EXHIBIT 99.1
[AFC LOGO]
PRESS RELEASE
AFC REPORTS THIRD QUARTER 2003 OPERATING PERFORMANCE RESULTS
Company Provides Update on Key Business Drivers for Periods 8, 9, and 10 of 2003
ATLANTA, Nov. 4 -- AFC Enterprises, Inc. (Pink Sheets: AFCE), the franchisor and
operator of Popeyes(R) Chicken & Biscuits, Church's Chicken(TM), Cinnabon(R) and
the franchisor of Seattle's Best Coffee(R) in Hawaii, on military bases and
internationally, today announced operating performance results for the third
quarter of 2003, which included the Company's fiscal period 8 (7/14-8/10),
period 9 (8/11-9/7) and period 10 (9/8-10/5). The Company also provided an
update on other key business matters. Results for periods 8 and 9 were
previously announced in a press release dated September 19, 2003.
AFC will host a conference call and internet webcast ( www.afce.com ) with the
investment community at 9:00 AM eastern time on Wednesday, November 5, 2003, to
review the third quarter of 2003 operational results and to provide an update on
the overall business.
Overall Performance
Domestic System-wide Comparable Store Sales
AFC reported that blended domestic system-wide comparable store sales at its
restaurants, bakeries and cafes were down 1.4 percent for the third quarter of
2003, compared to down 2.8 percent for the third quarter of 2002. The Company
continued to see improvements in domestic system-wide comparable store sales,
with the third quarter of 2003 representing AFC's strongest quarterly comparable
sales performance since the second quarter of 2002.
The Company's continued focus on operational enhancements and expanded
promotions helped improve average check for the third quarter of 2003. The
average check in the third quarter of 2003 was up 1.7 percent for Popeyes, 4.5
percent for Church's, and 0.4 percent for Cinnabon.
The following were domestic system-wide comparable store sales by brand for the
third quarter and by periods in the quarter for 2002 and 2003.
Domestic System-wide Comparable Store Sales
P8 P9 P10 Q3
2002 2002 2002 2002
Popeyes (1.9)% (2.6)% (0.7)% (1.8)%
Church's (3.1)% (3.4)% (4.5)% (3.6)%
Cinnabon (9.9)% (9.1)% 0.4% (6.6)%
Blended Domestic System-wide
Comparable Store Sales (3.0)% (3.4)% (2.0)% (2.8)%
Domestic System-wide Comparable Store Sales
P8 P9 P10 Q3
2003 2003 2003 2003
Popeyes (0.9)% (1.2)% (2.3)% (1.5)%
Church's (1.7)% (2.3)% (1.2)% (1.7)%
Cinnabon 1.7% 1.4% (2.3)% 0.4%
Blended Domestic System-wide
Comparable Store Sales (1.0)% (1.4)% (1.9)% (1.4)%
Specific drivers that helped improve comparable store sales in the third quarter
of 2003, in addition to the factors cited in the September 19, 2003, release
included:
- Popeyes revised domestic system promotions and limited time offers with
more favorable price-points and product types such as two different
shrimp offerings and a new bone-in chicken family offering. Part of
this strategy included the brand's concentration on limited time offers
with boneless chicken and seafood products that do not require
discounting of the core menu.
- Church's continued to expand the use of mixed bundles and increased
trade up opportunities with Honey Butter biscuits and limited time
offer dessert items such as lemon fried pies.
- Cinnabon benefited from improvements in captive venue traffic, and its
capture rate of guests improved with such programs as its Caramel
flavor promotion that was the brand's most successful marketing
campaign in 2003.
Brand building initiatives to be implemented for the fourth quarter of 2003 that
compliment those cited in the September 19, 2003 release include the following:
- Popeyes will return its focus to historically successful limited time
offers such as crawfish in November and holiday family bundle offers in
December. In addition, Popeyes will introduce an offering of healthy
alternative products, including Roasted Turkey over vegetable rice,
Roasted Turkey Po'Boy Sandwiches, and the Cajun Turkey program.
- Popeyes has revised its operational support structure to reposition its
talent so that the majority of their time will be spent directly
supporting franchisees in the field.
- Church's will continue to concentrate its menu strategy on flavor and
portability, including product tests of Zesty Tenders, Zesty Tender
Crunchers, Zesty Thigh Fillets, and Texas Chicken.
- Church's will continue to test its new menu-board program, showcasing
trade-up opportunities and help improving speed of service. The
menu-board program is scheduled for a system-wide rollout in the first
quarter of 2004.
- Cinnabon will complete the national product launch of Cinnapoppers(TM),
a bite-sized brown sugar and cinnamon pastry that will be available in
all Cinnabon bakeries in the fourth quarter.
- Cinnabon will continue to expand its licensing initiatives, partnering
with General Mills to introduce the new Cinnabon Cinnamon Streussel
jumbo muffins by Betty Crocker.
AFC reconfirmed its previously projected full-year blended domestic system-wide
comparable store sales of down 2.5-3.5 percent. By brand, both Church's and
Cinnabon have experienced slightly better than expected domestic system-wide
comparable store sales leading the Company to revise the full-year projection
for Church's from down 3.5-4.5 percent to down 3.0-4.0 percent and Cinnabon from
down 5.5-6.5 percent to down 4.0-5.0 percent. However, Popeyes domestic
system-wide comparable store sales have been revised from down 1.5-2.5 percent
to down 2.0-3.0 percent primarily due to the less than expected performance of
certain third quarter limited time offers.
New System-wide Openings
The AFC system opened 69 restaurants, bakeries and cafes during the third
quarter of 2003, compared to 99 total system-wide openings in the third quarter
of 2002. The new unit opening decline over prior year
is primarily a result of a continued cautious approach by franchisees on
building new units due to the current economic climate. In addition, the
temporary suspension of the Company's domestic franchise sales-related
activities has resulted in the loss of opportunities to sell a commitment and
have an opening in the same year. Of the 69 openings in the third quarter, 38
were in international markets and the remaining 31 were domestic.
Unit Openings
P8 P9 P10 Q3 P8 P9 P10 Q3
2002 2002 2002 2002 2003 2003 2003 2003
Popeyes 14 12 17 43 18 8 16 42
Church's 6 5 11 22 1 4 2 7
Cinnabon 2 12 12 26 4 3 4 11
Seattle's Best Coffee(1) 4 1 3 8 0 4 5 9
Total Openings 26 30 43 99 23 19 27 69
(1) SBC units in Hawaii, on military bases and internationally only.
Unit Count*
P8 P9 P10 P8 P9 P10
2002 2002 2002 2003 2003 2003
Popeyes 1,662 1,665 1,672 1,772 1,770 1,776
Church's 1,479 1,480 1,481 1,510 1,511 1,510
Cinnabon 579 590 600 613 615 618
Seattle's Best Coffee(1) 76 77 83 118 119 129
Total Unit Count 3,796 3,812 3,836 4,013 4,015 4,033
(1) SBC units in Hawaii, on military bases and internationally only.
* P10 signifies end of quarter for 2002 and 2003.
On a system-wide basis, AFC had 4,033 units at the end of the third quarter of
2003. The composition of units at the end of the third quarter of 2003 was
comprised of 3,127 domestic units and 906 international units in Puerto Rico and
35 foreign countries. The unit count represented 453 Company owned and 3,580
franchised restaurants, bakeries and cafes.
AFC still projects to record 345-370 new unit openings in 2003. This figure is
comprised of 175-180 Popeyes restaurants, 55-65 Church's restaurants, 70-75
Cinnabon bakeries and 45-50 Seattle's Best Coffee international cafes. The
Company is revising the net new units estimate from 185-210 to 170-195 as the
unit closings are now projected to be approximately 175 for the year. Unit
closings typically occur due to a loss or expiration of lease rights and closing
of under-performing units. Expected closings change throughout the year based
upon whether lease rights are renewed or terminated, and ongoing assessments of
unit performance.
Commitments and Conversions
The Company remains unable to participate in certain domestic franchise
sales-related activities, including the sale of new commitments and the sale of
Company-owned units to franchisees (conversions) because it has not yet
finalized its 2003 franchise offering circulars or renewed its state franchise
registrations, both of which require AFC's 2002 audited financial statements.
AFC will
reengage in domestic franchise sales, including possible select market
conversions to franchisees, after finalizing and filing the 2003 franchise
offering circulars and renewing its franchise registrations. This process will
immediately follow the release of its 2002 audited financial statements and the
release of quarterly 2003 financial statements, as may be required.
At the end of the third quarter of 2003, AFC had a total of 2,405 outstanding
commitments for future development, which included 197 that were signed in 2003.
Due primarily to the domestic franchising constraints, the Company now expects
to sign approximately 350-400 total new commitments for future development in
2003. However, the remaining domestic commitments projected to be signed in 2003
will be dependent on the timing of the filing of the required financial
statements.
"We continue to see improvements in the business demonstrating that our actions
to stimulate performance are having results," said Dick Holbrook, President and
COO of AFC Enterprises. "This has been a challenging year for AFC on many fronts
and I am extremely proud of our team for rising up to this challenge in order to
best position the Company for the future."
Other Key Business Matters
Listing Status
AFC continues to work diligently to complete the restatements and audit
of its financial statements for 2002, 2001, and 2000 and to file its 2002 Form
10-K, as well as its quarterly reports on Form 10-Q for the first three quarters
of 2003, as soon as possible. Upon completion and filing of such statements, the
Company intends to begin the listing application process.
Credit Facility
As previously announced on October 30, 2003, AFC's lenders recently agreed to an
amendment of the Company's credit facility to extend the filing timeline of the
Company's financial statements. The Company's outstanding debt under its credit
facility agreement, net of investments, at the end of the third quarter of 2003
was approximately $126 million versus $218 million at the end of 2002.
Unusual Expenses
AFC is projecting to incur $19-$20 million of unusual expenses in 2003.
This is an increase from the $17-$18 million estimated in AFC's September 19,
2003 press release due to the ongoing costs of the audit process. These unusual
expenses are related to the productivity initiative, the extended audit process
for fiscal years 2002, 2001 and 2000, shareholder litigation and expenses
related to the amendment of the Company's credit facility agreement.
Concluding Remarks
Commenting on AFC's key business matters, Chairman and CEO Frank Belatti
summarized, "I look forward to the conclusion of the audit process. Despite this
near-term challenge, the Company has made significant progress on confronting
obstacles and seizing opportunities. There are numerous accomplishments we are
proud of in the third quarter, including the recovery of our brands' operational
performance, the immediate recognition of savings from the productivity
initiative and recording the lowest debt level in the Company's history. We
continue to identify and address areas in the business that will make us
better."
Corporate Profile
AFC Enterprises, Inc. is the franchisor and operator of 4,033 restaurants,
bakeries and cafes as of October 5, 2003, in the United States, Puerto Rico and
35 foreign countries under the brand names Popeyes(R) Chicken & Biscuits,
Church's Chicken(TM), Cinnabon(R) and the franchisor of Seattle's Best Coffee(R)
in Hawaii, on military bases and internationally. AFC's primary objective is to
be the world's Franchisor of Choice(R) by offering investment opportunities in
highly recognizable brands and exceptional franchisee support systems and
services. AFC Enterprises had system-wide sales of approximately $2.7 billion in
2002 and can be found on the World Wide Web at www.afce.com.
AFC Contact Information:
Felise Glantz Kissell, Vice President, Investor Relations & Finance (770)
353-3086 or fkissell@afce.com
Additional Operational Performance Charts
Total Domestic Comparable Store Sales
Year to Year to
3Q Ended 3Q Ended Date Date
10/6/02 10/5/03 10/6/02 10/5/03
Popeyes
Company (1.0)% (2.7)% 0.9% (1.7)%
Franchised (1.9)% (1.4)% 1.4% (3.1)%
Total Domestic (1.8)% (1.5)% 1.4% (3.0)%
Church's
Company (2.8)% (1.3)% (0.5)% (2.3)%
Franchised (4.1)% (1.9)% (0.6)% (4.3)%
Total Domestic (3.6)% (1.7)% (0.6)% (3.7)%
Cinnabon
Company (4.9)% (1.9)% (1.1)% (8.5)%
Franchised (7.2)% 0.9% (6.7)% (4.3)%
Total Domestic (6.6)% 0.4% (5.0)% (5.1)%
Total (2.8)% (1.4)% 0.2% (3.4)%
New Unit Openings
Year to Year to
3Q Ended 3Q Ended Date Date
10/6/02 10/5/03 10/6/02 10/5/03
Popeyes
Company 1 0 1 1
Franchised 19 25 67 62
Total Domestic 20 25 68 63
International 23 17 57 63
Total Global 43 42 125 126
Church's
Company 1 0 1 0
Franchised 5 2 32 16
Total Domestic 6 2 33 16
International 16 5 29 13
Total Global 22 7 62 29
Cinnabon
Company 2 0 5 0
Franchised 9 4 27 11
Total Domestic 11 4 32 11
International 15 7 35 23
Total Global 26 11 67 34
Seattle Coffee Company(1)
Company 0 0 0 0
Franchised 0 0 0 0
Total Domestic 0 0 0 0
International 8 9 29 35
Total Global 8 9 29 35
Total 99 69 283 224
(1) SBC units in Hawaii, on military bases and internationally only.
New Commitments
Year to Year to
3Q Ended 3Q Ended Date Date
10/6/02 10/5/03 10/6/02 10/5/03
Popeyes
Domestic 10 2 125 37
International 29 0 110 46
Total Global 39 2 235 83
Church's
Domestic 8 0 98 7
International 22 0 48 72
Total Global 30 0 146 79
Cinnabon
Domestic 7 3 65 4
International 1 10 27 22
Total Global 8 13 92 26
Seattle Coffee Company(1)
Domestic 0 0 0 0
International 0 5 30 9
Total Global 0 5 30 9
Total 77 20 503 197
(1) SBC units in Hawaii, on military bases and internationally only.
Unit Count
3Q Ended 3Q Ended
10/6/02 10/5/03
Popeyes
Company 96 88
Franchised 1,277 1,344
Total Domestic 1,373 1,432
International 299 344
Total Global 1,672 1,776
Church's
Company 334 283
Franchised 905 958
Total Domestic 1,239 1,241
International 242 269
Total Global 1,481 1,510
Cinnabon
Company 93 82
Franchised 354 364
Total Domestic 447 446
International 153 172
Total Global 600 618
Seattle Coffee Company(1)
Company 0 0
Franchised 12 8
Total Domestic 12 8
International 71 121
Total Global 83 129
Total 3,836 4,033
(1) SBC units in Hawaii, on military bases and internationally only.
Forward-Looking Statement: Certain statements in this release, and other written
or oral statements made by or on behalf of AFC or its brands are
"forward-looking statements" within the meaning of the federal securities laws.
Statements regarding future events and developments and our future performance,
as well as management's expectations, beliefs, plans, estimates or projections
relating to the future, are forward-looking statements within the meaning of
these laws. These forward-looking statements are subject to a number of risks
and uncertainties. Among the important factors that could cause actual results
to differ materially from those indicated by such forward-looking statements are
the outcome of the ongoing audits, the restatement of the our financial
statements, the delisting of our securities from the Nasdaq National Market,
adverse effects of litigation or regulatory actions arising in connection with
the restatement of our financial statements, the inability to attract and retain
additional qualified management personnel, our ability to comply with covenants
contained in our credit facility, the cost and availability of our principal
food products, labor shortages or increased labor costs, our ability to
franchise new units and expand our brands, our and our franchisees' ability to
successfully operate existing units and open new units, changes in consumer
preferences and demographic trends, competition, general economic, political and
regulatory conditions and the risk factors detailed in our Annual Report on Form
10-K for the year ended December 30, 2001 and the other documents we file with
the Securities and Exchange Commission. You should not place undue reliance on
any forward-looking statements, since those statements speak only as of the date
they are made.