Why Bojangles', Inc. Stock Is Getting Cut Today

By Seth McNew Markets Fool.com

What happened

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Shares of chicken-and-biscuits quick-serve restaurant Bojangles'(NASDAQ: BOJA)dropped as much as 17% today after the company reported first-quarter earnings that didn't quite satisfy investors' palates.

So what

For the first quarter, Bojangles' reported sales of $131.5 million, up 3% year over year but short of analyst estimates. Both owned and franchisedcomparable-restaurant sales decreased slightly, while the company increased sales through new-store development. Additionally, the company reported a small decrease in net income to$7.6 million, or $0.20 per share, down from $0.21 per share inQ1 2016.

Image source: Bojangles'.

Now what

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The company plans to focus on increasing its franchising business, and is currently testing new concept stores that will have a more modern design and additional technology features -- something other restaurants like Panera have been able to do with great success. In a press release, Bojangles' CEO Clifton Rutledgesaid:

Our 'Bojangles' of the Future' restaurant in Charlotte's Historic West End is scheduled to open soon and will join ourGreenvillelocation which opened earlier this year. The feedback we will gather from these locations will enable us to fine-tune the prototype so that we offer only the highest quality experience to our customers. We also have several remodels underway that include elements of the new design concept. Our excitement for these projects is shared by our franchisees and together we will take Bojangles' to the next phase of its growth and into an even more incredible future.

The restaurant industry has been facing a tough last few quarters as a general slowdown among the group has hurt same-store sales and earnings for many of the companies in this space.Regardless, Bojangles' stock had been climbing nicely so far in 2017, rising about 18% before today's drop, so that now it's essentially flat year to date.

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Seth McNew has no position in any stocks mentioned. The Motley Fool owns shares of Panera Bread. The Motley Fool has a disclosure policy.