AFC Enterprises Announces Preliminary Third Quarter Earnings in Line With Consensus Expectations

AFC Enterprises Announces Preliminary Third Quarter Earnings in Line With Consensus Expectations

-- Restaurants and Institutions, 10/24/2008 3:13:00 PM

(PRESS RELEASE) ATLANTA--AFC Enterprises, Inc. (Nasdaq: AFCE), the franchisor and operator of Popeyes(R) restaurants, today announced preliminary earnings per share and operational results for its fiscal third quarter which ended October 5, 2008. The Company also announced that its Quarterly Report on Form 10-Q for the third quarter of 2008 will be filed on Wednesday, November 12, 2008, after market close. The Company will host a conference call on Thursday, November 13, 2008 at 9:00 A.M. Eastern Time to review operating results and provide an update on its new strategic plan announced earlier this year.

The Company estimates earnings per diluted share to be $0.16 for the third quarter of fiscal 2008 which is in line with consensus expectations, compared to $0.23 for the third quarter last year.

Total domestic same-store sales decreased 2.8 percent for the third quarter of fiscal 2008 compared to a decrease of 1.9 percent last year, and total global same-store sales decreased 1.9 percent compared to a decrease of 1.7 percent last year.

During the third quarter, the Popeyes system opened 28 new restaurants, including 12 units domestically and 16 units internationally, compared to 32 new restaurants last year. In the quarter, the Company had 24 permanent restaurant closures.

On a system-wide basis, Popeyes had 1,905 units operating at the end of the third quarter, compared to 1,881 units last year. Total unit count was comprised of 1,571 domestic units and 334 international units in 25 foreign countries and two territories. Of this total, 1,849 were franchised and 56 were company-operated restaurants.

Fiscal 2008 Guidance

The Company expects its full year earnings to be $0.75-$0.77 per diluted share which is in the range of the Company's previous guidance.

The Company expects total domestic same-store sales for fiscal 2008 to be at the lower-end of previous guidance of negative 1.0 to 2.0 percent. Consistent with previous guidance, the Company expects global new openings to be 115-130 restaurants and net openings to be 5-15 restaurants.

The Company now expects general and administrative expenses as a percentage of system-wide sales to be approximately 3.3 percent compared to previous guidance of 3.0 to 3.1 percent. This increase in general and administrative expense reflects the Company's investment of $2.3 million in national cable advertising and new menu board development. Additionally, a majority of Popeyes' franchisees have joined with the Company and invested an additional 1% of their sales. This media plan is designed to drive trial of Popeyes' new value, portable and lunch menu products. The shift to national cable has improved the impact of Popeyes' media plans by two-and-a-half times. The Company's investment is consistent with the new strategic plan announced earlier this year.

Cheryl Bachelder, AFC Chief Executive Officer, stated, "We are satisfied with our solid earnings performance in the third quarter, in light of the unprecedented economic challenges faced by our customers and the profitability pressures impacting our restaurant operators. We expect to meet our earnings guidance for the balance of the year, as we operate within the resilient Popeyes business model which continues to deliver stable and predictable cash flows. As we move into 2009, our goal is to remain tightly focused on the four strategic pillars of our plan to build the brand, run great restaurants, strengthen unit economics and align our people and resources to deliver results."