Dive Brief:
- Church's Chicken is possibly looking for a buyer. Private equity firm FFL Partners, which purchased the chain a decade ago, has hired an advisor to explore the potential sale, according to Bloomberg.
- The QSR chicken chain is seeking roughly $350 million for its purchase, but the company declined to comment on the rumor.
- Despite a boost from rolling out delivery last year, Church's Chicken has suffered sluggish sales and declining store count numbers over the last few years. Competitors like Popeyes Louisiana Kitchen, a revamped KFC and Chick-fil-A continue to raise the stakes. Boneless chicken chains like Raising Cane's and Zaxby's are also cutting into market share, according to Restaurant Business.
Dive Insight:
Many restaurants consider a sale to help steady a sinking ship, while others bring in buyers to inject new blood and innovation into a company that has reached its maximum growth potential in-house. Analysts have previously told Restaurant Dive that many private equity owners have also reached the end of their seven- to eight-year hold times on their investments and have to sell.
Texas-based Whataburger is reportedly considering a sale, for example, likely for the purpose of expansion and growth as it is ranked in the middle of the pack for QSR burger joints in America. Perkins & Marie Callender's also have a sale on the mind. Papa Murphy's was recently sold to MTY Group while Del Frisco's is likely finalizing a sale. Centerbridge Partners also sold P.F. Chang's and Pei Wei in two separate transactions.
When it comes to QSR chicken chains, Church's Chicken is within the top 10 chicken chains, according to Technomic's 2019 Top 500 Chain Restaurant Report, with Chick-fil-A, KFC, and Popeyes snagging the top three spots, consecutively. Overall, Church's ranks 63 out of the top 500. This suggests that while the chain has had a lukewarm performance lately, it isn't exactly rock bottom. A sale could give it the boost of ideas, innovation and financing that it needs to tackle some of its competitors and to boost its perception and popularity among consumers.
Alongside stiffening competition in the chicken-focused QSR segment, restaurants are having to face challenges from giants like McDonald’s and Yum Brands that have deep pockets to invest in new technology-driven features and innovative menu offerings. McDonald's was recently voted the fan favorite among QSR diners, particularly due to its value-centric menu.
Church's Chicken recently hired a new CMO, Brian Gies, to help the brand expand its marketing efforts worldwide and to drive domestic marketing, but a sale could have a bigger impact overall when it comes to making the chain more competitive.
