CEO Joe Guith rolls the tape back 18 months, deep into the heart of Church’s Texas Chicken country in the Rio Grande Valley. Guith, while celebrating the 45th anniversary of a market leader, was meeting with Mario Sanchez, one of Church’s true lifers, for the first time. Sanchez started with the brand the year Richard Nixon was elected America’s 37th president. He spent 45 years with corporate stores and the last decade as a franchisee. There’s even a room at HQ named after him.
Guith, a former GoTo Foods executive, arrived in early August 2022 with comeback designs for the 72-year-old concept. “I asked him, ‘so if you were me, what would you do?” Guith recalls.
Sanchez didn’t deliberate.
“He said, ‘make the chicken taste better.”
Guith wanted to know more. As the story often goes, through some ownership changes over the years—the brand was last sold in 2021 to High Bluff Capital Partners and FS Investments—somebody, at some point, decided to change the marinade and cost optimize it. That observation kicked off an investigation, with Guith, head chef Kevin Houston, and Will Cash, VP of purchasing, trying to figure out how Church’s, plainly put, used to make chicken. The group thumbed through files and talked to suppliers who were involved way back. Ultimately, Church’s landed on a formula that mirrored its 1952 recipe.
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“We tasted it side by side and wow, it was a big difference,” Guith says.
Given it’s not 70-plus years ago, however, Church’s efforts didn’t end there. It had to test and develop and map out an execution strategy for the new/old recipe given how much processes changed. In those nostalgic years, Church’s did everything in the back of the house. It cut chicken and created the marinade. Now, the marinade process happens at the processing plant. So reversing the clock needed ops planning. And, in the end, Guith says, Church’s was actually able to strip steps out of the model.
At Church’s, each piece of chicken is marinated, hand-battered, and double-breaded. This throwback needs only one batter and breader.
The brand introduced its chicken update in late October with two-piece legs and thighs or two-piece tenders and sauce deal for $2.99. Family Packs (10-piece legs and thighs or 10-piece tenders and sauce) also hit stores at $10.99.
Guith says customer feedback proved guests “absolutely [saw] the difference.” Results factored into same-store sales that continue to outpace competitors, he adds.
As noted, the switch fit Church’s larger evolution as well, which has been a journey in back-of-house simplification alongside returning the chain to its roots.
When Guith arrived, Church’s had gone from one breading system to three. It’s down to one. And it changed a spicy procedure where, instead of dipping the chicken in a special batter before frying, there’s a glaze that allows it to eliminate a step and remove a SKU. The end product also tastes better, Guith says.
With “Project Mario” (what Church’s is calling its recipe rewind), again, Church’s didn’t alter the breading or how it does so. It joined the overall streamlined approach—a plan that also included enlarging baskets and unlocking the ability to produce items 30 percent faster.
It took Church’s roughly a month of research, Guith continues, to figure out what the original ingredients were. The marinade is a higher-grade, higher-cost product, but Church’s was able to hold the line since chicken now requires less of it than it used to. “I mean, you can’t get better than that when you’re able to get back to a higher quality and a better flavor, but doing it at the same cost,” he says.
Guith continues to engineer Church’s turnaround by stacking these kinds of wins. The brand’s business, he says, has enjoyed “a very good run this year,” owing to a host of things.
Center is the fact Church’s had drifted from the core proposition George W. Church took to market with a walk-up stand located about a block south of the Alamo. Customers could get two pieces of chicken and a roll for 49 cents at “Church’s Fried Chicken-To-Go.”
The selling point was simple: the best chicken at the best value, serving underserved communities.
That lens set Guith on a track toward holistic value before the topic became the headliner of an inflation-strapped climate. From its two-piece to 10-piece options, Church’s price points, he says, have allowed it to “dramatically outstrip” peers by “a lot.” As a private company, he can’t divulge exact same-store sales figures, only to say it’s likely “well in the double digits” ahead of others.
“The value piece has come together,” he says. “Having the best chicken? Well, that’s a story that I think we want to tell.”
And that’s where Church’s began searching through the history books.
It can’t be understated where Church’s is serving its improved product, either. The brand has completed more than 200 remodels over the last few years. Newly built franchise “Blaze” image restaurants (the brand’s updated asset) averaged sales of $1.232 million last year. General freestanding franchises with drive-thrus came in at $1.038 million; freestanding $1.149 million; end cap with drive-thru $878,113; and C-store $819,600.
Company locations, across those formats, averaged $1.073 million (versus $1.008 million for franchises in total).
With the new image, corporate builds, of which six were counted in 2023, expanded sales from $1.082 million to $1.387 million in the first year following the change, or 28.2 percent average annual gross sales expansion. It pulls to average growth of $304,845.
For franchises doing the same, the AUV leapt from $1.006 million to $1.105 million (9.8 percent, or $98,657). The top franchise-operated Blaze store made $2.021 million a year.
COO Roland Gonzalez, a former RBI and VDC vet who came to Church’s about two years ago, previously told QSR the results showed Church’s potential when it’s operating to its updated capability. The company’s unit-level profitably approached a 40 percent increase last year for corporate-owned stores as well.
Guith says Church’s improved visibility through operations on the fresh asset by sevenfold. It’s also tapped into third-party and, more recently, launched a new digital platform and one of its first loyalty platforms with Real Rewards. It began by giving away chicken for a year to 500 guests and built the program around the Church’s DNA of abundance at speed.
For each $1 spent, users get 10 points. Everybody who signs up earns a free chicken deal they can redeem for a two-piece leg and thigh or three-piece tender meal as their first purchase. Next, 250 points unlocks a regular classic side, dessert, or 22-ounce drink. Real Meals open at 500 and 700 points and combos at 1,000 and 1,250 points. Then, family deals enter the fold at 1,500 and 2,000 points.
To put things into perspective, Church’s app wasn’t really working in 2023. This custom skin and CRM platform evolved Church’s digital journey from bouncing off the floor (gaining sales simply through better fundamentals) to something with the potential to unlock lifetime value from its best customers.
Guith says Church’s had more than a half-million people sign up in the first few months (it launched in August). First-party digital quadrupled.
He’s not overly surprised given Church’s came out of the gate with free chicken. Management made sure to open a digital fund with franchisees to work lockstep and be transparent in what the program would offer and how much it would cost to roll.
In sum, there are a lot of levers pulling at once. One being value, which today includes a $20 meal deal for families where they get five pieces of chicken, two sides, and five biscuits. Also, the decision to layer in free delivery for people who order direct. “You can’t beat that,” Guith says. “So you’ve got the value equation right. We’ve got some great marketing and have much better creative. You’ve got better chicken. You’ve got better operations. You’ve got better restaurants. You’ve got digital and rewards. All these things are converging at once and that’s what’s creating the upswell of our brand.”
A key throughout has been to not overwhelm the system. Church’s won’t run off into new platforms and equipment just yet. Instead, it’s been more granular efforts like those mentioned earlier (glaze, baskets) and some on-brand innovation such as nuggets, different flavored pies, and the impending return of a value sandwich early next year. “Those kinds of things are smart innovation that don’t add complexity,” Guith says. “If anything, it’s taking complexity out, like the spicy platform, and evolving that. You’re doing that all the time.”
He adds digital growth simplified operations, too, because you now have fewer people taking orders and more people making chicken.
There was a lot of foundation strengthening needed before innovation. Of Church’s 901 restaurants year-end 2023, 156 were company owned. It marked a 23-store year-over-year decline following the shedding of 76 restaurants the year before and 15 the calendar prior. Church’s U.S. footprint slimmed 114 locations since the start of 2021.
Yet there were noticeable splits to chase, like the “Blaze” image metrics. The gap between the high- and low-annualized gross sale freestanding Church’s with a drive-thru last year was $2.763 million and $284,415, respectively. For freestanding, it was $2.578 million and $427,812. Gonzalez told QSR in August there were some recent Blaze openings in Houston averaging double the system’s typical AUV.
Much of this improvement was process and asset driven. But some was ground-level pillar building. Church’s 7X-ed the number of times management visited restaurants last year than the prior 12 months. It accelerated third-party assessments of stores and improved the company’s guest feedback platform so it could gather results quicker and hand those insights over to operators. It started conducting business information meetings where each franchisee gets at least two per year. Also, Church’s hosts town halls to gather DMAs and have operators share best practices. There’s a convention. Lastly, Church’s began pushing out webcasts.
Looking ahead, like with any turnaround story, Guith has reached the fork of regaining momentum and figuring out what comes next. It’s been a good long while since Church’s had any tangible growth prospects stateside. Guith says the brand, for the first time in a decade, is flat on unit expansion in 2024. Closures have come down. Part of that is because of prior optimization, and the other is the unit profitability point from before—being up 40 percent is attracting more candidates and inspiring current ones to develop.
“That changes people’s minds when they look at it in terms of exiting the brand or restaurant,” he says, “when they see that kind of momentum.”
Church’s signed more than 60 deals this year. The aim will be to accelerate further and return to positive unit growth in 2025’s forecast. Guith says Church’s smaller footprint (the Blaze Compact iteration is 1,000 square feet with limited parking, no dine-in seating, a drive-thru, and to-go facilities; while 1400 Blaze is, naturally, 1,400 square feet, with dine-in and one or two drive-thru lanes; and the 1700 Blaze is 1,700) has clarified ROI. The estimated initial investments for those three Blaze models are $1.119 million to $1.631 million, $1.307 million to $1.804 million, and $1.609 million to $1.896 million, respectively.
Vitally, it’s not a sharp departure from the brand in terms of consumer acceptance. Church’s being a small, easily accessible concept was its day one view. Blaze is the modernized manifestation of a familiar personality.
Church’s broke the million-dollar barrier in AUV last year and is approaching $1.1 million. New openings are $1.3 million and higher, Guith says.
Church’s international footprint is also one of its less-publicized areas of runway. There are more than 700 outside the U.S. and, by the end of the year, Guith says, there will be north of 1,000 in the pipeline. “And that’s growing,” he says. “New geographies are coming online. Our team has done a great job of lifting up our current franchisees and expanding our growth prospects in countries we’re in. Now, new countries are starting to rapidly come online.”
Guith expects the macro restaurant climate to remain challenged and value centric. You see it with brands dialing back prices and launching new deals. He believes the secret to winning amid this landscape is to not manufacture something or become a brand people don’t recognize. Rather, you need to ask how to deliver a great value.
For Church’s, it’s who the chain has been since the outset. So answering the call came down to getting back to its laurels and the cost structure of its business (simplified operations and strengthened supply chain). Then, the timing lined up.
“That’s what I’m seeing out there, and some people are getting right, and others are not,” Guith says. “It’s not just about the short-term reaction to drop the price and pull out the promotional level. It’s far more of saying, ‘how are you architecting your menu for value?’”
