Known for its chicken and biscuits, Bojangles Inc. (BOJA, Financial) raised $147 million through an IPO with a projected opening price of $19 per share, which on its first day of trading marked a record rise of 47% with each share costing $26.55, which got a further raise to $27.97 before retreating. The NASDAQ-traded stock under the symbol "BOJA" booked $25.10 price in its afternoon trading. The valuations have made the company to become a $900 million worth.
The grand opening
Founded in 1977 by Jack Fulk and Richard Thomas, Bojangles had filed for an Initial Public Offering (IPO) of its common stock in April 2015 and expected to raise $372 Million through it. Before the stock opened for trading, the company was expecting the price of around 7.75 Million shares to be between $18 and $19 a share. However, the results came out way above expectations and are followed by the entry of market competitor Shake Shack in January, which had its shares rise up 44% so far. Revenues of the company went up 15% to $430.5 million last year with net income rising 7.4% to come at $26 million.
Majority of the money raised through the IPO will go to the controlling shareholder, private equity firm Advent International who has a 74% stake in the company post IPO down from the mark of 94% initially. The lead underwriters of the offering were Bank of America Merrill Lynch (BAC, Financial) (MER, Financial), Wells Fargo Securities (WFC, Financial) and Jefferies (JEF, Financial).
Breakfast at Bojangles
With specialization in spicy, Cajun fried chicken and buttermilk biscuits, Bojangles has a total of 622 outlets in the U.S. and Honduras noted at the end of fiscal 2014 with most of them in the South. Among these, almost 60% are franchisees. The fast-casual dining experience has been a hit with the masses and will continue to be the key serving point for the restaurant chain. The company considers breakfast to play an important role in many of the sales with about 38% of the revenue coming before 11 a.m. in the year 2014. Its breakfast menu has always attracted consumers due to the quick service restaurant’s quality food served fast. Since its inception, Bojangles’ breakfast menu, which includes chicken and biscuits mainly, has remained almost unchanged. Otherwise, the restaurant also serves Southern U.S. inspired food and also claims of using just the best available chicken. Another attraction is its fresh buttermilk biscuits, which are baked every 20 minutes throughout the day. Most of the company’s revenue amounting to 80% is generated via drive through and takeout. The company also revealed an average check of $6.68 generated for its company-operated restaurants making it more expensive than rivals McDonalds (MCD, Financial) and Wendy (WEN, Financial).
Other fast casual chains competing with Bojangles are Habit Restaurants (HABT, Financial), Potbelly (PBPB, Financial) and Noodles and Co. (NDLS, Financial) which all got listed in the past two years with Chiptole Mexican Grill (CMG, Financial) taking the lead whose shares have risen up more than fourteen fold since their debut in 2006.
Future menu
Fast-casual dining experience in the recent past has gained much popularity and is growing fast in the U.S. restaurant industry. It noted total annual sales rising 12.8% to $30 billion in 2014, which is 50% higher than the next fastest growing segment as per food service consultancy Technomic. The company looks forward to “double its footprint” in the next five to seven years while staying focused on store growth expected to be between 7%-8% which meets the criterion.
