Popeyes 2015 Analyst Day

October 13 | Atlanta, GA

Forward-looking Statement
Certain statements in this presentation contain forward-looking statements within the meaning of the federal securities laws. Statements regarding future events and
developments and our future performance, as well as managements current 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. Examples of such statements in this
presentation include discussions regarding the Companys planned implementation of its strategic plan, planned share repurchases, projections and expectations regarding
same-store sales for fiscal 2015 and beyond, expectations regarding future growth and commodity costs, expectations regarding restaurant reimaging, guidance for new
restaurant openings and closures, effective income tax rate, and the Companys anticipated fiscal 2015 and long-term performance, including projections regarding general
and administrative expenses, capital expenditures and adjusted earnings per diluted share, and similar statements of belief or expectation regarding future events. Among
the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: competition from other restaurant
concepts and food retailers, continued disruptions in the financial markets, the loss of franchisees and other business partners, labor shortages or increased labor costs,
increased costs of our principal food products, changes in consumer preferences and demographic trends, as well as concerns about health or food quality, instances of
avian flu or other disease outbreaks, instances of salmonella or other food-borne illnesses, general economic conditions, the loss of senior management and the inability to
attract and retain additional qualified management personnel, limitations on our business under our 2013 Credit Facility, our ability to comply with the repayment
requirements, covenants, tests and restrictions contained in our 2013 Credit Facility, failure of our franchisees, a decline in the number of franchised units, a decline in our
ability to franchise new units, slowed expansion into new markets, unexpected and adverse fluctuations in quarterly results, increased government regulation, effects of
volatile gasoline prices, supply and delivery shortages or interruptions, currency, economic and political factors that affect our international operations, inadequate protection
of our intellectual property and liabilities for environmental contamination and the other risk factors detailed in the Companys 2014 Annual Report on Form 10-K and other
documents we file with the Securities and Exchange Commission. Therefore, you should not place undue reliance on any forward-looking statements.

Copyright. 2015. Popeyes Louisiana Kitchen, Inc. All rights reserved.

2015 Analyst Day

Schedule

Subject/Event

Presenter

9:00 a.m. 9:35 a.m.

Dare to Serve

Cheryl Bachelder
Chief Executive Officer
Amy Alarcon, Vice President of Culinary Innovation

9:35 a.m. 10:20 a.m.

Inspired Food

10:20 a.m. 10:30 a.m.

Passionate People

10:30 a.m. 10:45 a.m.

Coffee Break

10:45 a.m. 11:30 a.m.

Operations Execution

11:30 a.m. 12:15 p.m.

Popeyes International

12:15 p.m. 1:00 p.m.

1:00 p.m. 1:30 p.m.

Lunch
ONE Technology

1:30 p.m. 2:00 p.m.

Capital Structure

Will Matt
Chief Financial Officer

2:00 p.m. 3:00 p.m.

Closing Remarks
Dessert Reception

Cheryl Bachelder
Chief Executive Officer

Lynne Zappone
Chief People Experience Officer

John Merkin
Chief Operating Officer
Andy Skehan
President International
Will Matt
Chief Financial Officer

Cheryl Bachelder
Chief Executive Officer

Popeyes Story
6

Declare a Daring Destination

The Hottest Concept in Quick Service Restaurants

Declare a Daring Destination

7

We created a plan

Analysts

Guests

Franchisees
Investors

Crew
Shareholders
Management
Employees
Bankers

Managers

Vendors

DO YOU

LOVE

THE PEOPLE YOU LEAD?

Choose to Serve
10

Franchise
Survey
Results

11

THERE ARE NO GREAT LEADERS

WITHOUT GREAT
RESULTS.

12

Popeyes Results

$57

$13

Popeyes Results
13

Seven Years of Consistent Results

14

15

The Next Daring Destination

16

The Next
Roadmap

17

The People
We Serve

18

Photo credit: G. Pasch

The Next Performance Results

19

The Next Horizon

20

Dare to Serve
The Atlanta Chorale

21

Amy Alarcon
Vice President of Culinary Innovation
Inspired Food

To bring the heart and

soul of Louisiana cooking
to the fast food world.

23

Louisiana Roots
Chefs John Folse & Leah Chase

24

Our Louisiana heritage inspires

our innovation
The foods you love,
inspired by the
distinct flavors,
ingredients, and
cooking techniques
of Louisiana

25

Louisiana values inform our innovation

Family
Camaraderie
Savoring Life
Celebration
Creativity
Passion for Food

26

Popeyes menu strategy framework

Foods you love, inspired by the distinct
flavors, ingredients and cooking
techniques of Louisiana

Objective

Key Strategies

Categories
Platforms

Premium quality products

Freshly prepared in-house
Platform product Innovation

Authentic Louisiana flavors

Competitively priced

Strategic: BIC, Boneless, Seafood, Beverages

Secondary: Sides, Desserts

Bonafide: Spicy & Mild

Tenders: Mild, Spicy & Blackened
Seafood: Fish & Shrimp

Beverages: Cane Sweeeet Iced Tea

Signature Sides

27

CROSS-FUNCTIONAL TEAMS WORKING IN HARMONY

Our Innovation Process

28

New product development funnel

Annual Cycle

Ideas
300

Ideas

48

Products

12

Market
Tests

Natl.
Intros

29

The components of successful LTOs

30

Stories are important

Every product should tell a story
The message should create a connection with the
guest and inspire them to visit the restaurant
All roads lead home, our products need to have a
distinctive attribute that reflects our heritage

31

The art of ideation

Marketing

Culinary:
internal
and
external

Agency

Food that tells a

story
32

Who are the players?

Right people,
right place

Popeyes
Culinary
Team

Supplier
Culinary
Teams

Product
Marketing
Team

Agency
Partner

33

Explorers at heart
Each ideation begins with a journey
Dine-arounds and city explorations
spark our creativity and provide
inspiration
In search of a good story

34

The volume of ideas

35

Right brain moves to left brain

Feasibility &
Action

Brainstorming

Action
36

Consumer Check-ins

CCT

CLT

SMT
37

RED STICK CHICKEN | AVERY ISLAND, LA

Following the Path: From ideation to

national launch
38

Avery Island: Home of Tabasco

39

Location as muse

40

Reverence for quality and tradition

41

Time-honored technique

42

The red stick

Le petit bton rouge, aka, the little
red stick, is a painted stick that was
used as a color guide for determining
when the peppers were at peak
ripeness and flavor so they could be
picked and started along the process
Source: Tabasco

of making Tabasco Hot Sauce

43

Idea turns into concept

Features Tabasco as a key ingredient for flavor and heat
New cut of boneless chicken highlights our expertise at presenting
chicken in fun, new and interesting ways that are a breath of fresh
air for consumers
Plays to our strength of hand battering and breading BOH that
delivers a fresh and handcrafted experience

44

Popeyes Red Stick Chicken $3.99

Tender, juicy, all white meat chicken tenderloin strips (the most tender and juicy part of white
meat chicken), marinated in cayenne and tabasco pepper marinade, hand battered and breaded,
then cooked until golden brown and crispy. Served with Cajun Fries, buttermilk biscuit and
Smokn Pepper Ranch for dipping.
45

Transformation

46

Annie Explains

47

Great story = Great message

Going beyond traditional media
Chicken Staredown app
A great product story provides
paths to communication
beyond traditional media

48

SXSW launch

49

Did it work?

Absolutely!
During the Red Stick Chicken LTO we
established a new all-time weekly sales
record for the Brand
Louisiana-inspired FoodPassionResults

50

Lynne Zappone
Chief People Experience Officer
Passionate People

If you are any good at

all, you know you can
do better.
- L. Buckingham
52

Restaurant General Managers experience

Simplify Work

Build Skills

Two key areas of focus for enhanced RGM success 360 support and role
clarification
53

Cultural transformation model

Source: Essential Marketing Models http://bit.ly/smartmodels

54

Leadership Development Framework

55

Lead from the Heart

Day One

Day 1:
The Leader in You
Explore Leadership
Servant Leadership at
Popeyes
Your Values
StandOut Strengths
Assessment
Your Personal Purpose
Identify Your Actions and
Bring it to Life at Popeyes
56

Lead from the Heart

Day Two

Day 2:
Leading the Business
Know the Popeyes
Your Role in Leading the
Business

57

Lead from the Heart

Day Three

Day 3:
Skills for Leading Your Team

Getting to Know Your

Setting Clear Expectations
Coaching and
Follow-up and

58

Early adopter status

Franchise Engagement

Franchise E
Franchise D
Franchise C
Franchise B
Franchise A

Employee Engagement

Guest Engagement

Above
Store
Leader

RGM

Voice of the Guest

Crew

Action plans to drive results

59

Next steps
Capture Early Adopter feedback on each tool and program
Ease of use and impact

Monitor impact on performance

Targeting employee engagement

Field team providing follow up and coaching

Revise tools and launch phased roll out in 2016

60

Break
Webcast will resume in 15 minutes

61

John Merkin
Chief Operating Officer
Operations Execution

Welcome John Merkin

John Merkin
Chief Operating Officer
Over 30 years of Operations and
Development experience
4 years with DineEquity, Inc./IHOP
Restaurants
26 years with Intercontinental Hotels
Group (IHG)

63

We are what we repeatedly

do. Excellence, then, is not
an act, but a habit.
William Durant, historian, philosopher and founder of General Motors

64

What weve learned by listening to

Our Team: Spread too thin to make the most effective impact
Franchisees: Please help me become great
RGMs: Simplify operations; build my skills
Team Members: Set me up for success
Guests: Make the service as good as the food

65

Moving performance

66

Elevating consistency of execution must have a

payoff for our franchisees
Brand
Support
Improved Guest
Experience

Franchisee
Competency
Restaurant

Improved
Franchise
Profitability

General Manager
Engagement

67

High impact opportunities

Structure and Systems
Consistent
Execution

Measure
&
Celebrate

Consistent
Execution

Create
Common
Standards
&
Processes

Drive
Profitable
Sales &
Traffic

Consistent
Execution

Train &
Prepare

Coach &
Inspire

Consistent
Execution

Leverage Technology
68

Brand support
What is being planned to win?
Structure Improvement

Process Improvement

Increase restaurant visits

Introduce multi-level RGM

development

Introduce multi-level training

Increase consultative skills

Drive evaluation process

Look for incremental success

opportunities

Create consequences for

compliance shortfalls

Deliver a standards manual

69

COMPANY RESTAURANTS

Update
70

Highly-franchised business model

Restaurant Count

2010

2014

CAGR

Company

38

65

14.4%

Franchise

1,504

1,740

3.7%

397

509

6.4%

1,939

2,314

4.5%

International
Global

% Franchisee global restaurant

98%

97%

71

Company restaurant goals

Maximize shareholder returns

What a great
Popeyes
looks like

Optimize development and

operations excellence
Control testing platform for
People Practices

72

Company markets
Recent development in Indianapolis & Charlotte

New Orleans
73

New company market

Indianapolis, IN

74

New company market

Charlotte, NC

75

Company restaurant growth

65

67

53
38

40

45

76

Company restaurant sales & profit growth

* Company operated restaurant operating profit is not a GAAP measure, includes rent expenses. Please refer to definitions and reconciliations contained in
the appendix.

77

Improvement plan
New market restaurants
Actions taken
Assessed leadership and team members
Re-established standards and training
Utilized expertise from Heritage Markets
Defined New Market goals
Created market timing maps for development

78

DOMESTIC RESTAURANTS

Development

79

Strong growth in new domestic openings

* 2012 included 2 rest. and 2013 included 24 rest. related to 2012 acquisition

80

New restaurant openings

81

30% opened since 2008

82

Approx. 20% of free-standing restaurants at $1.8MM+

$1.8MM+
$1.8MM+

2010 FS average = $1.1MM

2014 FS average = $1.4MM

Source: 2011, 2015 Popeyes FDD

83

Looking ahead

Raising the bar on Operational Excellence

Leveraging Company Heritage Markets
expertise in new markets
Doubling the Brands U.S. footprint

84

Andrew (Andy) Skehan

President - International
International Update

No matter how many

goals you have achieved,
you must set your sights on
a higher one.
- Jessica Savitch
86

Were growing
Crossed the 500 restaurant threshold
Four years of steadily increasing sales and unit growth
Roadmap strategies proven and effective
Domestic success generating increased interest

87

Over 530 International restaurants

Canada 87
Europe
141 in 6
countries

Latin
77 in 10 countries
and 2 territories

North Asia
123 in 2 Countries
and 1 territory
SE Asia
35 in 4
countries

Middle East 71
in 5 countries
Restaurant count as of 2015 Q2

88

Q2 summary metrics

Comp Sales
Openings
Closings

Q2 Actual
4.4%
19
2

Q2 YTD
5.3%
43
13

89

International same store sales

6.0%
5.0%
4.0%
3.0%

4.7%

5.0%

5.3%

2014

2015 Q2 YTD

2.0%

2.6%
1.0%
0.0%
2012

2013

90

International growth
2012-2015 (as of Q2)
Forecast 85-95

100
90
80
70
60
50
40
30

57

71

81
43

20
10
0
2012

2013

2014

2015YTD + Fcst

91

INTERNATIONAL

Roadmap

93

2015 INTERNATIONAL

Build Distinctive Brand

Define and Differentiate

Objective

Strategy
Description

Grow Same Store Sales and Average Unit Volumes

Utilize local cultural insights to develop unique and memorable brand

advertising creative. Build awareness and generate trial by promoting
early television advertising through co-investment.

94

Build Distinctive Brand

Define and Differentiate
MARKET

TURKEY

Insight

Marination =
Well
Mannered

Brand
Connection

12 Hours of
Marination

Local
Adaptation

95

TURKEY
96

Build Distinctive Brand

Define and Differentiate
MARKET

TURKEY

MIDDLE
EAST

Insight

Marination =
Well
Mannered

A Man Eats
as much as
He Does

Brand
Connection

12 Hours of
Marination

Bolder,
Flavorful
Food

Local
Adaptation

97

MIDDLE EAST

98

Build Distinctive Brand

Define and Differentiate
MARKET

TURKEY

MIDDLE
EAST

SINGAPORE

Insight

Marination =
WellMannered

A Man Eats
as much as
He Does

Fine = City
and Chicken

Brand
Connection

12 Hours of
Marination

Bolder,
Flavorful
Food

Superior
Tasting
Chicken

Local
Adaptation

99

SINGAPORE

100

Build Distinctive Brand

Define and Differentiate
MARKET

TURKEY

MIDDLE
EAST

SINGAPORE

Insight

Marination =
WellMannered

A Man Eats
as much as
He Does

Fine = City
and Chicken

Brand
Connection

12 Hours of
Marination

Bolder,
Flavorful
Food

Superior
Tasting
Chicken

Local
Adaptation

101

Create memorable experiences

Popeyes Delivers

Objective
Strategy
Description

Grow sales through the introduction and

support of home delivery
Build a comprehensive Delivery support program by
providing solutions addressing call center
management, online ordering, operational
execution, marketing support and monitoring
mechanisms

102

INTERNATIONAL

Development

Growth channels

Existing
Markets

Optimize development agreements

Pursue new or additional franchise partners to
fill market gaps

Adjacent
Markets

Leverage regional infrastructure

Build on regional interest and awareness

New Markets

Target high potential QSR markets

Seek best in class partners
Consider equity as a growth catalyst

104

Development considerations
General and prevalent interest in chicken QSR

Domestic success driving quality interest in Popeyes

International improvement reinforcing that interest

PLKI seen as a highly competitive alternative

105

Summary
International

Brand and product travel well

Advertising support is working well and will continue
Steady and improving sales and unit growth
Popeyes is an attractive CQSR option

106

William (Will) Matt

Chief Financial Officer
ONE Technology | Capital Structure

We have to be continually
jumping off cliffs and growing
our wings on the way down
- Kurt Vonnegut
108

Why ONE Technology?

Technology in its current state is an impediment
Information distribution across multiple systems is inefficient
Without ONE Technology, it is impossible to achieve our
aspirational vision of world-class customer service and $2.0mm
AUVs

109

The next horizon

ONE Technology is a BOLD transformational initiative to upgrade technology in all restaurants

CRITICAL ENABLERS

Superior
guest
experience

Engaged
franchisee,
RGM, crew
High
operating
standards

Consistent
execution

ONE Technology
110

ONE Technology: The challenge

Over 40 different POS systems in place today
POS standardization is a prerequisite

Each color segment represents a different system

111

ONE Technology
More than just POS
One of each component is optimal

Two or more of each is unmanageable

Keeping it manageable
112

Balancing three key areas

1

Seismic Technology shifts are

affecting how consumers transact
and obtain brand information

Technology provides new ways to

hire, train and communicate to our
people

Guest
Experience

Employee
Experience

RGM Experience
Essential systems for the RGM to
lead consistent execution, efficiency
and ease of operation

3
113

The What
One Standardized
Technology Platform

Centralized Data Management,

Configuration & Support

Centralized Technology
Procurement

Modular, best-of-breed approach;

allows us to focus on and solve for one
set of integrations

Popeyes-dedicated resources focused

on optimizing all systems for Popeyes
operations

Leverage our collective size to get the

best pricing on all technology products
and services

Includes all in-restaurant technology;

not just POS

One-push deployment of updates and

enhancements to all restaurants
simultaneously

Eliminate the need for each franchisee

to fend for the themselves in the IT
marketplace

Provides common infrastructure

needed for online ordering, mobilepayment, etc.

Get franchisees out of the I.T. business

so they can focus on running great
restaurants

Total alignment between our business goals and our technology

114

Future possibilities
Project
ONE Technology
Franchisee Experience

Integrated technology
Platform
Data Management and
Support
One-Push Deployment
of Updates
Centralized
Procurement
for Best Pricing
Provide world-class
service to our Franchisee
Partners

RGM Experience

Labor Scheduling
Production Planning
Inventory
Management
Paperless Ordering
Process
Integrated Dashboards
and Analytics
Support Service Speed

Simplify and support the

role of Restaurant General
Manager

Employee Experience

Training
Online Work Schedules
Paperless Applications
News Updates
Performance and
Talent Tracking
Real-Time Feedback
Daily Routines
Provide new ways to hire,
train and communicate
with our people

Guest Experience

Mobile Ordering and

Payment
Online Pick-Up
Catering
Delivery
CRM
Mobile Couponing
Social Media

Consumer-facing
technology is changing the
QSR experience
115

What to expect next

Scope

RFP
Process

Talent

Timing

116

FINANCIAL UPDATE

Capital Structure

Organic growth initiatives funded first,

financial strategies as a supplement
Inspired Food

Passionate
People

Operations
Execution

Drivers of the Business

ONE Technology

Supplemental to
Business Drivers

Financial
Strategies
Capital Structure
Changes
118

Strategies considered and analyzed

Franchise Development
Company Development
Refranchise Company Restaurants
Purchase Franchisee Restaurants
M&AAcquire Another Restaurant Concept
International FranchiseMedia Investment
International Franchise/Equity
International Traditional Joint Venture
International Equity
Leveraged Share Repurchase
Dividends
119

Balancing investment time horizons

Short-term
Investor

Long-term
Investor

Popeyes
Franchisor

Popeyes
Franchisees

1-5 years

5-10 years

10 years

20 years

Our shareholders

Must balance
interests between

Our owners

Our highly-franchised model (97%) results in an investment that is very attractive to our investors

With our franchisees investing approximately $1.4 to $2mm per location, signing 20-year franchise
agreements and typically providing personal guarantees, our investors enjoy an "asset light" model

All these favorable investment characteristics are predicated on the continued long-term health of our
franchisees

We have to balance the interests of our shareholders with that of our number one customer our
franchisees

120

Our franchised model delivers

steady, free cash flow ($M)
$60.0

$48.0

$50.0

$42.0
$36.7

$40.0
$30.0

$23.7

$26.3

$31.3

$28.5
$24.2

$20.0
$10.0
$2009

2010

2011

2012

2013

2014

YTD Q2 2014

YTD Q2 2015

121

Cash usage history

Share Repurchases ($M)
$50.0
$40.0
$30.0
$20.0
$10.0

$15.4

$20.3

$200

$40.0

$39.4
$22.3

$19.0

$15.2
$-

Total Debt Outstanding ($M)

$250

$19.9

$26.0

$-

$2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD
Q2
2015

In addition to the special dividend in 2005 of

approximately $350 million, we have repurchased
over $215 million of outstanding shares since 2005

$150
$100

$191
$134 $133

$119

$110 $110
$83

$66

$64

$73

$67

$50
$2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD
Q2
2015

Total Leverage Ratio was 1.3 to 1.0 at

the end of Q2 2015. Our weighted
average interest rate was 2.5%

122

Capex investment history

Capex increased during 2013 and 2014 as we have funded company restaurant
development and completed the opportunistic purchase of two markets.
$35.0

$32.8

$30.0

$27.8

$26.2

$25.0
$20.0
$15.0
$10.0

$7.9

$7.6
$3.2

$5.0

$1.4
$0.0

2009

2010

2011

2012

2013

2014

YTD Q2
2015
123

Popeyes current capital structure

Debt

Equity

$110MM Outstanding

Total debt capacity under the current facility $250MM

5 yr. All Bank Revolving Credit Facility

o

Common Stock ~23.0 million shares

outstanding

Market Cap Q2 2015 ~ $1.3BN

Maturity Date Dec. 2018

Weighted Average Interest Rate Base ~(2.50%)

80% fixed, 20% floating interest currently

Interest rate locked on fixed portion 2015-2017

Limited, flexible covenant package

o

Total Leverage Ratio (TLR) < 3.5 to 1.0

Minimum Fixed Charge Coverage Ratio > 1.25 to 1.0

We can repurchase shares when the TLR < 3.0 to 1.0

124

Capital Structure decision principles

Support the operating needs of the business

Organic growth initiatives are funded first and any excess cash or debt capacity could
be used to return cash to shareholders

We provided guidance we would increase our leverage to 2.5x to 3.5x over the period
from 2015 to 2017

Capital structure strategies are used to support the business and are not the drivers
of the business

Credit facility decisions are primarily based on: 1) Flexibility, 2) Total Costs, 3)
Simplicity and 4) Fit with the size and operating characteristics of the business

125

Share repurchase decision principles

Share repurchases are currently
favored over dividends due to:

Share repurchase decisions are

guided by consideration of:

EPS benefit of share repurchases

Availability of excess cash flows

Our current growth trend would favor

reinvestment to support organic growth

Intrinsic value
Share price (P/E multiple)
Interest rates
EPS accretion

Share repurchases have been consistently made in the past and we plan
to continue to make share repurchases in the future

126

Share repurchase general guidelines

Incorporating share price, interest rate and EPS accretion
Consider repurchasing shares when the share price and interest
rate could generate a positive EPS
Evaluate repurchase decisions to serve the best interests of our
shareholders and the company
Determine the amount and timing of levered share repurchases
based on market conditions

127

Capital Structure
Changes planned during 2016-2017
Plan to go into the traditional bank markets and negotiate a new credit facility
Could supplement share repurchases from excess operating cash flows with share
repurchases from borrowed funds
Seeking Board approval of our 2016 Plan, including planned capital structure changes
Plan to issue guidance in early 2016

128

Significant market cap growth

since 2008
Improvements in Earnings and increasing our P/E Multiple
have driven our Market Cap and Share Price
$1,400

$56.03

October 5, 2015 Update:

Share Price $56.29

Market Cap $1.3B

$1,200
$1,000

$38.55

$1,300

$24.83
$916

$600
$400

$14.76

$14.88

$378

$363

$8.38
$4.37

$30.00
$20.00

$596

$10.00

$213
$111

$-

2008
P/E

$50.00
$40.00

$800

$200

$60.00

5.8

$-

2009
11.3

2010

2011

16.4

15.3

2012
20.0

2013
26.8

Q4 2014
34.0
129

Closing Remarks
2015 Analyst Day
October 13, 2015

Key investment highlights

Highly-franchised system
Growing market share
Consistent, reliable cash flow
Strong unit economics
Collaborative relationship with franchisees
Steadily growing restaurant development
Opportunity to double U.S. restaurants
Untapped International growth

131

The Next Horizon: Your Questions?

132

APPENDIX

Non-GAAP Reconciliations

Reconciliation of Non-GAAP Financial Measures

Adjusted earnings per diluted share, Operating EBITDA and Free cash flow supplemental nonGAAP financial measures. The Company uses Adjusted earnings per diluted share, Operating
EBITDA and Free cash flow in addition to net income, operating profit and cash flows from
operating activities to assess its performance and believes it is important for investors to be
able to evaluate the Company using the same measures used by management. The Company
believes these measures are important indicators of its operational strength and the
performance of its business. Adjusted earnings per diluted share, Operating EBITDA, and
Free cash flow as calculated by the Company are not necessarily comparable to similarly
titled measures reported by other companies. In addition, Adjusted earnings per diluted
share, Operating EBITDA and Free cash flow: (a) do not represent net income, cash flows
from operations or earnings per share as defined by GAAP; (b) are not necessarily indicative
of cash available to fund cash flow needs; and (c) should not be considered as an alternative
to net income, earnings per share, operating profit, cash flows from operating activities or
other financial information determined under GAAP.

Adjusted Earnings Per Diluted Share

The Company defines adjusted net income for the periods presented as the Companys reported net income after adjusting for certain non-operating items consisting of the following:

a)

other expense (income), net, which included $0.1 million net loss on disposals of fixed assets for the twenty eight weeks ended July 12, 2105 and July 13, 2014, $0.2 and $0.4 million in executive transition
expenses in the twenty eight week period ended July 12, 2105 and July 13, 2014, respectively, and

Other income of $0.4 million for recoveries under the Deepwater Horizon Economic and Property Damages Settlement Program for the twenty eight week period ended July 12, 2015 and the tax effect of
these adjustments at the effective statutory rates.

b)

fiscal 2014, $0.5 million in tax expense for an out-of-period adjustment to the Companys deferred tax liability associated with its indefinite lived intangible assets as discussed in Note 2 to the Condensed
Consolidated Financial Statements;

c)

fiscal 2013, $0.4 million in interest expenses from the retirement of the 2010 Credit Facility fiscal 2012, $0.5 million in legal fees related to licensing arrangements;

d)

fiscal 2011, $0.5 million in accelerated depreciation related to the Companys relocation to a new corporate service center;

e)

fiscal 2010, $0.6 million in interest charges associated with the retirement of the Companys 2005 Credit Facility, and a $1.4 million tax audit benefit related to the completion of a federal income tax audit for
years 2004 and 2005;

f)

fiscal 2009, $1.9 million in interest charges associated with the Companys 2005 Credit Facility amendment; and

g)

the tax effect of these adjustments.

Adjusted earnings per diluted share provides the per share effect of adjusted net income on a diluted basis. The following table reconciles on a historical basis for fiscal years 2009 through 2014 and the
sixteen week periods ended April 19, 2015 and April 20, 2014, the Companys adjusted earnings per diluted share on a consolidated basis to the line on its consolidated statement of operations entitled net
income, which the Company believes is the most directly comparable GAAP measure on its consolidated statement of operations:

(in millions, except per share data)

Net Income
Other expense (income), net
Interest expense associated with credit facility retirements and amendments
Legal fees related to licensing arrangements
Accelerated depreciation related to the Company's relocation to a new Global
Service Center
Tax audit benefit
Tax effect
Adjusted earnings
Adjusted earnings per diluted share
Weighted average diluted shares outstanding

YTD Q2 2015
2015
2014
$ 23.9 $ 19.4
(0.2)
1.5
-

Fiscal
2014
$ 38.0
1.2
-

Fiscal
2013
$
34.1
0.3
0.4
-

Fiscal
Fiscal
2012
2011
$
30.4 $
24.2
(0.5)
0.5
0.5
-

0.1
$ 23.8

0.5
(0.6)
(0.5)
$ 20.3 $ 39.2 $

(0.3)
34.5 $

30.4

$ 1.02
23.3

$ 0.85
23.8

1.43
24.1

1.24
24.5

$ 1.65
23.8

$
$

Fiscal
2010
$
22.9
0.2
0.6
-

Fiscal
2009
$
18.8
(2.1)
1.9
-

0.5
(0.5)
24.7 $

(1.4)
(0.3)
22.0 $

0.1
18.7

0.99
25.0

0.86
25.5

0.74
25.4

Operating EBITDA
The Company defines operating EBITDA as earnings before interest expense, taxes, depreciation and
amortization, and other expenses (income), net. The following table reconciles on a historical basis for year to
date period through the second quarter 2015 and year to date period through the second quarter 2014, the
Companys operating EBITDA on a consolidated basis to the line on its condensed consolidated statement of
operations entitled net income, which the Company believes is the most directly comparable GAAP measure.
Operating EBITDA margin is defined as operating EBITDA divided by total revenues.

Q2
($M)

2015

2014
$23.9

$19.4

Interest expense, net

1.9

1.6

Income tax expense

14.8

11.8

Depreciation and amortization

5.2

4.6

Other expenses (income), net

(0.2)

1.5

$45.6

$38.9

$138.9

$123.8

32.8%

31.4%

Net income

Operating EBITDA
Total revenues
Operating EBITDA margin

Copyright. 2015. Popeyes Louisiana Kitchen, Inc. All rights reserved.

Free Cash Flow

The Company defines free cash flow as net income plus depreciation and amortization plus stock-based compensation expense minus maintenance capital
expenditures which includes:

a) for the twenty eight weeks ended July 12, 2015, $06 million of information technology and other corporate assets, and $0.4 million in other capital assets to
maintain, replace and extend the lives of Company-operated restaurant facilities and equipment; and
b) for the twenty eight weeks ended July 13, 2014, $0.6 million in Company-operated restaurant reimaging, $1.4 million of information technology and other
corporate assets, and $0.7 million in other capital assets to maintain, replace and extend the lives of Company-operated restaurant facilities.
c) for fiscal 2014, $0.6 million in company-operated restaurant reimages, $0.8 million of information technology hardware and software and $2.6 million in other
capital assets to maintain, replace and extend the lives of company-operated restaurant and corporate facilities and equipment;
d) for fiscal 2013, $2.2 million in company-operated restaurant reimages, $0.9 million of information technology hardware and software and $1.1 million in other
capital assets to maintain, replace and extend the lives of company-operated restaurant facilities and equipment;
e) for fiscal 2012, $0.6 million in Company-operated restaurant reimages, $1.1 million of information technology projects and $1.5 million in other capital assets to
maintain, replace and extend the lives of Company-operated restaurant facilities equipment,
f) for fiscal 2011, $1.5 million in Company-operated restaurant reimages, $0.8 million of information technology projects and $0.5 million in other capital assets to
maintain, replace and extend the lives of Company-operated restaurant facilities and equipment.,
g) for fiscal 2010, $1.4 million for information technology projects, $1.2 million for reopening a company-operated restaurant in New Orleans and restaurant
reimaging and corporate office construction, and $0.6 million in other capital assets to maintain, replace and extend the lives of company-operated QSR
equipment and facilities; and
h) for fiscal 2009 $0.3 million for information technology projects, and $1.1 million in other capital assets to maintain, replace and extend the lives of companyoperated restaurant facilities and equipment.

The following table reconciles on a historical basis for year to date period through the second quarter 2015, the year to date period through the second quarter
2014 and fiscal years 2009 through 2014 the Companys free cash flow on a consolidated basis to the line on its condensed consolidated statements of
operations entitled net income, which the Company believes is the most directly comparable GAAP measure on its condensed consolidated statements of
operations. Free cash flow margin is defined as free cash flow divided by total revenues

(in millions)

Net income
Depreciation and amortization
Stock-based compensation expense
Maintenance capital expenditures
Free cash flow

YTD Q2
2015
2014
$
23.9
$ 19.4
5.2
4.6
3.2
2.9
(1.0)
(2.7)
$
31.3
$ 24.2

Fiscal
2014
$ 38.0
8.7
5.3
(4.0)
$ 48.0

Fiscal
2013
$
34.1
6.7
5.4
(4.2)
$
42.0

Fiscal
2012
$
30.4
4.6
4.9
(3.2)
$
36.7

Fiscal
2011
$
24.2
4.2
2.9
(2.8)
$
28.5

Fiscal
2010
$
22.9
3.9
2.7
(3.2)
$
26.3

Fiscal
2009
$
18.8
4.4
1.9
(1.4)
$
23.7

Company Operated Restaurant

Operating Profit
The Company defines Company-operated restaurant operating profit as sales by Company-operated restaurants
minus restaurant food, beverages and packaging minus restaurant employee, occupancy and other expenses.
The following table reconciles on a historical basis for the twelve week and twenty-eight week periods ended
July 12, 2015 and July 13, 2014 , respectively, Company-operated restaurant operating profit to the line item
on its condensed consolidated statement of operations entitled sales by Company-operated restaurants, which
the Company believes is the most directly comparable GAAP measure. Company-operated restaurant operating
profit margin is defined as Company-operated restaurant operating profit divided by sales by Company-operated
restaurants.
YTD Q2
($M)

2015

2014

Sales by Company-operated restaurants

$59.8

$51.7

Restaurant food, beverages and packaging

19.4

16.9

Restaurant employee, occupancy and other expenses

28.0

24.6

$12.4

$10.2

20.7%

19.7%

Company-operated restaurant operating profit

Company-operated restaurant operating profit margin

Copyright. 2015. Popeyes Louisiana Kitchen, Inc. All rights reserved.