Popeyes Pays $43 Million For Its Own Recipes

Popeyes now owns the delicious rights to its own recipes. (Blue387)

Popeyes now owns the delicious rights to its own recipes. (Blue387)

It might seem completely irrational for a fast-food company to not own the recipes that it uses every day, but that’s exactly what fried chicken place Popeyes has been doing for the last 23 years. The company has been paying an outside company $3.1 million per year in royalties for certain recipes that are crucial to its business, and recently paid $43 million for the rights to them.

If you’re wondering how this happens and how you can get into the rent-a-recipe business, it helps to know that the company that owned the recipes was started by the chain’s founder, Al Copeland, in 1984. Diversified Foods and Seasonings is a separate entity that sells most of the food that a Popeyes franchisee needs, from biscuit mixes to chicken batter to premade soups and macaroni and cheese.

In 1994, the company filed for bankruptcy and reorganized, and Copeland was ousted from the company he founded. He got to keep some Popeyes franchises…and DFS, the company with the contract to supply Popeyes restaurants with, well, food and seasonings. The recipe royalty was actually a “spice royalty” for the rights to use the recipes for those spice blends and mixes.

DFS still holds the exclusive contract to supply spice mixes and other products to Popeyes franchisees, but the company now owns its recipes. The $43 million figure was calculated based on the amount that Popeyes would have paid in royalties for the next 15 years.

Popeyes Buys Its Recipes for $43 Million. Wait, Popeyes Didn’t Own Its Recipes? [Bloomberg Businessweek]