Restaurant operator Bojangles’ Inc. plans to test a delivery service in Charlotte by the end of this year or early next year.
The test will include 10 locations in the Charlotte market.
“We believe conducting the test here in our hometown, a significant market for our brand and close to our support center, is important as we evaluate the results of the test,” said Chief Executive Officer Clifton Rutledge on a conference call with investors.
“Again, this will be a limited test focusing on gathering data and real-world learnings to help make the best informed decisions regarding future efforts towards delivery.”
Rutledge pointed out that food delivery services such as GrubHub only cover about 13 percent of Bojangles’ locations in the country. But the company is concerned about whether the delivery service would take away from location sales.
“If that’s incremental sales, then great, if that’s at nighttime and it’s something that we wouldn’t have got,” said Rutledge. “But what would kill us is that if that same customer would be coming through our drive thru, that we’re now taking away from that, then that just doesn’t work. That puts you upside down on that.”
But he added that the potential could be in additional sales from specific customers such as college students and health care workers.
“But if we’re seeing that, hey, we’re getting incremental sales on this as they’re telling us that nighttime and those type of thing closer to colleges and hospitals, those types of things, then we’ll look at that and ratchet that up going forward, if that’s truly the case,” he said.
The comments came after the Charlotte-based company reported earnings that met analyst expectations of earnings in the third quarter even as comparable restaurant sales declined in the third quarter. The delivery test is one of the ways that Bojangles’ is looking at combating the sales issue.
Total revenues for the restaurant chain increased 0.2 percent to $133.4 million. The increase primarily resulted from the addition of 50 system-wide restaurants as of Sept. 24, according to a filing made with the Securities and Exchange Commission.
The addition was offset by a 3.3 percent decline in company-operated comparable store sales and a 1.5 percent decline in franchise comparable restaurant sales. The decline from company-operated restaurants was due to a decrease in transactions offset by an increase in prices.
Net income decreased 30.6 percent to $7 million, or 18 cents per share, in the third-quarter compared to $10 million, 27 cents per share, from the same quarter last year.
“The persistent headwinds affecting our industry, they’re significant,” said Rutledge on a conference call. “Consumer spending remains soft, and it appears those with lower household incomes have been impacted more than others. The competition from convenience and grocery store is still a concern for many. Consumers are staying at home more and using delivery.”
Bojangles’ now expects to earn revenue between $544 million and $547 million for the year, down from its previous guidance $549 million and $553 million. The average analyst estimate is at $549.6 million.
It also reduced the number of new location openings from between 53 and 56 to 50 and 52.
Its share price is at $12.35 in Thursday afternoon trading, up 2.5 percent since the markets opened after rising as much as 5.5 percent.
However, the stock has gone down 40 percent, from $20.60, since the beginning of the year.

