Making a Bojangles biscuit
A new chapter is about to begin for Bojangles’, an iconic brand that started in Charlotte in 1977.
The chicken-and-biscuits-chain has agreed to be acquired in an all-cash deal by two New York firms, Durational Capital Management LP and The Jordan Company, L.P., according to a statement Tuesday.
Bojangles’ shareholders will receive $16.10 per share, which represents a 39 percent premium to the closing share price on Feb. 12, a day before speculation arose that Bojangles’ could be selling itself.
The deal, which is subject to shareholder approval, is expected to close in the first quarter of fiscal year 2019. Bojangles’ said in the statement that when the transaction closes, it will continue to be operated as an independent, privately-held company and will remain based in Charlotte.
In the years since it went public in 2015, Bojangles’ has been beset with a number of challenges, prompting company leaders to work to improve the chain’s financial health — and prompting experts to speculate that Bojangles’ could be a takeover target.
For instance, Bojangles’ expanded into new markets outside the Carolinas, but many of those new restaurants haven’t fared as well as the ones in its core markets. In its last earnings report, in which the company said that its quarterly profit plummeted over 70 percent, Bojangles’ said it closed 10 company-operated stores in Alabama, Kentucky, Tennessee and Virginia.
Also in its last earnings report, Bojangles’ said it removed four “very slow moving” menu items — jambalaya bowl, smoked sausage biscuit, barbecue pork sandwich and Cheddar Bo Biscuit — from its menu.
Clifton Rutledge, a former executive at Texas-based Whataburger who steered Bojangles’ through its initial public offering, abruptly stepped down in March after about four years as Bojangles’ CEO. Randy Kibler, who ran the company from 2007-2011, was named interim CEO.
“For the Bojangles’ family of employees, franchisees, and our customers, today’s announcement represents an exciting next phase for this great brand,” Kibler said in the statement. “The new ownership group is committed to maintaining the qualities of this brand that have sustained it for over four decades.”
The Bojangles’ headquarters may be staying in Charlotte, but it’s unclear what else the future holds for the company.
C.L. King analyst Michael Gallo said he wouldn’t be surprised if Bojangles’ new owners close more restaurants, as well as re-franchise others. Re-franchising refers to brands flipping company-owned stores to franchisees, and it’s done to reap a bigger profit.
Gallo also said he expects the new owners to slow the chain’s expansion for now so that they can “get their ducks in a row and get their (restaurant) prototype figured out,” Gallo said.
“If this company is going to expand out of the core market, some changes will have to be made to where it can travel well.”
Gallo doesn’t anticipate any sweeping changes to the Bojangles’ brand, however.
“I don’t think it’s in anyone’s interest to gut the place in order to make a quick buck,” Gallo said.
Bojangles’ gets new owners over the years
This isn’t the first time that Bojangles’ has changed hands.
Four years after Bojangles’ opened its first restaurant at West Boulevard and South Tryon Street, co-founder Jack Fulk sold the chain to the New York food services company Horn & Hardart for $12 million. In an October 1982 Observer story, Fulk said he sold the company in order to “have the financial backing necessary for rapid growth.”
Under Horn & Hardart, the chain did expand rapidly — to 328 locations at its peak. Bojangles’ added stores all over the U.S., from Texas to Florida to New Jersey, according to the Observer story. When it opened a restaurant near Times Square in Manhattan in 1982, the store was so successful at first that additional frying and marinating equipment had to be installed.
Franchisees at the time said, however, that expansion came at a cost: The chain cut corners in quality control and marketing, leading to financial losses, according to an August 1990 Observer story.
Horn & Hardart trimmed the chain’s footprint to 152 stores by 1990, when it decided to sell Bojangles’ to two California venture capital firms, Sienna Holdings of Los Angeles and Interwest Partners of San Francisco, for $24 million. After a few years, a group led by restaurant executive Glenn Gulledge and former Charlotte steel executive James Miller bought Bojangles’ for $85 million in 1998.
A “rebound” brought the number of locations to 386 in 11 states, Honduras and Mexico by the early 2000s, according to a September 2007 Observer story.
Bojangles’ was bought in 2007 by a group led by Falfurrias Capital Partners, the private equity firm co-founded by former Bank of America CEO Hugh McColl. Also included in that ownership group was Carolina Panthers founder Jerry Richardson, who years prior had headed a company that franchised Hardee’s restaurants.
Falfurrias owned the chain until 2011, when the Boston private equity firm Advent International bought a majority stake in the company. The company went public in 2015.