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Chain LeaderEditorial Archives2003 — August — Turnaround Artist

Repair Man
Joe Drury is tuning up Bojangles' with a new image and renewed focus on the basics.

"Cleanliness and safe food handling are now part of daily operations because there is no room for error." —Bojangles' CEO Joe Drury
Joe Drury likes to fix things. Repairing old cars is a leisure time passion, second only to his love of auto racing. During the workweek, however, he thrives on reviving restaurant companies.

His latest project is Bojangles’ Restaurants Inc., the Charlotte, N.C.-based parent of Bojangles’ Chicken ‘n Biscuit with 308 units in 11 Southeastern states. Although its signature products remain strong sellers, nearly two decades of ownership changes had eroded the brand as well as corporate-store sales.

When the opportunity arose to become involved in Bojangles’ in 2000, Drury couldn’t resist. He acquired shares in the company and was appointed chairman and CEO in January 2001.

“I’d been watching the action at Bojangles’ for a while and always thought it had real possibilities,” says Drury. “Bojangles’ suffered from having been managed by individuals who just wanted to cash out for top dollar. No one was building Bojangles’ for long term.”

Just one year after Drury’s arrival, Bojangles’ Restaurants Inc. broke even, and management anticipates 2003 to be the company’s first profitable year since 1998. Drury attributes a new management team and rekindled emphasis on the basics. Sustainable growth is Drury’s goal, and Bojangles’ will open 40 locations in 2003.

Trying for a Hat Trick
From his first job in a fast-food restaurant at age 14, Drury was hooked. He eventually joined Wendy’s as a management trainee and rose through the ranks at Wendy’s International to become vice president of operations in the 1980s. Working closely with Wendy’s CEO Jim Near, Drury helped guide the chain’s focus back to burgers and turn the ailing company around.

In 1991, Drury became CEO of Carolina Restaurant Group, a bankrupt Wendy’s franchisee. Within two years, Drury returned the company to profitability, and grew sales by 15 percent annually.

While at Wendy’s International, he also ran Sister’s Chicken & Biscuit, competing directly with Bojangles’. Drury admired its product and franchise system and continued to track his one-time competitor.

Launched in 1977, Bojangles’ had grown from 24 locations when founders Jack Fulk and Richard Thomas sold it to Horn & Hardart in 1981 to 334 stores by 1984. Drained from overexpansion and riddled with discontented franchisees, Bojangles’ dwindled to 150 units and went through a leveraged buyout led by Interwest Partners and Sienna Holdings in 1990. In 1998, private investors acquired the chain, remodeled units and built out core areas.

The effort was not enough. Sales declined, particularly in corporate units, and profits stagnated. Disengaging himself from Carolina Restaurant Group, Drury bought shares in Bojangles’ and set out on his third endeavor to stabilize and grow a floundering restaurant company.

Something Old, Something New
First, Drury created an executive team by fusing Bojangles’ veterans with outside talent. Tom Lewison, former executive vice president with CKE Restaurants, came on as president last fall. Joseph Lenhart is CFO; recent positions include CFO of Olajuwon Management and CFO of Wendy’s of South Florida. Long-time Bojangles’ execs include Executive Vice President and General Counsel Eric Newman, an 18-year vet, and David Maisel, senior vice president of franchise development, with Bojangles’ since 1980.

“The restructuring of management was probably the most important thing,” says Drury. “We created a team that has very clearly communicated its intentions to be here for more than a few months or a year or two, that we’re working every aspect of Bojangles’ with the long term in mind.”

The next step in Drury’s turnaround plan was to address store-level operations and cleanliness. The company reviewed and updated every procedure manual and implemented new food-safety practices.

“We bought everything into the age of HACCP and redid production procedures that hadn’t been touched in 20 years,” he explains.

Inside Job
While the corporate structure and operations needed revamping, all agreed that Bojangles’ core menu—Cajun-style fried chicken; sides like dirty rice, pinto beans, coleslaw, and mashed potatoes and gravy; chicken sandwiches; and breakfast biscuit sandwiches—was best left alone.

Its image, however, did demand attention. Many stores looked old and dated, and the fits and starts of different remodeling and expansion efforts resulted in a jumble of presentations and formats.

“There are some less-than-positive perception issues out there,” Drury admits, adding that priority one was improving corporate stores. “The company operators are critical to our turnaround because they’re crucial to the G&A support.” Corporate units average $1.1 million annually, compared to franchised unit average volumes of $1.6 million. To ease the financial pressures at headquarters, corporate has sold 32 units to existing franchisees.

New procedures in place, Bojangles’ turned to training and incentives to improve quality and service. The company doubled its training staff and expanded management training. “A lot of the content was very task oriented,” says Lewison. “We layered in modules on soft skills and better bottom-line management tactics.”

A new POS and back-office computer system improves reporting and labor scheduling, and lays the groundwork for Web-enabled communication and training in the future, he adds. An All-Star Training Team now assists with openings, and quarterly meetings of the Bojangles’ Management Advisory Council provide a forum for discussion between unit operators and the executive team.

Most importantly, Bojangles’ rewards operators who excel. For example, the SHOWBO competition rates restaurants on food quality, service and cleanliness, and involves an operator review, awarding cash prizes of as much as $10,000.

“We’ve also increased the management bench at corporate stores by 30 percent in the past year and are paying bonuses based on new performance management metrics such as improved retention,” Lewison adds.

These efforts are beginning to pay off. Nearly three-quarters of Bojangles’ units systemwide now meet or exceed the company’s standards on quality evaluations. Customer surveys reveal “marked improvements in quality, speed of service and cleanliness,” says Lewison.

Systemwide sales rose almost 10 percent to $348 million in 2002, though comparable-store sales were flat. Average checks are up 50 cents from the 1990s to $4.51, and systemwide sales are expected to reach $380 million this year, putting Bojangles’ Restaurants in the black.

“We’re seeing the company stabilize and anticipate big results to come along later,” says Drury. “So far, store and company profits are improving. We’ve got to be patient.”

Face Lift
Drury is losing no time in updating the Bojangles’ brand, however. The exterior of the 3,800-square-foot, 96-seat prototype restaurant in Charlotte replaces the box-with-yellow-awnings look with brick facing, columns, archways and a new take on the Bojangles’ trade dress.

The interior continues the updated look and features the return of fried chicken to the front line. “There was a time when the chicken was right in front of the customer, and then it was moved to the back of the house,” Maisel explains. “We’ve put it back where it belongs—on the front line—so the freshness and quality is conveyed.”

The contemporary look is continued at the Bo-to-Go unit opened in January in a Charlotte office building. At 700 square feet, Bo-to-Go puts a new spin on the Bojangles’ concept. The menu includes the breakfast biscuit sandwiches, chicken sandwiches, wings and sides found at full-size Bojangles’, and introduces salads, some topped with Chicken Supreme strips or boneless Buffalo Bites. Bo-to-Go does not sell bone-in fried chicken, but management believes its absence helps the company gain footing in nontraditional locations. “Without the heavy prep of chicken on the bone, we now have entry to new venues,” says Newman. “Our sandwiches have a strong following and are a natural for the takeout concept, and putting our other chicken products on salads gives us credibility there as well.”

Checks average $2.35, and Newman reports sales at the existing location are “positive and growing.” Bojangles’ expects most of the new Bo-to-Go locations to be franchised.

Franchise Player
In fact, Bojangles’ anticipates most of its growth to be through franchisees. “We’re looking for a 30/70 mix of company- to franchise-operated locations as we build out existing markets,” says Drury. Currently, 200 of the chain’s 308 units are franchised. A team of five franchise area developers supports new and old operators. Franchisees go through the same six-week training program as corporate operators and have access to the new training materials and performance competitions.

Many franchisees who had watched owners come and go simply shrugged when Drury took over. Most are long-time operators of multiple stores, some with sales as high as $3 million annually. But much of the indifference dissipated as Drury’s operations orientation came to light.

“I’ve been impressed with Joe actually going into the restaurants, with him restructuring the organization to focus on chicken and biscuits,” says Tommy Haddock, president of Tri-Arc Food Systems in Raleigh, N.C., a 23-year franchisee with 31 Bojangles’ restaurants.

“For years, the brand had been shoved aside by corporate in the name of expansion. Joe’s been on both sides—as franchise operator and franchisor—so he knows that brand and operations are crucial,” Haddock adds.

Bojangles’ founder Richard Thomas, who now operates the R. Thomas Deluxe Grill in Atlanta, echoes those sentiments. “Joe is an operations guy, which is something none of the owners have been since Jack and I sold it,” he says. Thomas adds that the franchisees had continued to succeed, but corporate needs to take the lead and steer the concept’s direction.

Drury agrees: “Bojangles’ franchisees have always been focused on the product, the basics and the customer. Now it’s time for corporate to do the same and drive sustainable growth for the entire system.”

New franchisees like James “Hezzy” Miller, president of BOJ of Western North Carolina, appreciate the added support and brand development initiatives.

“Corporate is convinced of the merit of the concept and product, and franchisees have clearly demonstrated what it’s capable of when properly managed. Our hope is that corporate continues to solidify the brand position and develop a consistent marketing approach based on the quality and uniqueness of the food,” says Miller, who signed on in January 2001 and now operates nine locations.

“Anything they can do on the corporate level to strengthen the brand will help all franchisees,” says Tri-Arc’s Haddock.

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