What does it cost to open a Popeyes franchise? The total investment could range from $383,500 to $2,620,800. To open a franchise with Popeyes, you’ll need at least $500,000 in liquid capital and a net worth of $1,000,000. This refers to the amount you need to have available on hand and the total amount of your assets respectively. The company also has a franchise fee of $50,000, which is on the high-end for food franchise opportunities.
For a better overall look, we will go over the details regarding the finances, advantages of running the franchise as well as the challenges involved in running this franchise. Try our franchise quiz if you want to find the best opportunity for your goals and budget.
Table of Contents
- Financial Requirements and Fees
- Average Sales / Revenue per Year
- Popeyes Franchise Facts
- How Much Profit Does Popeyes Franchise Make Per Year?
- Advantages of Popeyes Franchise
- Challenges of Popeyes Franchise
- Is the Popeyes Franchise Right for You?
Financial Requirements and Fees
First, here is a quick breakdown of the initial expenses and base requirements as mentioned earlier.
|Fees/ Expenses||Dollar Amount|
|Initial Franchise Fee||$50,000|
|Initial Total Investment||$383,500 – $2,620,800|
You may have noticed that the franchise fee is quite expensive when compared to other franchises, but there are programs that you may be eligible for that can reduce the price. The Women and Minorities Development Incentive Program and the Veterans Development Incentive Program are some examples of programs that can significantly cut the initial investment by half (~$23,000).
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On top of this, borrowing money or receiving a loan is easier to be approved for with franchises as opposed to opening up your own business. This is due to the fact that franchises are seen as a more stable investment by lenders compared to unproven businesses. The total initial investment also raises eyebrows because of the vast range, but real estate prices affect the total investment, hence, the variation.
First, we breakdown the initial total investment numbers including the estimates of the other fees that come into play in the long run.
|Real Estate||Price Range|
|Additional Funds||~ $20,000 – $30,000|
|Building||~ $100,000 – $1,025,000|
|Business License||~ $300 – $600|
|FF&E Signage and Technology||~ $165,000 – $485,000|
|Initial Training||~ $17,200 – $24,200|
|Insurance||~ $9,000 – $18,000|
|Opening Supplies||~ $11,500 – $23,000|
|Site Work||~ $0 – $650,000|
|Soft Costs||~ $8,000 – $265,000|
|Utility Deposits||~ $2,500 – $50,000|
|Total Including Franchise Fee||$383,500 – $2,620,800|
As you can see, depending on location, the cost of opening this franchise will vary. This of course is a startup cost variable that’s shared by all food franchise opportunities. The location of a store will is one of biggest variable factor determining total cost. These costs including the franchise fee is how we get our estimated total initial investment of $383,500 – $2,620,800
Besides the initial cost, there are other fees that must be considered. Here is a chart that lists the other fees that need to be taken into consideration.
|Advertising Fund Contribution||4% of gross sales|
|Background Check Fee||~ $280 – $15,000|
|Impact Study||~ $4,000 – $6,000|
|Interest on Overdue Payments||~ 1.5% per month|
|Renewal||50% of the current standard initial franchise fee|
|Royalty||5% of gross sales|
|Site Re-approval Fee||$5,000|
|Transfer Fee||~ $5,000 – $7,000|
Note that these fees listed in the chart above are not part of the initial total investment as the above fees are fees that are paid once you own the franchise.
Average Sales / Revenue per Year
Systemwide Annual Sales/ Revenue
In 2019 that systemwide sales for Popeyes increased by 19% to $4.40 billion, showing aggressive growth from previous years. Recently in 2020, the Q4 reports found sales figures to be lower than expected despite still showing growth. The company ended the year with $4.968 billion in total revenue. This was due to several factors, including the global pandemic. Though the estimates were less than expected, the company has plans for a return to fast growth and increased revenues.
Average Annual Sales per Unit
The average annual sales per unit are about $1,800,000 based on 2020 performance. Of course, this is just sales and does not reflect profit after expenses. As mentioned earlier, ongoing fees like a royalty of 5% and 4% for an advertising fund are fixed expenses to consider.
Related Reading: How Much Does it Really Cost to Open a Chick-fil-A?
These numbers are impressive when compared to other chicken joints like KFC with average store sales of $1,200,000 per year.
Average Franchisee Profit
The average profit for a franchise can expect a large margin because there are many factors that come into play. For example, a franchise that needs a completely new facility will have to invest more of their money in the building expenses and may not reap the benefits that a franchise with little to no building expenses would. With that said, that number can fall anywhere between $50,000 – $200,000.
These numbers are not that accurate because there are a number of factors that come into play and can be seen as irrelevant to some investors. Some franchises make less than $50,000. A Popeyes store may cost a lot because they typically run in larger, and more updated buildings.
They may also need more equipment than say a boba shop, and also needs the space for a drive-through. Again, these numbers do not capture the full essence of the expenses and returns of each restaurant.
Popeyes Franchise Facts
Research is essential for anyone looking to open a franchise that offers promise. Here are some facts about Popeyes:
- Popeyes was founded in 1972 and opened its first franchise in 1976 in Louisiana
- In 2018, there were 3,000 operating units with a total of 3,102 today.
- Industry: QSR (Quick Service Restaurant)
How Much Profit Does Popeyes Franchise Make Per Year?
The average operating profits per store was $312,782 according to the Popeyes FDD (franchise disclosure document). This number reflects the profit before taking tax, fees, and interest on debt into consideration.
The company experiencing high profitability in the United States and Canada and wish to move internationally into Asia as fried chicken joints prove to perform well in these areas. The company recorded 5 consecutive quarters of positive growth so leadership has demonstrated the ability to execute on their business plan recently.
Advantages of Popeyes Franchise
Popeyes has seen a lot of publicity and attention due to their chicken sandwich wars with competitors like Chick fil’ A. This marketing campaign helped the company build a large presence on social media. Not to mention, it has driven sales with their chicken sandwiches consistently being sold out. With that said, there are a number of other advantages to owning this franchise than just their signature chicken sandwich. Not only with their chicken sandwiches, but Popeyes also updates their menu constantly with new and popular trends.
Another advantage is that they provide training for new franchises. Though they do want people with prior restaurant experience, it is a nice refresher to understand how this store functions in particular.
The second is that they are quite profitable. As mentioned earlier, they gained more in sales with $1,800,000 million compared to rivals like KFC that brought in $1,200,000. Of course, there are more expenses, which we will get into more detail in a bit, but overall it is a growing brand that provides decent profits.
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The last advantage is actually the smaller number of franchise locations or competition. Compared to McDonald’s or Subway (with more than 44,000 locations), Popeyes does not have many stores open which present two pros. One is that there are many opportunities to grow. Popeyes is looking for franchisees to open in several states in the U.S. and in Canadian provinces.
This could be great opportunity if you’re open to relocating. According to a recent report in Forbes, Popeyes currently holds less than 4% of the total fried chicken sandwich market. There’s plenty of runway for growth, especially in markets where Popeyes is not well known. Now, of course, there are some challenges related to the fact that they are smaller, but a franchise with growth potential is something that’s desirable as a prospective franchisee.
Challenges of Popeyes Franchise
There are some fundamental challenges with opening any franchise. The first one to think about is the number of fees. While most franchise stores are profitable, it’s important to understand how much you would make after taking the fees into account so you’re not surprised. We listed a few examples of fee types and the percentage you would need to pay earlier, but that did not reflect the total amount in annual fees you would incur.
Another challenge with a Popeyes franchise is the initial cost. If you’ve done your research, you know there are other restaurants that are just as popular and are cheaper to buy. On the one hand, Popeyes has been doing well in terms of sales and has been consistently growing, on the other hand, just getting your foot in the door and meeting their requirements is a bit tricky.
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The Popeyes franchise fee is also a bit higher than other franchises, so that is an obstacle you may need to face in the beginning. The stores also require more space than other chains, but this may make them more profitable as well. For example, a store with a drive-through is more expensive in its initial cost but has the potential to bring in more customers. It’s not uncommon for a drive-thru window to add more than $200,000 in gross sales annually for a restaurant.
The last bit of information that is fairly important to consider is the number of units across North America. As mentioned earlier, the company has less than 4,000 locations globally. While this might seem like a lot compared to other concepts like KFC (22,000+ locations) and Wendy’s (6,000+ locations), they are still small. This means there’s still plenty of room for expansion opportunities across many markets.
Is the Popeyes Franchise Right for You?
As stated on the official website, this franchise may not be for someone who is not committed to delivering excellence. The requirements are quite high for Popeyes as they have less locations and a desire for expansion across the North American regions like California, Florida, Kansas, Nova Scotia, Prince Edward Island, and Quebec.
The ideal Popeyes franchisee is someone with previous restaurant experience and the financial resources to run a successful business. You need to be someone looking for an active investment opportunity that is ready to take on the challenges of this growing brand. Some key characteristics include: being a self-starter, goal-oriented, and an interest in running your own business. Commitment and focus are key and it’s important that you live near the restaurant you plan to run.
If you’d like to learn more about the Popeyes franchise, we recommend taking the next key steps.
- Attend an information session or a “Discover Day”
- Review the franchise agreement
- Think whether it is possible to fund or not
- Make final decisions (location, training, etc.)
Popeye’s has its advantages and challenges, but ultimately, you decide whether you can manage a fast-growing franchise. This is a promising concept that appears poised for growth over the next 5 years at least.
“Love that chicken from Popeyes” is that catchy tagline that may have you looking to open your next franchise. Originally opened as “Chicken on the Run” in 1972, founder Alvin C. Copeland Sr. reopened the restaurant at “Popeyes” with a New Orleans-style twist in their chicken. With over 3,000 locations across the states and their release of the chicken sandwich, they have made impressive sales and positive growth for 5 consecutive quarters.