The Time Popeyes Nearly Went Bankrupt

Popeyes is one of the world's most successful fast food restaurant chains. Per ScrapeHero, there are 2,822 Popeyes locations around the globe. While that pales in comparison to some of the competition, like Kentucky Fried Chicken's over 25,000 locations, Popeyes is still a titan in the fast food chicken field.

The restaurant's history isn't without its low points, however. The story of loving chicken from Popeyes includes a moment in which the love almost ended. Over three decades ago, the restaurant filed for bankruptcy and had to reassess all of its operations to survive. Chain restaurants fail for many different reasons, but bankruptcy doesn't have to be the ultimate end. In some instances, the restaurants can actually come back stronger due to restructuring and unloading debt. Popeyes is an example of a chain that has bitten the bullet to file for bankruptcy and sprung back to life, per The Daily Meal.

The Daily Meal says that in 1991, Popeyes declared bankruptcy. At the time, the company was in default on nearly $400 million in debt, according to Popular Timelines. What got them into the situation? For the most part, it was a rapid expansion plan that proved overambitious. Popular Timelines reports that through a franchising model, the restaurant chain grew from a single location in 1976 to over 500 locations in both Canada and the United States in 1985. Hundreds of more franchises opened over the next few years, too.

While franchising fees covered part of that expansion, it also took on debt to finance the rapid growth. At that point, the company had a serious case of expansion fever. In 1989, the company took on even more debt against its future profits to acquire another chicken restaurant chain, Church's Chicken. Popeyes profits failed to keep up with debt service costs. As a result, the company filed for bankruptcy protection in 1991. Late the following year, the chain began its recovery through bankruptcy.

Popeyes' recovery is about much more than its chicken sandwich, which is purportedly among the best chicken sandwiches in the United States. According to Popular Timelines, the company reemerged in October of 1992 as America's Favorite Chicken Company, Inc. (AFC) Since then, the company has been more strategic about its opportunities — in 2001, AFC went public, bringing in a massive infusion of cash. Instead of diving headlong into more reckless growth, though, the company has stuck to a measured strategy.

Popular Timelines also lays out that in 2004, that strategy included unloading Church's and focusing its business on the Popeyes brand. Since 2000, Popeyes has made changes to its domestic menu and opened limited franchise locations in Asia, Europe, and Mexico. For many fans of Popeyes, nothing has been more iconic in those menu makeovers than its now-famous chicken sandwich, introduced in 2019. The hype for the sandwich was so frenzied that Vice reports that one man resorted to armed robbery to try to get one. If not for carefully navigating the bankruptcy process in the early 1990s and some clever moves since, guests at Popeyes might never have gotten to try that sandwich at all.