The Best Business Diversification Strategy in 2024
Why a Diversification Strategy is Critical to Success
As your business grows, knowing when and how to shift strategy is critical. One powerful approach is diversification — expanding your offerings to boost revenue and reach new customers.
We’ll be looking at Popeyes Chicken as a case study on how to build a diversification strategy. While already a top-performing chain, there’s untapped potential in bringing their products to grocery store shelves, a move brands like McDonald’s, Wingstop, and Red Lobster have already made successfully.
Diversifying in this way allows companies to meet customers where they are, strengthen brand loyalty, and create new revenue streams beyond physical locations. For Popeyes, this could mean greater visibility, increased sales, and long-term growth.
In today’s market, the ability to adapt and expand strategically is more than smart, it’s essential. Let’s use this case study to dive into steps you can take to diversify your business.
How to Strategize
An optimal way for Popeye’s to achieve business growth is to ultimately create new ways for existing customers to purchase additional items whilst also allowing new customers to discover the brand. Let’s look at some actionable steps.
1. Conduct Market Research
Market research is a key component in creating a diversification strategy. This is where you track trends, make competitive analysis, survey your audience, and find a position within a new market.
Following Chick-fil-A’s footsteps, a brand often compared to Popeyes, they have already ventured into bottling their customers’ beloved sauces. and have even confirmed plans for introducing salad dressings soon. It’s known that people love their Polynesian sauce,
Both Popeyes and Chick-fil-A have a similar number of store locations, yet Chick-fil-A manages to generate higher annual revenue—a clear-cut showcase of the benefits of a business diversification strategy, along with better customer service.
2. Analyze Existing Services & Products
Sometimes, growth doesn’t require starting from scratch; it means revamping what already works. By analyzing sales reports, customer feedback, and surveys, brands can identify their top-performing products and find creative ways to repurpose them for new markets.
For Popeyes, this opportunity lies in their seasonings and sauces. Known for bold, unforgettable flavors, Popeyes already has fan-favorite items like Cajun Sprinkles which could be packaged and sold as retail seasoning blends. Imagine seeing Cajun Seasoning in the spice aisle! It’s a simple (and I don’t say simple lightly. production costs are real) yet strategic move that builds brand visibility and gives customers a taste of Popeyes at home.
This type of product expansion is low-lift, because it’s an existing product, yet high-impact, allowing Popeyes to tap into at-home cooking trends, drive new revenue, and deepen customer loyalty through products they already love. Something we’ve seen from Hooters!
3. Dive Into Innovation & Creativity
With Popeye’s unique sauce flavors of Sweet Heat, Blackened Ranch, and Mardi Gras Mustard, they can simultaneously introduce new taste experiences to customers both locally and globally while allowing their existing customers to purchase their favorite sauces for use at home.
Collaborations like the “Hottie Sauce” show how Popeyes can successfully innovate, test, and launch new or repurposed products. Because the brand has already crafted great standout sauces, they naturally have an advantage—once a company proves it can deliver quality, customers become more open, and usually ready to try whatever comes next.
New products can also be introduced as exclusives to build excitement and urgency. For example, Popeyes could launch a limited-edition sauce or in-store–only seasoning blend to create buzz, drive foot traffic, and test demand before considering a wider rollout. This exclusivity not only enhances the customer experience but also strengthens the brand’s marketing momentum. Which, of course, leads to more sales!
4. Take a Test Drive
Before diving deep into a new business avenue, doing a pilot run is key to testing the market. It’s a great way to test a larger audience before going into full production of a bottle of sauce.
Many food businesses will sell their products within their business, which cuts out distributing fees to outside stores. This is another way Popeye’s can start to test their products with customers, and with a small selection of stores.
Offering bottled sauces and packaged seasonings directly to buying customers can be a quick key performance indicator (KPI) of the market. Make sure to find a small way to test drive your new ideas. It can be hosting your family, sharing it with friends, or even a few social media followers — just make sure you test it out.
Step 5 – Scale and Market
Once we do our test run, we can move into scaling and pushing out our product. Early we spoke on social media marketing; this would be an optimal time to collaborate with social media creators to showcase new products. Showing customers how these products could be used in their everyday meals is key to this diversification strategy.
Also, with Popeye’s having just over 5,000 stores, this business diversification strategy to enter into packaged goods could make up for the lack of locations. Promoting and collaborating with major grocery retailers would expand their market reach and drive more foot traffic back to Popeyes.
Putting your new product in front of the audiences you researched at step one is the start to your new journey of scaling.
Final Thoughts:
When it comes to your business, whether it’s stagnating, struggling to attract new customers, failing to increase revenue, or even getting started, a business diversification strategy should be a consideration.
What is holding Popeyes back is its critical need for more revenue diversity. None of the RBI brands have products in stores, unlike many of their competitors, and they operate from a quarter of the locations of more prominent brands.
To increase their revenue and reach business growth again, a business diversification strategy that focuses on placing their products on shelves, leveraging food influencers and social media chefs, and growing their number of locations will find success.
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