The Popeye’s Chicken Sandwich has been all over social media for the past 2 weeks. It has been argued about, starred in many memes, and even trended higher than global news like the Amazon’s destructive fires. However, due to inaccurate projections and lousy inventory management, the Popeye’s Chicken Sandwich reign will quickly fall, and the buzz will die down.
In the words of the highly esteemed poet Biggie Smalls, their “reign on the top was short like leprechauns.” As a business owner, running out of products quicker than demand hurts your revenue. Not only does it limit your ability to fulfill all of your potential orders, but it also creates distress in your customer’s experience.
In this article, we will dissect the phenomenon of the Popeye’s Chicken Sandwich. We will discuss what went right and wrong in the last few weeks to help both new and established business owners avoid similar inventory fallouts. After reading this article, business owners should be confident in reaching their maximum revenue potential by successfully managing inventory and keeping customers happy.
What Is Inventory Management?
Projections are essential when starting any business. Whether financial projections or customer acquisition rates, having accurate forecasts for your company will do is imperative to success. With a product-based business, however, inventory management is one of the most important things you can understand.
Inventory management is the supervision of non-capitalized assets (inventory) and stock items. A component of supply chain management, inventory management supervises the flow of goods from manufacturers to warehouses and from these facilities to point of sale. When managing inventory, you must first understand how many products are needed, the supply and demand. (SearchERP)
Supply and demand is the amount of a commodity, product, or service available and the desire of buyers for it, considered as factors regulating its price (Merriam-Webster). When determining the supply and demand of your products, consider things such as your website traffic, conversion rate, amount of similar products purchase per day at your store, and the number of competitors available to fulfill the demand.
With each sale projection, there should be a best-case and worst-case scenario. You must have explicit knowledge of how long it takes for you to replenish supplies. Create a minimum stock quantity that will allow for you to not run out of your products before you, or your suppliers can replace your products.
What went right:
The attention-grabbing twitter beef between Popeyes and Chick-fil-A helped to push the sandwich off the menu into the mouths of many raving customers. In an attempt to be involved in the most significant brand war in our lifetime, customer reviews helped to create record-breaking lines to the chain for only one thing; That darn chicken sandwich.
Anyone who’s ever lived in Los Angeles has seen long lines around a fast-food drive-thru before. In-and-Out has mastered the art of the wait. And, in my opinion, had the market cornered on ridiculous customer lines. However, the lines for Popeyes hit an all-time high. The sandwich had been crowned better than Chick-fil-A, though jokes of the establishment being far more “ratchet” had been made extensively through social media as well.
The coverage of the chicken sandwich from Twitter and Popeye’s customers resulted in a whopping $23M in free press. Just in advertising dollars alone, the sandwich had outperformed to company’s wildest dreams, which is why things went wrong.
What went wrong:
The Popeye’s Chicken Sandwich hit the market on August 12th, 2019 and had entirely sold out by August 27th, 2019. In this case, Popeye’s had created only enough sandwiches to fulfill its projected sales through September, not expecting the war to go viral. Popeye’s took to Twitter with a post stating “Y’all. We love that you love The Sandwich. Unfortunately we’re sold out (for now).”
Y’all. We love that you love The Sandwich. Unfortunately we’re sold out (for now). pic.twitter.com/Askp7aH5Rr
— Popeyes Chicken (@PopeyesChicken) August 27, 2019
Customers responded to the post with both amusement and anguish. Some customers demanded that the company needed to bring the sandwich back because they hadn’t had the opportunity to try them. Other customers even went as far as to offer to bring their own bread to Popeye’s, hilariously leaving the fast-food chain solely responsible for providing the chicken and toppings.
The selling-out of the product was so ill-received customers accused Popeye’s of pretending to sell out as a marketing gimmick. Maybe they were passively conceding to Chick-fil-A in the “Chicken Sandwich War?” The CEO of the company went to CNN to assure customers that they were indeed sold out.
“The demand for the new Chicken Sandwich in the first few weeks following its launch far exceeded our very optimistic expectations,” a Popeyes spokesperson told CBS News in a statement. “In fact, Popeyes aggressively forecasted demand through the end of September and has already sold through that inventory. We, along with our suppliers, are working tirelessly to bring the new sandwich back to guests as soon as possible.” (CBS News)
What happens when you oversell products:
Overselling products, while it can be something to be proud of (Yay, I sold out), it can have an extremely negative impact on your business. When you lose the ability to fulfill your product demand, you negatively impact your sales momentum, customer experience, and competitor advantage.
In the next few sections, we will dive into each of these results and how they impact your brand reputation and customer loyalty.
Momentum (Riding the Wave)
When you have a product that many customers want, this gives you a huge opportunity to secure new clients and create brand loyalty. The original product acts as an introduction to customers who had limited interactions with your business.
As a business owner, this is an opportunity to sell, up-sell, cross-sell, and secure the customer’s business in a way that will cause them to come back. By doing this, you are now expanding your community of customers who are then able to become free brand advocates.
When you run out of products, your brand’s momentum comes to a dead halt. You are not longer able to supply the needs of your customers. The inconsistency forces the customer to either settle for something that they didn’t initially want or to go somewhere else for something similar. In the case of boutiques, customers can even a competitor offering the same product.
Customer Experience (Managing Disappointments)
Most purchasing decisions are emotionally driven. As a brand, customer disappointment is a hard feeling to shake. Once a customer feels that the brand is inconsistent or unable to supply their needs, they are most hesitant to attempt to purchase from them again.
When you disappoint customers, whether it is with inventory or customer service, they are likely to stop patronizing your business. Customers like to leave a brand experience feeling satisfied, and as the old saying goes, “if you cannot do it, someone else will.”
Leading customers to competitors (Fulfilling the Demand)
Whether a customer wants a chicken sandwich or a white dress, a specific companies inventory doesn’t influence the customer’s decision to purchase. Instead, it impacts the customer’s decision on where to buy it. This is amplified when there is direct competition, as in the case of the Popeye’s Chicken Sandwich.
Popeye’s vastly underestimated the demand of their custom-made chicken sandwich, resulting in a huge revenue opportunity for its competitor Chick-fil-A. The competitor now has the opportunity to gain all of Popeye’s customers looking to curb their chicken sandwich craving.
This happens in small businesses all of the time when they miscalculate their buying and have poor inventory management. When you run out of products quickly, especially in the span of days, you lose the ability for your customers to advocate for you.
71% of consumers are more likely to make a purchase based on social media referrals (AnnexCloud). Customers are unable to successfully refer friends and family to your brand if you are unable to offer the same experience to them. It is more likely that a customer will not buy from your business at all, rather than purchase something else when you are unable to supply their needs.
Again, we see this glaringly with Popeye’s today. Popeye’s has plenty of other products on the menu that customers can buy. The company prepares many of these products in precisely the same way. Still, the hype has died down, and the number of people standing in line has dwindled.
Instead of raking in cash from genius marketing, Popeye’s now has to deal with angry customers attempting to buy a product that is no longer available.
What can you do to make sure this doesn’t happen to your business?
To avoid what will go down in history as the Popeye’s Chicken Sandwich fiasco, you must create an iron-clad inventory management system for your business.
To create this system, do the following steps:
- Understand the demand for your products
- Set up par levels for your products
- Prioritize your products
- Regularly audit inventory
- Supplement with dropshipping when possible
Understanding Product Demand
For new businesses, figuring out product demand can be daunting. Using free tools like Google Trends, you see how many people are looking for products like those you offer. The trend maps, which are based on the Google searches of your potential customers, will allow you to determine when your products will be popular and how often people are looking for them.
If you already have made sales in your business, you can look at past metrics. Measure what products sold the most, how quickly they sold out, and how much stock you generally had of each.
Use these metrics to understand how much of the products you should order for the business. After calculating the demand, create par levels for your products to keep you from running out.
Setting Up Par Levels
Par levels are the minimum stock levels of your products. These levels are determined by the least amount of inventory needed to meet the demands of your customers with a delay in fulfillment.
To ensure you do not run of out stock of your revenue-driving products, create a list of:
– the lead-times for your suppliers to replenish each product
– when the products will expire or be out of season
– how often you sell each product monthly
This will successfully determine the par levels of your products.
Prioritize Your Products
For product-based business, using ABC analysis allows you to prioritize your inventory. This is great when determining where to allocate your buying budget and marketing dollars.
- A items: Products that sell most regularly. These will be your revenue drivers.
- B items: Products that don’t sell frequently but cost more to hold in stock. These are products with lower profit margins or higher buying costs.
- C items: Low-value items. These are items that take up a lot of warehouse space have minimal contribution to your bottom line.
After ranking your products, you will be able to see which products you should regularly restock and which you shouldn’t. Items in the A category will make the bulk of your products on the restock list.
Regularly Audit Inventory
Depending on your sales volume, you should create an inventory audit schedule for your business. These audits can happen monthly or seasonally. The more accurate your projections, the longer you can go without auditing your inventory.
Using centralized inventory management systems like your Shopify or WooCommerce stores, help you to see your inventory in realtime. They are equipped with features that automatically alert you when products need to be restocked, alleviating some stress.
For brands that create products in-home, it is essential to have both an inventory management system for finished goods and raw materials. Having both allows you to reorder the raw materials early enough to ensure that you do not run out of stock of the final product.
Supplement With Dropshipping
Utilize dropshipping when you are unable to purchase enough products the keep with the demand of your customers. This eliminates the need for keeping inventory in your store while minimizing costs.
Dropshipping select products from your store can help lower your inventory management burden by placing some responsibility on the manufacturer.
In conclusion, selling products is great. Selling out too quickly is not. While it is easy to get caught up in the entertainment of things like the Popeye’s Chicken Sandwich fiasco, and the twitter wars it comes with, as a business owner you should look carefully at mistakes made by Fortune 500 companies. Because let’s face it, they can afford it and as a small business, you cannot.
Create a strong inventory management system for your brand in order to continue to deliver amazing customer experiences and increase revenue and brand loyalty.
If you haven’t already, spend some time diving into the metrics of your business. Learn them, understand them, and master the art of projections.
If analytics are not your strong point as a business owner, consider hiring someone to help break down your business into digestible pieces while you focus on the rest.
At TC Creatives, we offer brand consultant services that help with creating accurate projections, brand extensions, and monitoring brand reputation for small businesses — allowing business owners to stay ahead of the game and maximize their revenue potential.