Originally created 12/13/04

Bojangles' exports its Cajun-spiced treats to China

CHARLOTTE, N.C. - Cajun-spiced fried chicken and "dirty rice" may not have enticed the Irish palate, but officials at Bojangles' are betting China will be a much hotter market.

The Charlotte-based chicken-and-biscuit chain has a five-year plan to build 10 stores in the world's most populous country. The first 6,700-square-foot store is scheduled to open early next year in Tianjin, China's third-largest city.

"I have no doubt that our food is a natural for their markets," said Eric Newman, executive vice president and general counsel for Bojangles', before he boarded a plane last week to go to Tianjin to work out final details of the first store.

"The Chinese love to eat spicy chicken," he said. "It's well known that they use a lot of bold flavors and spices in their cooking."

The nation's No. 7 fast food chain, Bojangles' has begun - and abandoned - past international operations in Ireland, Grand Cayman and Jamaica.

In moving into China, the company is working with franchisee Tianjin Kaobita Restaurant Services Co.

"We are selling more than food," Newman said. "We are also selling the American experience and cultural experience. Going to McDonald's means eating a hamburger, but it's also an American experience."

The Tianjin store will have two stories and features a miniature basketball court, evidence of how popular the game has become in China.

Fried chicken is another popular American import, Newman said, noting that Kentucky Fried Chicken opened its first restaurant in China in 1987 and now has more than 1,100 stores in the country.

Unlike most freestanding fast-food restaurants in the United States, the Bojangles' Tianjin store is being built in a mall. Residents have shown considerable interest during construction, Newman said.

"It has generated some excitement because it has a very American feel to it," he said.

So why not Beijing or Shanghai?

"Tianjin is China's third-largest city and the 21st biggest city in the world," he said. "The city has been trying to work its way out of the shadow of Beijing by doing things like free trade zones."

Bojangles' decided to target China after studying international growth possibilities.

"We are trying to identify our best opportunities and all signs point to Asia," Newman said. "We once were in Ireland, but the Irish palate proved to be not as welcoming."

Carl Sibilski, who covers the food industry as an analyst for Chicago-based Morningstar, Inc., said the venture has obvious risks but a lot of potential.

"It's no secret the Chinese people love chicken and KFC is doing very well there," he said. "As far as the product is concerned, it's probably the right one."

The biggest logistical problems for Bojangles' and its franchisee will be "getting things done on the ground" because of bureaucratic delays and other remaining problems from China's Communist economy, Sibilski said.

Chains that are already in China, like McDonald's and KFC are much bigger than Bojangles', making a Chinese venture less important to their overall bottom line. While KFC, a division of Louisville, Ky.-based Yum Brands, had $4.9 billion in sales last year, Bojangles' (No. 7 among U.S. fast food chains) will do about $424 million in sales at 335 restaurants in 2004.

Bojangles' has stores in just 11 Southeastern states (plus two in Honduras), so moving into a country halfway around the world is a big step.

"My gut reaction is that it is quite a gamble," Sibilski said. "But sometimes companies throw something up against the wall and see if it sticks."

Newman said his company's expectations are realistic.

"The annual revenue at a Bojangles' (restaurant) is about a third higher than at a KFC," he said. "We're not trying to be a giant killer, we want to find our niche. Often the big players come into a new market first and the consumer wants more variety."

Certainly, China has grown into a powerful consumer market that many U.S. companies hope to penetrate, and its demographics skew young.

"China is a nation of young people," Newman said.


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