Bojangles' looks to grow while staying regional

After failed expansions, execs turn focus to image and service

elyportillo@charlotteobserver.comDecember 1, 2012 

  • Bojangles’ by the numbers • Percentage of a typical Bojangles’ business done at the drive-through window: 60% • Percentage of Bojangles’ sales done before 11 a.m.: 40% • Bojangles’ 2012 sales: $870 million • Percentage of company-owned stores: 40% • Percentage of franchised stores: 60% • Percentage of Bojangles’ stores in the Carolinas: 70%

— Biscuits, coffee, iced tea and fried chicken are powering Charlotte-based Bojangles’ toward the $1 billion mark in annual sales, with the company focusing on its identity as the Southeast’s homegrown chicken joint.

And as it grows, the company is hoping to avoid earlier missteps and far-flung expansions such as those during the 1980s, when Bojangles’ fell on hard times and shrank from nearly 350 stores to fewer than 200 a decade later.

Now with more than 530 restaurants and $870 million in annual sales, Bojangles’ is still focused on growth. The company’s sales have increased from $575 million in 2007, and executives say the company will likely reach $1 billion in annual sales within 18 months.

But it’s not looking to open restaurants in far-flung locales: Bojangles’ can increase its store count and remain in its 10-state area, executives say.

“We can double the size of our company without really having to step outside of that footprint,” said Randy Kibler, Bojangles’ CEO. Vestiges of former expansions still remain, including two Bojangles’ franchises in Honduras, but that direction is not the company’s future, he said.

Bojangles’ has opened about 60 new company-owned and 120 new franchised locations since 2008.

The company is administered from a one-story building in a suburban office park off Arrowood Road, where a large test kitchen behind glass is the first thing visitors see. About 75 people work there, and Bojangles’ also holds a company-wide biscuit-making contest each year in that kitchen.

The company was founded in Charlotte in 1977, when the first restaurant opened at West Boulevard and South Tryon Street.

It has passed through a series of different ownership groups who led the company with varying degrees of success. In 2007, a group led by former Bank of America CEO Hugh McColl’s fund Falfurrias Capital Partners purchased Bojangles’ for an undisclosed price.

Panthers owner Jerry Richardson, who made his name in business growing the Hardee’s chain, was also in the investment group. He brought on Kibler, who started working at 15 in a Hardee’s owned by Richardson, to run Bojangles’.

Last year, Falfurrias sold its stake in the company to Boston-based private equity fund Advent International, again for an undisclosed price.

Unlike other restaurant chains, which have added new menu items at a fast clip – smoothies at McDonald’s, spicy chicken sandwiches at Wendy’s – Kibler said Bojangles’ hasn’t introduced a new menu item system-wide in six years.

“If you look at who we’re competing against, you’re always hearing about new items,” Kibler said. “We really focused on biscuits, chicken, iced tea and service.”

Extra care with the food

He said improvements in processes and extra attention paid to food – such as marinating chicken for 12 hours and making fresh biscuits – have helped the chain more than branching out would have.

That’s not to say there have been no changes. Bojangles’ has changed its coffee to a darker roast, following consumer tastes, and is trying out iced coffee and new chicken tender products. “You do have to eventually evolve,” Kibler said.

And as many consumers have become more health-conscious in recent years, Bojangles’ executives insist the restaurant can keep up, with its wide array of “fixins” and the Bo Smart menu, which offers grilled chicken and salads.

“You can get fat-free green beans, complex carbohydrates, Cajun pinto beans, cole slaw, salad, dirty rice,” said executive vice president and general counsel Eric Newman. “So you have a variety of alternatives to fries.”

Still, Kibler acknowledged that most people don’t opt for the healthier choices.

“Most people have very good intentions, but the taste wins,” he said. “It’s still not the primary direction of the menu.”

Another factor behind the company’s drive to grow is its recent refinancing of $200 million worth of debt at historically low interest rates. “Our interest rate was cut in more than half,” said chief financial officer John Jordan. “It gives us even more flexibility. We’re going to enter into the Tennessee market. We’re also investing some additional funds into our franchise sales department to get the message out.”

There are still challenges to navigate. Bojangles’ is figuring out how to implement new health care reforms and what effect that will have on its bottom line. Kibler said the restaurant will likely hire more part-time workers in the future, rather than full-timers, in order to keep health care costs manageable.

“We’re still working through the process, but there will probably be more people that are part time that become new hires than full time,” Kibler said.

While Bojangles’ remains privately held, Kibler said don’t count out a publicly-traded fried chicken chain in the future. Most large fast-food chains are public companies. “There is not currently a plan today for Bojangles’ to be public, but as we grow, that opportunity could be available for us to consider,” he said.

Portillo: 704-358-5041 On Twitter @ESPortillo

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