North Carolina chicken chain Bojangles Inc. saw its stock jump 47 percent in a huge market debut on Friday, with investors voting big on its success.
Bojangles initial public officer price was just $19, but the stock increased to $27.97 before dipping back down to $25.10 in the afternoon. It opened at $26.55, a full 40 percent above the starting price.
As a result of the new stock price, the company is now worth $900 million.
The IPO price of $19 per share was actually an increase from earlier this week, when the company said it would increase the shares in price.
Bojangles is seeing big gains thanks to a growing market in the United States for fast food breakfast. In addition, its competitors — including KFC, owned by Yum Brands — are posting some strong sales growth.
Bojangles specializes in southern-style fast food, especially its breakfast biscuits and fried chicken. It also offers salads and wraps. About 38 percent of its sales come from breakfast.
The chain has its eyes on big growth over the next five years, with the company hoping to double its size while posting store growth at about 7 to 8 percent, which is about in line with what the chain has shown in the last few years.
That doesn’t mean a big expansion is coming. A Wall Street Journal report quoted the CEO, Clifton Rutledge, as saying that the company wouldn’t be focused on “putting dots on a map,” but rather the expansion would be focused on North Carolina and nearby states rather than jumping all around the country. However, it could lead to a gradual expansion to other states in the U.S.
Bojangles was founded in 1977. Right now, it has 258 company-operated restaurants, and 377 franchised stores at the end of March. The company pulled in more than $430 million in revenues, a 15 percent boost from the previous year.
Bank of America, Wells Fargo, and Jefferies led the offering by Bojangles. It’s not uncommon for restaurants to do well in their debuts on the market, and a 40 percent increase on the first day is actually typical for restaurant stocks over the last decade.
Shake Shake, which recently went public, also posted a big initial increase in its IPO. In the case of El Pollo Loco, a peer to Bojangles, it increased 60 percent on its first day.
Bojangles is based in Charlotte and specializes in spicy, “Cajun-style” fried chicken and buttermilk biscuits. Jack Fulk and Richard Thomas founded the chain in 1977. Fulk sold the Bojangles concept to Horn & Hadart Company in 1981, which grew the chain to 335 restaurants over a short period of time. Its 600th restaurant opened in July 2014 in Charlotte.
Horn and Hardart sold its interest in Bojangles in 1990 to Sienna Partners and Interwest Partners. At the time, the company was headed by a former executive from KFC named Dick Campbell. Bojangles actually attempted a public offering in 1994, but Campbell was replaced by CEO Jim Peterson and a group of investors bought the company, including a former executive with Wendy’s, Joe Drury.
The chain was purchased again by Falfurrias Capital Partners in 2007. The private equity firm then sold Bojangles to Advent International in Boston, another private equity firm, led by a former executive in charge of Dunkin Donuts.
Currently, Bojanlges has restaurants in 10 states and the District of Columbia, with most of those locations in the Southeast. About three restaurants are located in Honduras. Its first Kentucky location was opened in July 2014, 24 years after the last two Louisville locations were closed for good.
The common stock from the IPO was expected to raise $372 million.
