chicken Category has Challenges

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2.8

4.0

Vis

its/

Mo

nth

CQSR HQSR

Visit Frequency

Source: Sandelman Quick-Track; Oct-Dec, 2004

Popeyes Loyal Customers want new reasons to visit…

• Popeyes has access to large, loyal customer base

• We can give our customers reasons to visit more frequently

Shifting the Segment

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Today – Modest Growth

System-wide sales represents combined sales of all restaurants that we operate or franchise. Information for franchised units is provided by our franchisees. System-wide sales are unaudited.

• Total System Sales Growth 4-yr CAGR 5.7%

• Total Restaurant Count Growth 4-yr CAGR 5.0%

1,230 1,3231,420 1,471 1,538

0

200

400

600

800

1,000

1,200

1,400

1,600

$ m

illio

ns

2000 2001 2002 2003 2004

System-wide Sales

1,5011,620 1,712 1,806 1,825

0200400600800

1,0001,2001,4001,6001,8002,000

# U

nits

2000 2001 2002 2003 2004

Total System Restaurant Count

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Great Brand for Tomorrow

Paradigm Shift

• New Competitive Set• Improved EconomicModel

• New Imperative for Growth

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Growth Levers

Domestic Development

Sales Growth• Brand Communication• Menu Development• Re-Imaging• Operations

Profit Growth

International Development


Sales Growth

• Drive Operations Improvement– New Leadership– New Organization– New Resources

• Accelerate Re-imaging– Re-imaging program since 2000– “Heritage” image as of year-end

2004• 45% Domestic system• 65% International

– Domestically, 600bps sales increase when re-imaged

– 250+ stores targeted in new image in 2005

New Results


Sales Growth

• Menu DevelopmentDrive Mix Where the Customers Want It!– Boneless Chicken for all

Dayparts– Snack Dayparts– “Healthy Matters”

• Communications– Re-Focus on Differentiated

Positioning(It’s about the Food Stupid!)

– Align Brand Communications– Develop New Creative – “Taste

of New Orleans”


-4.5%

-2.6%-1.5% -1.2%

1.1%

-0.6%

1.9%

3.2% 2.8%

-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

Q1 '03 Q2 '03 Q3 '03 Q4 '03 Q1 '04 Q2 '04 Q3 '04 Q4 '04 Q1 '05

FY ‘03-2.6%

FY ‘041.3%

Total Domestic System Comp Sales


Profit Growth

Drive AUP

• Sales Leverage• Technology/Controls• Purchasing Leverage• Moderating Food Costs• Reduce Project Costs

14.4%

16.6%

2004 2005 Q1

ROP %


Fueling Domestic Growth

Existing PresenceExisting With Focused DevelopmentNew Targeted Development


Existing PresenceExisting With Focused DevelopmentNew Targeted Development

Fueling International Growth


Development –How We Get There

Drive New Restaurant Growth

• Reduce Cost & Improve ROI• Field Base Teams for Sales & Site Development • Select Stronger Franchise Operators• Sell Smaller, More Concentrated Development

Areas

Bottom Line: Better Quality Deals Lead to Stronger Domestic

& International Pipelines


2000 2001 2002 2003 2004 2005 Est

Company-OwnedDomesticFranchiseInternationalFranchise

Stop SellMarch 2003

Start SellApr-May 2004

143

177 169 177

109

New Opening Growth

120-130


Financial Summary

Fred BeilsteinAFC Chief Financial Officer


YTD 2005 Financial Highlights

• Refinanced the Debt “2005 Credit Facility”• Paid Cash Dividend $12.00 per Share• Settlement of Certain Shareholder Litigation• Transition of the Corporate Center• Q1 Improved Operational Performance

– System-wide sales up 5.3% vs prior quarter– Total domestic same-store sales up 2.8%– ROP margins up 160 basis points to 16.6% vs prior

quarter– 27 new unit openings – New opening pipeline improved by 25% vs this time last

year


Refinancing“2005 Credit Facility”

$ 132.4Net Proceeds

60.0Revolving Credit Facility5-year 100% available

$ 190.0Term Loan B6-year

2005 Credit Facility($ millions)


YTD 2005 Cash Summary

Cash Summary($ millions)

Cash and cash equivalents $ 32.3Short-term investments 209.6Other assets 90.4

Total Cash $ 332.3Refinancing Net Proceeds 132.6Cash Available $ 464.9Dividend Payout (352.9)Future Disbursements, including taxes (87.4)

Net Cash Surplus $ 24.6


Q1 2005 G&A

$ 11.4Popeyes G&A

(2.0)Spice royalty and rental expense

$ 30-35G&A Annualized Target

(9.0)AFC Corporate Center

$ 22.4Total G&A

Q1 2005 G&A Actual($ million)


Why Popeyes?

• Highly Differentiated Brand with “Ownable”Positioning

• Capacity for Consistent Growth with Significant Upside

• Multiple Growth Levers

• Well Positioned for Future Success

Documents

CSFB Retail and Restaurant Conferencelibrary.corporate-ir.net/library/12/125/125194/items/155206/AFCE... · CSFB Retail and Restaurant Conference June 13, 2005. 2 Building Momentum