“We evaluated and assessed everything about AFC. Our people. Our systems. Our brands. Our portfolio.Then we created and invented and improved and fixed. The result will be an AFC Enterprises that is as strong and valuable as we can make it.”
—Frank J. Belatti, AFC 2003 Annual Report		  
In AFC’s case, our portfolio reduction provides us with three distinct advantages. First, it allows us to focus on the brand that we believe has the superior growth potential, is overwhelmingly franchised, requires lower capital expenditure, has the capacity to promote a more diverse and contemporary menu, and provides the greatest point of differentiation in a highly competitive arena.

Second, by consolidating our operations to Popeyes’ corporate offices, we eliminate a shared service center that has ceased adding financial leverage. This initiative also saves considerable expense.

And third, the transactions have allowed us to monetize certain assets of slower growing and less profitable businesses in a positive financial market. This has generated cash that should provide for enhanced shareholder value. Frankly, we feel very positive about our strategic direction and the execution of our plan. We believe our current structure will prove to be a better vehicle for growth and value creation in the future.

AFC is now Popeyes Chicken & Biscuits. We have hired Ken Keymer, the former president of Sonic Corporation, to lead this great brand. Additionally, we have put a number of people back in the field, decentralized our field operations, reenergized Popeyes’ marketing, built a new management team, and strengthened the relationship between the corporate service center and the franchisees. The result is that we have a franchise community today that is enthusiastic and highly supportive.

It is no coincidence that Popeyes saw an improvement in performance during the last two quarters of the year. In the fourth quarter of 2004, Popeyes’ domestic same-store sales growth was 3.2 percent compared to a decrease of 1.2 percent for the fourth quarter of 2003. That was the most improved year-over-year quarterly performance for Popeyes since the first quarter of 2002. Popeyes reported full-year domestic same-store sales growth of 1.3 percent for 2004, slightly higher than what we had previously projected.


  “We are setting objectives for ourselves that are well in excess of what many people may expect of us.”
—Frank J. Belatti, AFC 2003 Annual Report
It is an exciting and invigorating time for Popeyes. There is a lot of new product activity, a lot of new design activity, a lot of new re-imaging activity, and a lot of focused development activity.

For 2005, Popeyes expects domestic same-store sales growth of 2.0 to 3.0 percent driven by continued operational improvements and increased food-focused advertising, as well as additional menu and promotional products focused on further driving lunch and snack day-parts. The company expects the Popeyes system to open 120 to 130 restaurants in 2005, with a