Brand outlines strategy as it seeks new CEO
Bojangles Inc. maintain “right value” promotions and explore new technologies as it searches for a CEO successor to Clifton Rutledge, who resigned earlier this week, executives said Tuesday.
Leaders of the Charlotte, N.C.-based chicken brand, in a fourth-quarter earnings call with analysts, said the company did not have a timetable for naming a new CEO.
“The board will be focused on finding a right person, so we are not in a position to put a timeframe on the process,” said James “Randy” Kibler, the board director who was named interim CEO. “Meanwhile, I will be working closely with the leadership team to help shape our direction while managing the day to day business.”
Rutledge’s departure after four years in the CEO role caught many analysts by surprise.
“The departure of Rutledge — who helped take BOJA public in '15 — was unexpected and will likely put some ’18 initiatives on pause,” said Andy Barish, an analyst with Jefferies LLC, in a note to investors after the call. Barish advised investors remain on the sidelines while the company did its CEO search.
Meanwhile, John Jordan, Bojangles’ chief financial officer, said the company would continue with its barbell-pricing menu strategy that included such recent value promotions as the recent “2 for $5” BojAngler fish sandwich limited-time offer.
“We also believe breakfast served all day every day is a key differentiator for our brand,” Jordan said, “and we will continue to emphasize it in our marketing programs along with other initiatives that drive home on our unique high-quality flavors.”
In the fourth quarter ended Dec. 31, the company increased prices 0.9 percent, but the number of transactions was down 6.2 percent, Jordan said. Systemwide same-store sales in the quarter declined 3.1 percent, with company-owned restaurants down 4.4 percent and franchised units down 2.2. percent.
“What's interesting is when you look at it by daypart, if you look at the fourth fiscal quarter, breakfast was our best performing daypart,” Jordan said. “All the dayparts were negative, but breakfast was our best and ‘after dinner’ was our worst.”
Jordan said Bojangles’ new BoRewards loyalty and payment smartphone application, introduced in company-operated restaurants late 2017, has been received well by customers.
“We continue to work with our franchisees to expand availability of the app to their restaurant [point-of-sale] systems,” Jordan said. “We anticipate launching Phase Two of our test in 2018 that would include large-menu ordering such as Big Bo Boxes and ultimately the addition of full-menu ordering capabilities.”
Jordan added that Bojangles is close to a deciding on a delivery test. “We know that it's important for us to keep pace with the changing needs of today's sophisticated consumers,” he said.
The company continues to work on reducing costs of Bojangles’ units after introducing a new restaurant designed a year ago in Greenville, S.C., Jordan said.
“One of the things we are going to really have to hone in and focus on is bringing those costs down, whether it be the Bojangles' of the future or whether it be our existing or previous prototype,” he said.
The company is looking at smaller stores and scaled-back remodels that reduce investment costs, he said. The three significant remodels in 2017 “cost way too much and we did not get the return that we would have expected on those,” he said.
For the fourth quarter, which included a tax benefit, Bojangles on Tuesday reported net income of $48.8 million, or $1.27 a share, compared to $9.8 million, or 26 cents a share, in the same period a year ago. Revenues rose 6.2 percent to $148.1 million, compared to $139.4 million in the prior-year quarter.
Bojangles' ranked No. 47 in Nation's Restaurant News' most recent Top 100 census, posting $1.2 billion in U.S. systemwide sales for the fiscal year ended in December 2016.
As of Dec. 31 , Bojangles' had 764 restaurants, of which 325 were company-operated and 439 were franchised. Most of the restaurants are in the Southeast.
Contact Ron Ruggless at [email protected]
Follow him on Twitter: @RonRuggless
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