Hungry consumers have plenty of choices when it comes to fried chicken, and soon investors will, too. Bojangles’ — the chain of more than 600 restaurants specializing in baked biscuits and southern fried chicken — filed to go public this month.
Investors can already buy into the success of KFC through parent company Yum Brands (YUM). If they want a pure play in fried chicken, there’s always Popeyes Louisiana Kitchen (PLKI) with its more than 2,000 locations. If they’re willing to substitute rotisserie rods for fryers, there’s El Pollo Loco (LOCO).
This has been a surprisingly potent niche for investors. Yum has had some recent struggles with KFC in China, but the smaller players are rocking. Popeyes has seen its stock nearly quadruple over the past four years. El Pollo Loco has had its ups and downs, but the stock has still nearly doubled since going public last summer.
It’s against this inviting climate that Bojangles’ is hoping to become the next hot chicken stock. It seems to have the fundamentals to make that happen.
He’d Jump So High
Bojangles’ may seem to be going public at the right time given the success that investors in Popeyes and El Pollo Loco may be experiencing, but Bojangles’ itself is no slouch.
It’s on an impressive stream of 19 consecutive quarters of positive year-over-year comparable restaurant sales, including a 7 percent spike in its latest quarter. There are 254 company-owned locations and another 368 franchisee-run stores. The average restaurant rings up $1.8 million in annual sales, placing Bojangles’ at the high end of the quick-service industry. It’s been able to achieve that high target despite a low average check price of $6.68 per diner at its company-owned eateries last year.
Bojangles’ may have just a third as many restaurants as rival Popeyes and far fewer than KFC or Chick-fil-A, but it’s growing quickly. The chain has grown from 508 total restaurants three years ago to 622 units at the end of last year.
Morning Person
A big catalyst in the success of Bojangles’ is that it’s a major player in breakfast. Most chicken chains outside of Chick-fil-A have conceded mornings to the doughnut shops, baristas and burger chains, but Bojangles’ has embraced the opportunity to serve up chicken biscuit sandwiches, blueberry biscuits and other morning essentials.
Breakfast has been a big winner for Bojangles’, and last year it recorded 38 percent of its revenue before 11 a.m. That’s a big deal, scoring more than a third of a day’s sales before its rivals even open.
It’s too soon to evaluate if the stock will be overvalued. We don’t have pricing information just yet. However, the chain’s steady growth through both expansion and store-level upticks and its improving profitability can only help. Bojangles’ is in the right place at the right time by filing to go public. Now let’s see if it’s able to pull the IPO off before the market itself goes chicken.
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