Pizza—the American fast food industry has been built on iconic menu

offerings that have enticed millions around the globe.

In the summer of 2019, another cultural phenomenon took place.

The launch of Popeyes' chicken sandwich was an inflection point for the

fast-food company and kicked off what industry insiders have referred to

as the "Chicken Sandwich Wars".

Chicken has been having a moment for quite some time now.

So, you know, it's hard to say that this, you know, this one sandwich

changed the trajectory of QSR chicken, but it certainly changed the

trajectory for Popeyes.

Hype around the chicken sandwich, and a lighthearted Twitter spat with

Chick-fil-A turned the menu item into an overnight sensation.

In November of 2019, Popeye's location alone sold more than 3,500

chicken sandwiches in a day.

And since then, sales at the company have surged,

I'd say so, it's the next sort of category, again, goes back to the

buckets of chicken that were invented as a whole meal solution that that

travel well.

In other words, the food doesn't degrade over time as much as, say,

french fries or hamburgers.

So it was that next category.

It was also created to be shared like pizza.

It's meant to be shared, and so there's a value proposition there for

the family. So can a simple chicken sandwich save a company that once

filed for Chapter 11 bankruptcy protection and is trailing two major

rivals, Chick-fil-A and KFC?

Popeyes Louisiana Kitchen got its start in the early 1970s in New

Orleans. Founder Al Copeland grew up poor in the Big Easy, dropped out

of high school at 16 and in 1971 opened Chicken on the Run.

Despite some early setbacks, Copeland went on to reinvigorate the menu

to include spicier, Louisiana Cajun-style recipes and eventually reopen

the restaurant under the name "Popeye's Mighty Good Fried Chicken,"

after Gene Hackman's character, Popeye Doyle in the movie "The French

Connection." The menu was a hit.

Copland opened a second location a year later, and by the late 1980s,

Popeyes ballooned to more than 100 company-owned stores, and 620

franchises.

Looking to expand further, in 1989, Copeland gambled big buying rival

Church's Fried Chicken for $400 million, making the new company the

second largest fast-food chicken restaurant in the U.S.

behind chain Kentucky Fried Chicken.

But even in the number two slot, the chain struggled.

The deal eventually soured, and by 1991, the company filed for Chapter

11 bankruptcy, due in part to the remaining debt from the earlier

buyout. Copeland stepped down as CEO and sold his 84 percent ownership

of the company for $31 million.

By 1994, the reorganized company, America's Favorite Chicken, had more

than 1800 company owned and franchised restaurants worldwide.

The chain looked to diversify, acquiring Seattle Coffee Company and

Cinnabon. The plan was a flop, and within a few years, Popeyes decided

to double down on chicken and offloaded both companies, Cinnabon at a

major loss. In March 2001, Popeyes made its debut on the Nasdaq, opening

up at $19.50 a share.

By 2004, the company decided to go all in on Popeyes, so it downsized

even more, selling off its Church's Chicken restaurant for $390 million

dollars. By 2017, shares had soared to close at almost $79.

That same year, Restaurant Brands International, the owner of Tim Hortons

and Burger King, added Popeyes to their roster.

What's exciting about Popeyes is we have the opportunity to double our

footprint in the US and grow rapidly internationally so there is no

better growth runway in front of a chain than Popeyes.

In 2008, the chain took the name Popeyes Louisiana Kitchen and at the end

of 2019, Popeyes had more than 300 venues worldwide, making it the

second largest chicken chain by total number of restaurants.

For much of Popeyes' history, its Louisiana style menu featured items

like fried chicken, chicken tenders and fried shrimp.

But after nearly 50 years in business, in August 2019, the chain rolled

out its first ever nationwide chicken sandwich.

The launch, the biggest menu change since the restaurant added crawfish

three decades earlier, and the ensuing social media debate, sent

shockwaves through the fast-food industry.

A few days after its debut, Chick-fil-A tweeted a thinly veiled critique.

Popeye's response: y'all good?

The tweet were the opening salvo in what industry insiders refer to as

the "Chicken Sandwich Wars."

As I've seen it dubbed the tweet that changed the quick service

restaurant industry last August.

Until then, you know, they were a solidly performing, middle-of-the-road

chain that, you know, that certainly was doing all right, but you know,

that nobody would say, hey, you know, they are really setting themselves

apart. We were really excited about the launch of the chicken sandwich.

We spent a lot of time working on on a best-in-class sandwich.

The heritage of Popeyes has always been about culinary excellence.

And so we felt we had something really special for a simple but amazing

ingredients, a chicken fillet, Yvonne pickles and mayonnaise.

And we were ready for something big.

And then we broke the Internet in early August and that created a craze

that we haven't seen, I haven't seen in more than two decades in the

business. While Popeyes, Chick-fil-A, Wendy's and Shake Shack traded

barbs on Twitter, Popeyes nearly doubled its Twitter followers to

180,000. More importantly, the company saw sales surge almost 10 percent

at stores open more than a year in the third quarter of 2019, compared

to less than one percent growth in the same period the year prior.

With lines out the door, about two weeks after the launch, the chain ran

out of chicken sandwiches.

One analyst estimated that while in stock, Popeyes sold about a thousand

chicken sandwiches per store a day.

And that the sandwiches alone accounted for 30 percent of sales.

And it wasn't just Popeyes that saw battlefield gains in the chicken

sandwich wars. According to food traffic analytics performer, Placer

Labs, over a typical summer weekend, Popeyes, Chick-fil-A, Zaxby's and

KFC receive about 8.3 million visitors.

At the peak of the chicken sandwich wars, the chains collectively had

over ten million visitors.

We launched our great tasting chicken sandwich last year in August.

Then, as you well know, we had to pull it back because of a number of

challenges, including supply.

And then we relaunched it in November.

And it's been a big part of our many since then.

And what it's done, it's brought a lot of new folks into the business, a

lot of folks that that hadn't really tried Popeyes or only tries it once

every 35, 40 days.

By November 2019, the Popeyes chicken sandwich, made of a chicken breast

fillet hand-battered and breaded in buttermilk coat, and served on a

British bun with either spicy or regular mayo, was back in action.

I think what Popeye's has done is created a sandwich that some people say

is better than Chick-fil-A some people say it's on par with.

There's very few people that say it's worse than, or significantly worse

than Chick-fil-A. And so they backed up their social media firestorm

with a really good product that people wanted.

As of August 2020, Popeyes sold more than 203 million chicken sandwiches.

The company reported second quarter same-store sales in August 2022,

grew nearly 25 percent.

The fast-food chicken market in the U.S.

is a $32 billion industry dominated by a handful of big players,

according to Technomic, including Chick-fil-A, KFC and Popeyes.

In 2019, Chick-fil-A had sales of $12.6 billion, making it not only the

largest chicken fast-food restaurant in the U.S., but also one of the

largest restaurant chains by systemwide sales behind McDonald's and

Starbucks. For comparison, Popeyes, the 19th largest U.S.

chain, according to the Nation's Restaurant News, pulled in $3.8 billion

in sales in 2019.

Closed on Sundays, Chick-fil-A first opened in Atlanta, Georgia, in

1967.

As of September 2020, the brand had more than 2,400 restaurants across

the U.S. The key to the restaurant's success?

According to analysts, Chick-fil-A benefits from having quality food,

stellar customer service and unlike most other fast-food franchises,

limiting most operators to just one store.

So Chick-fil-A has got a number of things going for them, right.

And obviously, first and foremost, for any quick service restaurant is

the food. Their food is phenomenal in any rating that we or other

research firms have done, always indicate that Chick-fil-A's food is

phenomenal. But guests that go into Chick-fil-A are treated to people

that are trained to be polite, that say thank you and please and and,

you know, all of these things that get hammered into them.

And part of that is driven by the way they're structured.

Their franchisees structure is such that really most franchisees only

want to run one restaurant.

And so they're not torn between six or eight or 10 restaurants.

They're really on-site operators and are dedicated to growing and

improving the operations in the service at that one restaurant.

That focus has driven sales volume per store at Chick-fil-A significantly

higher than rivals KFC and Popeye's, according to analysts.

Their in the $5-6 million range per store.

Whereas a KFC might be the $1-2 million range.

I think Popeye's is approaching $1.7 million.

The performance in the way they've been able to grow and outperform the

rest of the industry really is beyond precedent in anything that you can

look at. With the exception maybe now of at least over the last several

years, with the exception of Popeye's and how they've been growing.

KFC was bought by PepsiCo for $850 million in 1986.

And in 1997, PepsiCo spun off its then struggling fast-food business,

launching Pizza Hut, Taco Bell and KFC into a new publicly traded

company that would later be renamed Yum Brands.

By 2019, KFC had more than 2,400 restaurants, 83 percent of which were

located outside of the U.S.

Though it's seen growth internationally in the years leading up to 2020,

the company has faced fierce competition in the U.S.

and at the same time struggled to reinvent its chicken sandwich.

Up to 2011, KFC was the leader in market share in the U.S.

limited service chicken segment.

A year later, Chick-fil-A was in the top spot.

But like other fast-food chicken restaurants, KFC has seen sales surge

during COVID-19.

In July 2020, Yum Brands reported that second quarter U.S.

same-store sales at KFC were up almost seven percent.

And to compete against rivals, the company tested an upgraded version of

its chicken sandwich in the summer of 2020, according to industry

insiders. Well, KFC went through a transformation period where they

invested the company invested its own capital in turning around the

business. You know, they reformulated the menu, they, you know, invested

in digital technologies.

And really, it's become, during this COVID crisis, it's actually become

a hotspot for lack of a better term.

But it may be Popeyes that has benefited the most.

Popeyes reported same-store sales rose twenty five percent in the second

quarter, ending June 30, 2020.

During the same period, Restaurant Brands International's other

businesses reported same-store sales at Burger King fell 13 percent, and

Tim Hortons declined 29 percent.

For decades, burgers have been one of the top choices for consumers at

restaurants across the U.S.

Americans ordered an 8.6 billion burgers in the year ending February

2019, compared with four billion chicken sandwiches.

But according to the NPD Group, the chicken sandwich is only getting

started. The big story over the past 30 or 40 years has been the rise of

chicken consumption.

Chicken went in the late 1970s from being a minority meat, at least

relative to beef and pork to now.

Today, it's the most consumed meat in the United States.

One reason Americans have consumed more chicken: affordability.

Over the past several decades, the availability of chicken has increased

dramatically as consolidation in the meat processing industry has

allowed companies like Tyson Foods, Pilgrim's Pride and Sanderson Farms

to increase production while at the same time keeping costs low.

So the industry in chicken is much more vertically integrated, which

means that you have companies say, like Tyson, that own most of the

supply chain. They've been able to improve genetics, improve feed,

improve housing situations, and that's really been able to pull down the

price of chicken quite considerably.

And while low prices have kept consumers coming back for more,

perceptions of health and wellness have led to carnivores choosing white

meat over red meat.

Organizations like the World Health Organization and the U.S.

Department of Health have linked red meat with cancer and heart disease

Particularly in the 80s and 90s, there was a lot of concern among