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    Church's Chicken Shows Grit on Comeback Trail

  • The 65-year-old brand accomplished a lot in CEO Joe Christina’s first year. But it didn't come without its share of challenges.

    Web Exclusive March 15, 2018 By Danny Klein
    Church's Chicken
    A newly remodeled Church's Chicken showcases a bright image for the brand's future.

    As you might expect from a three-year revitalization plan, Joe Christina’s first at the helm of Church’s Chicken was a foundation-shaking one. The company rebuilt its leadership team, achieved positive global sales for the first time in three years, and took significant steps toward becoming what Christina calls “the global franchisor of choice.” But perhaps it was the darkest times that proved the 1,650-unit brand’s true mettle.

    During a five-week period, Church’s largest franchise market in Houston, its company market in Florida, and it’s most profitable international market in Puerto Rico were hit by hurricanes Harvey, Irma, and Maria, respectively, and in succession.

    “I think when the chips are down, like they were in these markets, it really showed the grit of the brand, and how much we care about the franchises, communities, and employees to get them back on their feet,” Christina says.

    This was especially true in Puerto Rico, where 112 units were hit. Forty-five days after Maria, 85 of them were back open.

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    In the case of Harvey and Irma, Christina was actively involved in the brand’s response in Texas, Florida, Louisiana, and Georgia. He joined staff to serve guests at a “Pay What You can” fundraiser. “Whether it was domestically or internationally, our franchisees, our vendors, our employees, they all stepped up,” he says. “… That was our biggest challenge, but we came through better on the other side.”

    Where Church’s sits today is an enviable spot. Although like the hurricane comeback, it didn’t happen overnight or without some significant challenges.

    Christina stepped into the CEO role in November. He was the company’s EVP of U.S. operations since 2014, overseeing more than 1,150 units in 29 states. Christina served as SVP of Burger King before that.

    Christina’s first year was also the company’s 65th anniversary. Yet, while there was no shortage of brand sentiment to build on, the company’s relationship with its franchise community—and in turn its guests—was simply not where it needed to be. From 2015 to 2016, Church’s total U.S. store count dropped 55 units to 1,076. Total systemwide sales (in millions) fell to $800.27 from $838.0, and average-unit volume declined to $724,000 from $729,000.

    The turnaround began with a thorough restructure of the corporate leadership. Among those changes: Hector Munoz joined as chief marketing officer from the same role at Popeyes. Former McDonald’s exec Pete Servold took Christina’s old post. David Knies assumed a role as VP of franchise development. And much more. Read more about all the executive changes here. These moves were all made with the franchise system and company’s long-term growth in mind.

    The interior of a remodeled unit. Church's Chicken expects to reimage about a quarter of the domestic restaurants in the next 18 months.

    “We were able to take the beginning of the year, get some great people in here, and begin to gain the respect and trust and confidence of our franchisees, and reverse the trend of what the brand has been for the last couple of years,” Christina says. “And really get us in the back half of 2017 where domestic sales trends were positive, international continued to grow. It really was a great accomplishment and took a lot of hard work. So while I’ve caught my breath, we’re very determined to keep going.”

    Here are some other accomplishments for Church’s in the past year:

    • Improved communication and relationships with franchisees and employees
    • Reduced costs for restaurant remodel packages
    • Signed domestic multi-restaurant development agreements
    • More favorable supply and distribution contracts
    • Refinanced company debt to free up capital for investment
    • Enhanced real-time monitoring and accountability for purchasing and supply chain initiatives
    • Global sales increases and restaurant growth supported by clear short-term and sustainable long-term strategies

    Church’s system includes 240 franchisees across the U.S., Canada, the Americas, Europe, the Middle East, and Asia Pacific region. So Christina knows just how vital transparency in this part of the business is for the company.

    He says the turning point came when the company brought key franchisees in for the 2018 planning process. “That transparency showed that we’re listening, showed that we care about the business, and like I said, it’s a work in progress. We have to earn that trust every day,” he says.

    The reimaging program is a big part of this. Through conversations, Church’s was able to identify areas to save franchisees without hurting the ultimate goal—to drive more guests into restaurants. Different levels were tested in company stores. Christina says the company expects to reimage about a quarter of its domestic restaurants over the next 18 months.

    Church's Chicken

    Side dishes are key to Church's Chicken's menu, not just its chicken and biscuits.

    "We’re in a relationship business. And we have to make sure that we have not only a good relationship with our franchisees, but also with our communities and our guests. There’s no faking that as a 65-year-old brand."

    Christina also reinforced a community-first culture that has always defined the nearly seven-decades old brand. The Church’s Scholars program awards $1,000 college scholarships to high school seniors. In September, Church’s announced that it set a company fundraising record for the third consecutive year for No Kid Hungry. This time, the chain raised about $400,000 in donations, almost $85,000 more than 2016, and brought the total raised over the last two years to nearly $700,000, which equates to 7 million meals.

    From March 27 through April 23, all participating Church's restaurants offered a coupon booklet with more than $20 in savings in return for a $1 donation to No Kid Hungry. Restaurants also offered a Full Hearts family meal for a special value price that also included a $1 donation. All proceeds from booklet sales and 100 percent of the $1 donation from Full Hearts meals goes directly to No Kid Hungry.

    Christina doesn’t openly bring attention to it, but he’s on the advisory board for No Kid Hungry.

    “We’re in a relationship business. And we have to make sure that we have not only a good relationship with our franchisees, but also with our communities and our guests. There’s no faking that as a 65-year-old brand,” he says. “We operate restaurants in communities that other brands left years ago, and we stayed. We support them. And we employ many of those residents from those communities, and help them support their families. Both our franchisees and here at the corporate office, we don’t take that lightly.”

    This year, Christina says Church’s wants to build on 2017’s foundation. He says the company understands quick service is a street fight right now, where operational excellence and customer response are as tight as the day-to-day margins. The company signed development agreements with existing and new franchisees, and says it will grow in areas where it doesn’t have restaurants right now, although Church’s wouldn’t share further details just yet. Church’s Chicken announced the sale of 70 company-owned restaurants to a new franchise operator—Ampler Chicken LLC, and the sale of six Atlanta-area restaurants to an existing franchise operator—Sal Kabiruddin of KSH Chicken Restaurants LLC., in December.

    “We proved in the back half of last year that the strategy is working to give our guests what they’re asking for, and the trust of the franchisees continues to build,” he says. “And so we’re working very hard to build on that foundation by giving great products and great choices to our guests. We’ve got to work very hard to continue the improvement of our fast, accurate, and friendly service in the restaurants.”

    “I believe we’re on the right track,” Christina added. “The way I look at is, like I said, this is a relationship business, and I’ve got to earn both the trust of my team, our franchisees, and our guests every day. And that’s something I work very hard for.”