Customer Acquisition Cost Of Popeyes

One day in 1971, Alvin Copeland was coming home on a family vacation when his family stopped for food. He noticed that all of the places on the way home, were all the same. They all had the same taste, and quality. When his family got home, he remembered his mother’s recipe for fried chicken and made it. His family liked the chicken and decide to open a quick-serve restaurants. That name of the quick-serve restaurants is Popeyes.
Popeyes is a 222 million dollar business that serves spicy chicken, chicken tenders, fired shrimp and other regional items. With Popeyes Louisiana Chicken having over 2,600 franchises, it shows that there are a multitude of places to get Popeyes but, there are some places that don’t have a Popeyes. The average consumer

will only drive about 17 minutes to reach a business. Sometimes, a franchise can be up to thirty miles away from where a person lives. This is the case for the city of Valparaiso, Indiana and I believe that it is time to open up a franchise. Opening a franchise means that people don’t have to drive that far to eat at a Popeyes, and consumers are able to enjoy the Popeyes flavor.
There are seven main items that the franchise has to look at. They are opportunities for venture creation, feasibility of venture creation, start-up requirements, risk-taking opportunities, complexity of business environment, and finally marketing function and related activities.
The first opportunities for venture creation. For the Popeyes franchise in Valparaiso to succeed, the franchise needs to see the opportunities for venture creation. There are three main opportunities and they are inefficiency in the market, how effective in the solution, and how hard it will be to acquire customers. The first opportunity is the inefficiency in the market. When there is an inefficiency in the market, this means that a franchise can sweep in to take the market by storm. In the Valparaiso area, there are not that many quick-serve restaurants in the area whose main purpose it to sell chicken products. That means that the franchise would be able to attract customers that are seeking something to eat.
The next venture opportunity is how effective the solution will be. The solution to the problem is to open up a Popeyes franchise in Valparaiso. This means that people will not have to travel far to go to Popeyes and they will be able to have a quick-serve restaurants that mainly sells chicken products. This is a good solution because the company does not want to wait too long to make the franchise. If they wait too long the franchise may not be built because the franchise may not be able to survive if many competitors come into Valparaiso.
The final venture opportunity is customer acquisition costs.

Customer acquisition costs can make or break a franchise because you need to have customers come into your business and you will have to find them. Having a low customer acquisition cost means that you are able to bring potential customers into your franchise. To formula to find customer acquisition cost is how much you spend on money divided by number of customers acquired. The first year the franchise will spend around $40,000 with the number of customers being around 60,000 to 80,000 customers. The customer acquisition costs would be from 50 to 67 cents. The average customer acquisition for Popeyes is around 80 to 90 cents. Having this low customer acquisition means that the franchise can acquire customers at a low

cost.
Now let’s move on to the feasibility of the venture ideas. To find out if the franchise is feasible, the franchise would have to do a feasibility study. In a feasibility study, there are four important conditions. They are competition, site analysis, capital utilization, and financial analysis.
The company should have a franchise in an area with moderate to low competition.

This is so that Popeyes can have a bigger market share in that area. If the Popeyes franchise goes into an area with high competition, the franchise may not be able to survive. Locally there is only one competitor and this Kentucky Fried Chicken. Kentucky Fried Chicken has two franchise: 2005 East Morthland Drive and 2402 Calumet Avenue. If the consumer went outside of the city, they would be more competitors like Chick-fil-A, Boston Market, and Zaxby’s. The cities that contain these franchise are Schererville and Merrillville Indiana but are a 30 minute drive.
Having a good site for your franchise means that you will be able to have customers find your franchise. If your customer cannot find your place you might not be in a good location. The location of the Popeyes franchise will be at 2014 US-30 Valparaiso, Indiana. The location of the franchise is near a highway, so that means there is more traffic on that road which could lead to more customers. This location is near a Staples and a Speedway Gas Station with a Kentucky Fried Chicken inside. The franchise should build close to it competitors because the franchise needs to see how the KFC will compete with the

Popeyes.
The franchise should have a good capital utilization rate. The capacity utilization rate measures the proportion of potential economic output that is actually realized. Capacity utilization is an important operational metric for businesses, and it's also a key economic indicator when applied to aggregate productive capacity. A company with less than 100% utilization can theoretically increase production without incurring expensive overhead costs associated with purchasing new equipment or property. The maximum output for a Popeyes Franchise is around 100,000 a year. In a perfect world, the franchise should be at that. But, our goal for the franchise should be around a rate would be 90%-100%.
Being financially stable is an important part of business. You need to have money because you might need money for things like more employees, new supplies, utilities, and unexpected expenses. To start off the business, the franchise will need a loan. If you are a first time franchise owner, Popeyes will pay for your franchise to be built and you will supply the rest. The franchise will get a 5 year loan from Bank of America at a rate of 3.5% with a monthly payment around $7277 per month. The franchise will use most of that money to furnish and get supplies for the franchise. Per year the franchise will make around $300,000-$500,000. If we put all of these factors together. It shows that the Popeyes franchise will be able to attract customers to the franchise and it will be able to survive will these factors.
Now let’s move on to start-up requirements for the franchise. All franchise have some start-up requirements to start the Popeyes Franchise. The start-up requirements include obtaining permits, hire employees, find suppliers, and set up an accounting and record-keeping system.
To start the franchise, we will need to get some permits. The main permits and licenses that the franchise will need are a state license, sales tax permit, and a business license. The franchise needs to have these because these permits and licenses help identify the franchise and make sure the franchise is accountable for its actions, to protect the public health and safety, and to keep track of finances for tax purposes. The cost of these permits and licenses vary. The state license costs around $200, the sales tax permit is around $25, and the cost of the business license is around $200. So in total it would cost about $425.
The next start-up requirement is hiring employees. The franchise needs to have employees to run the place. The company should hire people with characteristics like honesty, responsibility, confidence, and self-reliant. The franchise should also hire people with skills like communication skills, team working skills, and problem-solving skills. To find these employees, we would need to post job listings on the Popeyes website and on third party websites like Monster and Indeed. The employees would go through with an interview. If they are the type of employee that Popeyes is looking for they will be hired and trained. Once employees are hired, the franchise would then need to buy business insurance with the price being around $300 a year.
Finding a good source of inventory is crucial. The franchise needs to line up good reliable suppliers and service providers so you don’t have to sweat the details. At Popeyes, the supplier should have great quality and fresh products. The supplier that we plan on getting is Diversified Food and Seasonings. This is the supplier that Popeyes Headquarters recommends on having. They have a variety of options for the franchise and offer fast shipping to the franchise.