Bojangles Inc. is highlighting discounts and everyday value as the regional chicken-and-biscuit chain faces a challenging consumer environment, the company said Wednesday.
Clifton Rutledge, CEO and president of the Charlotte, N.C.-based Bojangles, said the company had “a challenging fiscal quarter” and would be testing delivery in 10 restaurants to help counter the sales declines.
For the third quarter ended Sept. 24, Bojangles’ net income fell 30.6 percent to $7 million, or $0.18 a share, from $10 million, or $0.27 a share, in the same period a year ago. Revenue increased 0.2 percent to $133.4 million from $133.2 million in the same quarter last year.
Bojangles’ systemwide same-store sales declined 2.2 percent, including a drop of 3.3 percent at company-operated units and a decrease of 1.5 percent at franchised restaurants. Bojangles’ stock was up about 2 percent in Thursday afternoon trading.
“Without a doubt, we are operating in a very competitive retail environment, but this is especially true for regional limited-service restaurant brands,” Rutledge said in a call with analysts. “The persistent headwinds affecting our industry are significant.”
Rutledge said consumer spending remains soft, especially among those with lower household incomes.
“The competition from convenience and grocery stores are still a concern for many, and consumers are staying at home more and using delivery, and of course aggressive deep discounting from larger national brands with significantly greater marketing budgets continues to attract consumers away from small regional players,” he said.
Rutledge said Bojangles recently pivoted to discounting with a “Welcome Home” discounting campaign in Charlotte during August and September.
In October, the brand promoted a new Pork Chop Griller Biscuit for $1.99 and five hearty meal combos for $5 each.
“Along with these value promotions, we also are using PR, digital and social media to remind consumers that they can always find multiple breakfast biscuit sandwiches on the Bojangles' menu for less than $2 each all day, every day,” Rutledge added.
“We will fine-tune what we've learned,” he said, “but ultimately we believe that consumers are simply trying to balance the need for value and the desire to provide their families with quality, great-tasting meal options made hot and fresh every day.”
Rutledge said Bojangles had hired a consumer research firm to help it develop a barbell marketing strategy to balance lower-priced value items and higher-profit, more expensive menu offerings.
The company would also be testing, on a limited basis, delivery in 10 restaurants in Charlotte toward the end of this year or early next, he said.
“We believe conducting the test here in our hometown, a significant market for our brand and close to our support center, is important as we evaluate the results of the test,” he said. “This will be a limited test focusing on gathering data and real-world learnings to help make the best-informed decisions regarding future efforts toward delivery.”
Rutledge added that if the delivery test results in incremental sales additions, it would be expanded. He warned, however, that third-party delivery commissions, which can range from 20 percent to 30 percent, would be a hurdle.
Bojangles is also considering refranchising some of its restaurants, executives said.
John Jordan, Bojangles’ chief financial officer, said the brand is currently 58 percent franchised and 42 percent company-owned. As of Sept. 24, Bojangles had 749 locations, with 316 of those company-owned.
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