Business

Bojangles’ execs shed light on growth plan, new target customers

dlaird@charlotteobserver.com

Charlotte-based Bojangles’ reported a fourth-quarter profit Thursday that was down from a year ago but sales that surged thanks to the opening of 40 restaurants over the year.

In a call with analysts, the chicken-and-biscuits chain provided some insight into what happens to markets that don’t fit into the company’s careful growth plan it sent forth when it went public last May: Bojangles’ said its Orlando, Fla., franchisee closed eight restaurants, and that the company doesn’t plan to return to that market anytime soon.

As particular challenges in the fourth quarter, executives also cited flooding in the Carolinas and “a competitor” introducing breakfast all day – an unmistakeable reference to McDonald’s, which launched all-day breakfast last fall.

Bojangles’ has said breakfast accounts for 38 percent of its sales. And McDonald’s isn’t the only rival taking note of the meal’s popularity: Taco Bell, for example, unveiled a dollar breakfast menu made up of 10 menu items Thursday.

Bojangles’ management team also said it plans to boost sales by appealing more to Latino customers, who account for 20 percent of the dollars spent at quick-service restaurants. One way it’s doing this is through its recently launched Spanish language ad campaign.

“Since the Southeast is one of the fastest-growing areas in the country in terms of Hispanic population, we’re going to capitalize on this great opportunity we have to introduce them to Bojangles’,” Chief Executive Officer Clifton Rutledge said Thursday.

For the quarter that ended Dec. 27, Bojangles’ reported a profit of $7.8 million, down from $7.9 million from the fourth quarter a year ago, according to a securities filing. Eating into earnings were costs associated with operating as a public company, Bojangles’ said.

Sales for the quarter totaled $128.8 million, up from $117.4 million the same quarter a year ago and above the consensus estimate from Bloomberg-surveyed analysts, which was $126.7 million. The company attributed the sales bump to the opening of 40 new stores in the fourth quarter.

Bojangles’ comparable store sales, an industry term for sales at stores open at least one year, rose a sluggish 0.6 percent for the quarter.

When it went public last year, Bojangles’ management team vowed to grow its store footprint by 7 to 8 percent each year, filling it its core in the Carolinas and then gradually spreading out into adjacent markets.

Rutledge said the Orlando market was set before the company determined how it would expand. One major reason the market’s eight stores won’t reopen: Bojangles’ doesn’t operate in any markets nearby.

“We love Florida, it’s just not going to be anytime soon that we go back to Orlando,” Rutledge said during the call with analysts Thursday.

As of Dec. 27, Bojangles’ operated 662 system-wide restaurants, mostly in the Southeast.

Bojangles’ shares closed Thursday at $15.03, down less than 1 percent.

Katherine Peralta: 704-358-5079, @katieperalta

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