Bojangles’ is a fast growing operator and franchisor with a menu centered on chicken and biscuits. Founded in 1977 in Charlotte, NC, Jack Fulk and Richard Thomas based their restaurant on distinctive flavor, high-quality products made from scratch, along with a festive design. The concept caught on fast with the first franchise location opening one year later.
Today, Bojangles’ has 761 restaurants across 11 states and Washington DC, clustered around their core market, North Carolina. Bojangles’ has grown at an impressive rate, opening 48 locations during 2017 alone. Bojangles’ looks to continue this growth with franchisees expanding into adjacent markets.
Net Lease Overview
Bojangles’ are great net lease tenants because their locations have strong real estate fundamentals. They operate in an internet proof industry, and their leases are investor friendly.
Bojangles’ knows a restaurant’s location can be critical to its success. Their in-house development team evaluates site’s demographics, traffic counts, and visibility. These factors not only lead to the success of a tenant but the real estate will hold its value.
The entire QSR sector is well positioned against any online competition. Tenants, such as Bojangles’, are able to provide their customers with food immediately, something an internet- based service cannot do.
Bojangles’ leases are very investor friendly. Bojangles’ tends to sign 15-year triple net leases, leaving the investor with no landlord responsibilities. The leases will also feature some form of rental increase, providing a hedge against inflation.
Bojangles’ has slightly more franchisee operators than corporate-operated locations. The corporate locations tend to trade at slightly lower cap rates because of the strong guarantee behind their leases.
Bojangles’ has traded at higher cap rates than the national chain chicken restaurants and on the lower end of the regional chains. This shows Bojangles’ relative strength among the many chicken chains.
Bojangles’ cap rate has compressed faster than the Single Tenant Net Lease (STNL) average. This rapidly changing cap rate is due to the growth of the chain.