Popeyes franchise costs have fallen for the first time since 2009, as consumers have switched to convenience food chains and restaurants like Taco Bell and Chipotle, according to an analysis by the National Retail Federation.
The latest figure is $3.3 billion, a drop of about 11 percent from the previous year, when $4.4 billion was spent.
The biggest drop was at McDonald’s, which is spending about $2.4 million on the chain’s franchisees.
At other chains, such as Chipotle and Taco Bell, the number of franchisees has dropped by about 3,000 since the previous fiscal year.
That’s a sharp increase over the previous decade.
Some restaurants, including the new Chipotle in San Diego and the former Domino’s Pizza in Philadelphia, have struggled to compete with Chipotle.
“These are good companies,” said Kevin Bales, the president of the national retail federation, noting that franchise costs are “one of the few things that we think about when we’re looking at where our industry is headed.”
The drop in franchise costs is a reflection of a changing marketplace and shifting tastes among consumers, Bales said.
In 2010, Popeyes was the No. 1 franchise cost for American households, according the analysis.
By 2019, that number had dropped to No. 11, with a decline of 12 percent.
In 2019, the average cost for a Big Mac was about $1.69, up from $1 at the start of the decade.
Last year, the Big Mac cost was about 3.5 times higher than in 2010.
Popeyes franchisees make about $9,000 a year, while McDonald’s pays franchisees about $7,500, according a report by the Federal Reserve Bank of Philadelphia.
Chipotle pays about $4,000, with the average paying about $10,000.
While Popeyes has had a strong start to the year, franchise costs dropped in 2018 and 2019.
Bales noted that Popeyes had been struggling financially, and it is hard to imagine a franchisee making more money than they are now.
The franchisees are also struggling to maintain quality.
In the past year, they have laid off employees and increased their payrolls, which are typically lower than they were when the chain began.
At the same time, the chains has been increasing its advertising budgets, Bews said.
That includes the launch of new ad campaigns in the past few weeks.
More to come from the National Restaurant Association on Thursday, May 29.