Value Keeps Customers Coming to Bojangles'
Despite increasing menu prices, the fast-food chicken chain says perceived value has helped increase traffic and same-store sales.
By David Farkas, Senior Editor -- Chain Leader, 8/29/2008
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Bojangles' company-owned restaurants have posted same-store-sales gains for 60 consecutive months. |
So far, same-store sales and guest counts at the 147 company-run units have displayed surprising resiliency despite the economic downturn. The last hike, in June, took menu prices up a stiff 5 percent.
"It was an uncharacteristic move, says Executive Vice President and General Counsel Eric Newman, explaining that the chain raised prices only once, by 2.5 percent, between 2003 to October 2007.
Prices Rise
But rising ingredient costs, which have pressured margins, have forced the regional fast-feeder to step up prices across the board. "Everything we sell has gone up--chicken, wheat, grain, dairy, everything," Newman adds.
Costs will likely continue to rise. The USDA, for example, predicts broiler prices will increase in the second half of '08 and the first half of '09 when production is flat or down slightly on a year-over-year basis.
Despite the higher menu prices, Newman says that through June, guest counts at the company stores had not declined. "Over the last 60 months, we've had a net transaction increase of more than 10 percent in that period," he claims.
Comparable sales at units open longer than 15 months have also climbed in the same period. Newman says month-over-month gains have climbed steadily, generally ranging between 4 percent and 8 percent. Bojangles' is private company, and figures cannot be checked independently.
Value Remains Strong
Asked to account for the chain's positive sales and transaction numbers, Newman cites recent CREST data that shows Bojangles' value is a competitive point of difference. "Of all the major chains we're compared against that [serve breakfast], we were No. 1 in perceived value," he maintains.
Serving breakfast, roughly 40 percent of Bojangles' sales, has helped the value equation, Newman says. With CREST data showing significant weakness at dinner on weekends and weekdays at both casual-dining and QSR chains, Newman argues chains that market breakfast and lunch are better positioned to withstand the current downturn. That's because people tend to use quick-service restaurants for breakfast and lunch on weekdays--when they work--more so than on weekends.
The chain's made-from-scratch menu and fast service times, Newman says, add to the value equation.
Still, he cautions that the picture could change. July same-store sales crept up barely a point, and the impact of June's 5 percent price hike has yet to be felt.
"When you adjust the price, people react. Then they settle into it," Newman says, sounding hopeful.
Bojangles' isn't counting on promotions to lift sales, even briefly. "We are relying less on promotions and new products and more on executing our made-from-scratch menu to keep up our value position," Newman adds.
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