It’s been a rollercoaster week for Charlotte, North Carolina–based Bojangles’.
The popular, 764-unit Southern brand, known for its chicken and biscuits—and ranked No. 28 on the QSR Top 50—released earnings for the fourth quarter of fiscal 2017 this week. Stocks tumbled Tuesday, only to bounce back Wednesday and continue the rally midday Thursday to the chain’s highest value this calendar year at $14.35.
And there was also the news that CEO Clifton Rutledge abruptly left the company on Monday for personal reasons.
Former CEO and current board member James “Randy” Kibler was named interim CEO and led the company’s earnings call on Tuesday, recounting a somewhat turbulent year for Bojangles’.
Like many American restaurants reporting earnings for the fourth quarter, income statistics were obscured by recent tax legislation. Bojangles’ received a deferred income tax benefit of $40.1 million, or $1.04 per diluted share, related to the Tax Cuts and Jobs Act. Beyond a tax bump, the numbers weren’t forgiving.
System-wide sales were down in both franchised and company-ran units, totaling a 3.1 percent decrease in same-store sales compared to the final quarter in 2016. Year-over-year, comparable sales slumped 2.1 percent compared to 2016.
Adjusted net income was $8.7 million during the quarter, nearly $2 million less than the final quarter in 2016. The brand’s adjusted diluted net income per share figure was down a nickel as well to 23 cents.
Bojangles’ added 15 locations during the fourth quarter, bringing the year’s total to 52 new restaurants system-wide, split evenly between franchised and company-operated stores. Four company-operated restaurants closed last year, although three were relocation efforts. An additional six units were refranchised by Bojangles’.
These latest stores were designed to test a new, sleeker prototype for Bojangles’ stores aimed at modernizing the classic restaurant. Since 2016, some Bojangles’ have undergone remodeling efforts to equip the units with WiFi and phone-charging stations, plus tables designed for communal dining.
Unfortunately, sales don’t seem to be responding to the remodeled locations.
In the earnings call on Tuesday, CFO John Jordan laid out the company’s four-pronged plan for progress heading into the 2018 fiscal year.
The chicken brand’s growth strategy might mean some temporary shrinking, too. Jordan said Bojangles’ will continue to implement a growth strategy based on “strategic franchise development and reorganizing underperforming markets through strategic refranchising, closings or relocations.” In existing stores, Jordan maintained that another goal for growth is operational excellence.
Jordan also highlighted effective marketing strategies and technology integration as goals for 2018. He said the recent two-for-$5 BojAngler promotion featuring the brand’s Alaskan Pollock fish fillet was successful because the seasoning-dusted sandwich was different from other quick-serve fish offerings.
“We also believe breakfast served all day everyday is a key differentiator for our brand and we will continue to emphasize it in our marketing programs along with other initiatives that drive home on our unique high quality flavors,” he added.
Finally, Jordan expressed enthusiasm for the recently launched BoRewards loyalty and payment app. Although currently only operational in company-operated stores, Bojangles’ is hoping to soon have the app running for all units, with added large menu ordering for items like the Big Bo Box.
Jordan said his company is also continuing to review options for Bojangles’ delivery in 2018, but a final decision hadn’t been made on whether or not to go forward with the project.
Despite a rocky end to a challenging year, leaders at Bojangles’ remained confident. The brand is actively seeking owner-operators in North Florida, Memphis, Tennessee, and South Georgia. Despite the desire to open more units, though, more “strategic consolidation” is expected in 2018 in the form of refranchised units and some store closures. An additional 30–40 units are anticipated to open.
While hoping to grow, Jordan said the brand wouldn’t get more aggressive with its value strategy in 2018 after leaning on premium products in 2017 that many core consumers didn’t connect with.
“I think what you will see is we will have some value messages but we are going to focus on things that are profitable to the company and you may see some more emphasis on our core products,” Jordan said.
In addition to focusing on the brand’s bread and butter—chicken and biscuits—Jordan said pricing would be lower in 2018, too. The brand has a clear plan for the fiscal year, but only time will tell if Bojangles’ can bounce back, yet again under Randy Kibler’s watch.
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