Bojangles' Soars in Market Debut

By Lisa Beilfuss 

Shares of Bojangles' Inc. soared as much as 47% in their market debut Friday as investors piled into the North Carolina-based chicken chain.

The stock opened at $26.55, 40% above its initial public offering price of $19, and quickly ran to a high of $27.97 before retreating. The shares, listed on the Nasdaq under the symbol "BOJA," recently traded at $25.10 in afternoon trading.

The current stock price values the company at about $900 million.

Earlier this week, the company upped the terms of the offering and said it expected shares to price between $18 and $19 a share.

In an interview, Chief Executive Clifton Rutledge said, "It's been a great day for our brand and a great day for our employees and franchisees."

Bojangles' hopes to build on Americans' growing appetite for breakfast on the go, and it is entering the market as KFC, the chicken chain owned by Yum Brands Inc., last quarter reported its strongest U.S. same-store sales growth in a decade.

The restaurant operator sells a variety of southern fare, including breakfast biscuits and fried chicken dinners, in addition to salads and wraps. Breakfast represents about 38% of sales.

Over the next five to seven years, Mr. Rutledge said the company could "double its footprint" while taking a disciplined approach to store growth.

The CEO projects store growth between 7%-8%, a rate that is in line with its store expansion over the past several years.

"We won't jump states--it's not about putting dots on a map," the CEO said. For now, Bojangles' plans to concentrate growth in North Carolina and adjacent states, but it could eventually open shops outside of the region.

Founded in 1977, Bojangles' counted 258 company-operated and 377 franchised restaurants at the end of March. In 2014, the company generated $430.5 million in revenue, up 15% from a year earlier.

The offering was led by Bank of America Corp, Wells Fargo & Co. and Jefferies.

Restaurant stocks traditionally have performed well in market debuts. In the past 10 years, the average one-day pop for restaurant stocks topped 40%, according to Dealogic.

Shares of Shake Shack Inc. and Habit Restaurants Inc., the last two restaurants to go public, more than doubled in their stock-market debuts. The restaurant IPO before those burger chains, and what many investors view as Bojangles' closest peer, was El Pollo Loco Holdings Inc. Its stock jumped 60% in its first day of trading.

Write to Lisa Beilfuss at [e-mail]

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