Latest / Choppin’ It Up by Bloomberg Intelligence / Church’s Texas Chicken CEO on Driving Traffic

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Church’s Texas Chicken CEO on Driving Traffic · Choppin’ It Up by Bloomberg Intelligence

• 0:13
  Speaker 1: Welcome to Chopping It Up, where we chat with the
• 0:15
  Speaker 1: executives shaping the future of the restaurant and food service industries.
• 0:19
  Speaker 1: I'm Mike Handlin, a senior restaurant and food service analyst
• 0:22
  Speaker 1: at Bloomberg Intelligence. Joining me today is Roland Gonzalez, CEO
• 0:26
  Speaker 1: of Church's Texas Chicken.
• 0:28
  Speaker 2: Church's has had a nice turnaround.
• 0:29
  Speaker 1: It's got about 1,600 stores, pretty evenly split between the U.S.
• 0:33
  Speaker 2: And international.
• 0:35
  Speaker 1: It's generated more than $ 1. 6 billion in system-wide sales last
• 0:39
  Speaker 1: year and returned a positive net unit growth in the U.S.
• 0:42
  Speaker 1: for the first time since 2010. The strong momentum has
• 0:46
  Speaker 1: continued into 2026, with both sales and traffic moving higher.
• 0:50
  Speaker 1: Thanks for doing this, Roland.
• 0:51
  Speaker 3: Yeah, thanks for the kind intro, Mike. Really excited to
• 0:53
  Speaker 3: be here.
• 0:54
  Speaker 2: For sure.
• 0:55
  Speaker 1: You know, in my digging, I found out that you
• 0:57
  Speaker 1: played baseball in college and the major leagues.
• 1:00
  Speaker 2: What position did you play?
• 1:02
  Speaker 3: Yeah, I did. Not quite the majors. I did play
• 1:04
  Speaker 3: in the minors, though. But I was a center fielder.
• 1:07
  Speaker 3: I was gifted with the speed. My senior year in
• 1:10
  Speaker 3: D1 baseball, I led the country in stolen bases, which
• 1:12
  Speaker 3: is kind of my claim to fame back in the day.
• 1:14
  Speaker 3: But that was going on almost 20 years ago now.
• 1:18
  Speaker 3: So we'll see. I could probably steal one more, but
• 1:21
  Speaker 3: don't ask me to steal another one after that.
• 1:23
  Speaker 2: Probably before something. That's very cool, man.
• 1:27
  Speaker 1: Did you have a coach that was especially impactful? And
• 1:29
  Speaker 1: what was one lesson that sticks with you today?
• 1:32
  Speaker 3: And it's a great question. You almost every coach, you
• 1:35
  Speaker 3: take a little bit of something different from each one.
• 1:38
  Speaker 3: Everybody has their own different styles and kind of will
• 1:40
  Speaker 3: say something that applies to you differently, kind of hits
• 1:43
  Speaker 3: with you. I take a lot of that even in
• 1:46
  Speaker 3: leadership today. I think it's very applicable to business. My
• 1:49
  Speaker 3: father from the very young age, you know, really was
• 1:52
  Speaker 3: an entrepreneur himself. So like just hard work ethic, like
• 1:54
  Speaker 3: also translated into the sports world.
• 1:56
  Speaker 1: Yeah.
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  Speaker 3: But really, it was until my my coach in college
• 2:01
  Speaker 3: where he he didn't give me the steel sign. Right.
• 2:05
  Speaker 3: I had what was called the green light. So I
• 2:07
  Speaker 3: would I would go whenever I felt I could take
• 2:10
  Speaker 3: the base, whether second base, third base, whatever. And that
• 2:13
  Speaker 3: just allowed me to play really loose and free. And
• 2:15
  Speaker 3: so I give a lot of credit to him for
• 2:17
  Speaker 3: for that.
• 2:18
  Speaker 2: Very cool. So what drew you to the church's gig?
• 2:21
  Speaker 3: I mean, talking about baseball, right, it's super competitive. When
• 2:25
  Speaker 3: I finished with the Phillies shortly after my senior year
• 2:29
  Speaker 3: in college, I was kind of looking for that transition
• 2:31
  Speaker 3: that all athletes try to go through. And I found
• 2:35
  Speaker 3: QSR as an incredibly equally competitive in the business world.
• 2:41
  Speaker 3: I always knew that I had that passion for business.
• 2:45
  Speaker 3: But 3G Capital had just purchased Burger King back home
• 2:47
  Speaker 3: in Miami where I was from. And it was just
• 2:50
  Speaker 3: a collision of a very competitive industry along with a
• 2:54
  Speaker 3: very competitive PE firm that allows you to sink or swim.
• 2:57
  Speaker 3: And so I found that fascinating. And that was kind
• 2:59
  Speaker 3: of my entry into QSR and restaurants. And man, I've
• 3:04
  Speaker 3: been in it ever since 2011. Learned a ton there
• 3:08
  Speaker 3: from RBI. Was there through all the acquisitions when it
• 3:10
  Speaker 3: was just Burger King and to Tim Hortons and Popeyes.
• 3:14
  Speaker 3: I then went after 10 years to a startup company.
• 3:17
  Speaker 3: Always wanted to get that startup experience. So I went
• 3:19
  Speaker 3: to a brand called Virtual Dining Concepts when COVID hit
• 3:22
  Speaker 3: and delivery was booming like crazy at the forefront of
• 3:26
  Speaker 3: that technology. But churches, you know, when I was able
• 3:30
  Speaker 3: to see the power of what you can do when
• 3:33
  Speaker 3: you turn around a legacy brand like Burger King, which
• 3:36
  Speaker 3: ultimately allowed RBI to become RBI and the growth that
• 3:39
  Speaker 3: it had. And I saw churches for a lot of
• 3:42
  Speaker 3: similarities where you have a brand that was maybe neglected
• 3:46
  Speaker 3: for a very long time, maybe lost its way. But
• 3:48
  Speaker 3: despite all that, has a big fanatics that love the
• 3:52
  Speaker 3: brand with amazing experiences and a ton of potential to
• 3:57
  Speaker 3: really unlock. And so when I saw churches, I was like,
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  Speaker 3: this is a brand that I can be for another
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  Speaker 3: 10 or 15 years as I was before when I
• 4:04
  Speaker 3: started my career. And so it's been incredible the last
• 4:07
  Speaker 3: three to four years to see the brand start to
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  Speaker 3: reach its full potential by becoming who it's always been,
• 4:13
  Speaker 3: you know, and giving it the love that it that
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  Speaker 3: it required.
• 4:15
  Speaker 1: And during that stint you had at Burger King and
• 4:18
  Speaker 1: Restaurant Brands International, you spent a lot of time focused
• 4:23
  Speaker 1: on operations.
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  Speaker 2: What did you learn during that tenure that you've been
• 4:26
  Speaker 2: able to implement at churches?
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  Speaker 3: Yeah, I feel so kind of privileged to be part
• 4:30
  Speaker 3: of that operations track. One thing that did really well
• 4:34
  Speaker 3: was I spent three months in a restaurant from doing
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  Speaker 3: all the, you know, it's kind of like a fast
• 4:40
  Speaker 3: track through being a team member into a shift manager
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  Speaker 3: and ultimately running the restaurant. Those three months I still
• 4:46
  Speaker 3: take with me till today. And I still am often
• 4:49
  Speaker 3: in the restaurants. One of the things that I implemented
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  Speaker 3: at churches when I became CEO was every single RFC
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  Speaker 3: individual has to work one day at the restaurant at
• 4:58
  Speaker 3: least once a year in order to get their bonus.
• 5:01
  Speaker 3: And they also have to experience the brand a couple
• 5:03
  Speaker 3: of times per year as a guest as well, provide feedback.
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  Speaker 3: Because there's never been a time where I've been in
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  Speaker 3: the restaurant where I've not learned something or taking something
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  Speaker 3: to make a better decision in the future. And so
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  Speaker 3: that's one of the things that I had a really,
• 5:17
  Speaker 3: really strong foundation on. So I did start in operations
• 5:21
  Speaker 3: and my first role in typical fashion. And I think
• 5:24
  Speaker 3: it's something that I like to tell because it's for
• 5:27
  Speaker 3: folks that are kind of in a crossroad and are
• 5:29
  Speaker 3: waiting for that big opportunity. Sometimes it's in front of
• 5:32
  Speaker 3: you and you have to take the leap. And for me,
• 5:33
  Speaker 3: it was after the three months in the restaurants, you
• 5:36
  Speaker 3: rotate into a couple of places in the organization. And
• 5:39
  Speaker 3: so it's a six month program at the end of it.
• 5:42
  Speaker 3: if you did well, you get offered a role. You
• 5:44
  Speaker 3: don't know what it is in the organization. For me,
• 5:45
  Speaker 3: they said, Hey, look, you know, you're top of the class.
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  Speaker 3: You did really well. We want to give you a
• 5:49
  Speaker 3: $ 300 million organization, uh, to run. And if you turn
• 5:53
  Speaker 3: it around, you can become, you know, a big VP. But, um,
• 5:58
  Speaker 3: if you want this opportunity, you need to move to
• 5:59
  Speaker 3: Puerto Rico next week. And for me, that was, um,
• 6:03
  Speaker 3: I was, I was in Puerto Rico the next week and, uh,
• 6:07
  Speaker 3: And it was the best decision I made in my
• 6:08
  Speaker 3: career because I learned so much about operations there. I
• 6:11
  Speaker 3: was a franchisee that was in the market for more
• 6:13
  Speaker 3: than 50 years, running incredible operations. And I was in
• 6:18
  Speaker 3: charge of actually doing unannounced visits to the locations, seeing
• 6:22
  Speaker 3: how the operations were. And I was learning about how
• 6:25
  Speaker 3: to do things right. Meanwhile, my other portfolio was the
• 6:29
  Speaker 3: Caribbean islands, a lot of smaller unit operators that really
• 6:33
  Speaker 3: needed the help. So I was learning... how to do
• 6:36
  Speaker 3: things well while applying it to other franchisees, making them better.
• 6:39
  Speaker 3: And it was making me better all in between. And
• 6:42
  Speaker 3: then along the way, I learned all about supply chain
• 6:44
  Speaker 3: and marketing, et cetera. So having a strong foundation of
• 6:47
  Speaker 3: operations in the restaurant industry out of the gates has
• 6:51
  Speaker 3: paid dividends from where I'm at now and has allowed
• 6:55
  Speaker 3: the levers, when we talk about churches, it's the levers
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  Speaker 3: you pull are as equal, equally important as the order
• 7:01
  Speaker 3: in which you pull them. And it has to be
• 7:03
  Speaker 3: off of a strong base of operations. And so that's
• 7:06
  Speaker 3: something I always take with me.
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  Speaker 2: Yeah, that's very cool. And three months in a restaurant,
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  Speaker 2: that's intense, man.
• 7:12
  Speaker 3: It's not easy, man. Not easy for sure. I have
• 7:15
  Speaker 3: a tremendous amount of respect. And a lot of people
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  Speaker 3: don't realize you're running a million dollar restaurant. Most locations,
• 7:21
  Speaker 3: most QSRs or fast casuals, like a restaurant manager running
• 7:25
  Speaker 3: a million dollar business, you're hiring, you're You're training, you're
• 7:28
  Speaker 3: developing a whole bunch of things. So a lot of
• 7:32
  Speaker 3: respect always for restaurant managers and crew members.
• 7:35
  Speaker 2: For sure.
• 7:36
  Speaker 1: Church has had a very strong 2025. That momentum has
• 7:40
  Speaker 1: carried into this year. How are you and the team
• 7:42
  Speaker 1: driving traffic in a tough environment for quick service restaurants?
• 7:46
  Speaker 3: It is tough sledding out there for a lot of brands.
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  Speaker 3: That said, we are in our third consecutive year of
• 7:51
  Speaker 3: positive traffic. This year is no different. We're up 6%
• 7:55
  Speaker 3: in sales, 5% in traffic in this kind of endeavor.
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  Speaker 3: And really for us, it's been being who the brand started.
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  Speaker 3: So like we're going to be 75 years old next
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  Speaker 3: year or 75 years young, as I like to say.
• 8:08
  Speaker 3: And when we started in 1952 in San Antonio, George Church,
• 8:13
  Speaker 3: you know, was selling, was allowing people to get full
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  Speaker 3: with incredible chicken, freshly made chicken, you know, hand battered
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  Speaker 3: and breaded for 49 cents. And that back then was valued. Um, obviously,
• 8:26
  Speaker 3: you know, now it looks a little bit different, but
• 8:29
  Speaker 3: it was now every brand, you know, uh, is kind
• 8:33
  Speaker 3: of having to position themselves as value, even though it's
• 8:36
  Speaker 3: not in their DNA for churches, it's always been in
• 8:38
  Speaker 3: our DNA. And before it became cool to be value,
• 8:41
  Speaker 3: that was like what we started our turnaround four years
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  Speaker 3: ago was being who we are. And we also serve
• 8:47
  Speaker 3: the underserved communities, the folks that need that the most.
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  Speaker 3: Over the years, the different leadership has been tempted to
• 8:54
  Speaker 3: go more premium, right? And to hire income neighborhoods or
• 8:59
  Speaker 3: open larger restaurants because the chicken is so good, right?
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  Speaker 3: You're like, well, we can go compete with these other
• 9:04
  Speaker 3: folks because we do have great chicken. But leaning into
• 9:09
  Speaker 3: that value, you know, you can, we have a promotion
• 9:12
  Speaker 3: just as an example where we have a two-piece feast,
• 9:14
  Speaker 3: what we call it. You can get two pieces of chicken,
• 9:16
  Speaker 3: a biscuit, uh, which is an iconic biscuit and a
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  Speaker 3: jalapeno for $ 3 and 79 cents. People need to eat
• 9:24
  Speaker 3: and you cannot find the quality of chicken anywhere that,
• 9:27
  Speaker 3: that we serve for that, for that value. And so
• 9:30
  Speaker 3: that has been a huge unlock for us. Um, and
• 9:32
  Speaker 3: while others, you know, that is our core competency, others
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  Speaker 3: whose core competencies seem may have been quality or ambiance
• 9:40
  Speaker 3: or service are trying to get in the value game.
• 9:43
  Speaker 3: And that's just helping us out even more, you know? So, um,
• 9:46
  Speaker 3: As long as we stay true to that in the U.S. Now, internationally,
• 9:50
  Speaker 3: it's a completely different story. As you mentioned at the beginning,
• 9:54
  Speaker 3: we are now approaching 30 different countries. Our positioning is different.
• 9:58
  Speaker 3: And sometimes we are premium international. but that's, you know,
• 10:01
  Speaker 3: we let the data lead us there, but that's been
• 10:03
  Speaker 3: a huge part of our traffic is leaning into that
• 10:06
  Speaker 3: on the individual side, people that are coming in, you know,
• 10:10
  Speaker 3: it's hardworking people themselves or as families and family meals
• 10:14
  Speaker 3: are a huge component. We give equal value places that you,
• 10:17
  Speaker 3: you know, offers you can't get anywhere else with churches.
• 10:21
  Speaker 2: So.
• 10:21
  Speaker 1: And what are you seeing from churches customer right now?
• 10:24
  Speaker 1: How sensitive are they to price?
• 10:26
  Speaker 3: They're extremely, they're extremely sensitive. You know, the cash economy is,
• 10:30
  Speaker 3: is real prices continue to go up. We have a
• 10:33
  Speaker 3: couple of advantages in that we're in the right category.
• 10:36
  Speaker 3: So other, other categories like, like beef and coffee have
• 10:40
  Speaker 3: gone up much more. In addition, though, bone and chicken
• 10:44
  Speaker 3: is our, is our big one, right? So, so we
• 10:46
  Speaker 3: do sell tenders and we do have, have that kind
• 10:48
  Speaker 3: of stuff, but our bone in chicken is really what
• 10:50
  Speaker 3: we're known for and what we sell a lot of
• 10:52
  Speaker 3: that has been even less impacted. And then when you
• 10:55
  Speaker 3: overlay that, a lot of folks come to us for
• 10:58
  Speaker 3: dark meat chicken that we've actually seen deflation in that category.
• 11:02
  Speaker 3: So it's allowed us to maintain prices low while everybody
• 11:06
  Speaker 3: else has had to take price. And, and one of
• 11:08
  Speaker 3: our strategies that's allowed us to get traffic is just
• 11:11
  Speaker 3: holding price and not taking price. Um, And it's tempting
• 11:15
  Speaker 3: because it does flow to the bottom line very well,
• 11:17
  Speaker 3: every dollar that you increase price. But we would rather sell,
• 11:21
  Speaker 3: you know, 2X more of a product than, you know,
• 11:25
  Speaker 3: see a decline at a higher margin. So, and I
• 11:27
  Speaker 3: think our franchisees, you know, have bought into that as well.
• 11:30
  Speaker 3: And that's impacted the system. But it all comes down
• 11:34
  Speaker 3: to like, it was first holding franchisees accountable. It was
• 11:39
  Speaker 3: giving them the support that they need to be successful.
• 11:42
  Speaker 3: much stronger operations. So while we've seen, this is the
• 11:45
  Speaker 3: first time it's ever happened in any brand, Mike, where
• 11:48
  Speaker 3: we've improved our overall satisfaction, all the operation metrics you
• 11:51
  Speaker 3: can think of. We've gotten faster in speed. We're faster
• 11:54
  Speaker 3: by 50 seconds now than we were when I first
• 11:56
  Speaker 3: started while having more people in the restaurants. That's the
• 11:59
  Speaker 3: first time in any brand that's ever happened. And it
• 12:02
  Speaker 3: just shows how much love the brand needed. And these
• 12:05
  Speaker 3: are basic stuff. I wish I could say that it was,
• 12:08
  Speaker 3: you know, this AI crazy thing that we came up
• 12:10
  Speaker 3: with or something. It was, you know, 40% of our
• 12:14
  Speaker 3: locations had working drive-thru timers. You can't improve the speed
• 12:18
  Speaker 3: if you don't have them. Now that's a big investment,
• 12:21
  Speaker 3: but franchisees invested in it. We invest in our company
• 12:23
  Speaker 3: locations and then we provided the systems around to improve it.
• 12:27
  Speaker 3: And guess what? Now our throughput during peak times are
• 12:30
  Speaker 3: higher than they've ever been before. More people are coming back.
• 12:32
  Speaker 3: We're remodeling. So there's another thing. We've remodeled a hundred
• 12:36
  Speaker 3: locations every year for the last four years. This will
• 12:39
  Speaker 3: be the fourth year. So now you have better operations,
• 12:42
  Speaker 3: the pricing is attractive, and they're coming in. That's part
• 12:45
  Speaker 3: of value too, right? Value for the team members that
• 12:48
  Speaker 3: are working there and value for the guests that are
• 12:50
  Speaker 3: experiencing it. So when you add up all those together,
• 12:52
  Speaker 3: you know, it's a component of all those things that
• 12:55
  Speaker 3: are allowing the traffic and the operations to be better.
• 12:58
  Speaker 2: That's great.
• 12:59
  Speaker 1: You know, and to follow up on the remodels, you know,
• 13:01
  Speaker 1: when we met a couple months back, you said you
• 13:04
  Speaker 1: were seeing sales lifts of 15 to 20% at some restaurants.
• 13:07
  Speaker 1: You know, what types of, changes are you seeing in
• 13:11
  Speaker 1: customer behavior at these re-image stores.
• 13:13
  Speaker 3: Yeah we have um our our image is called the
• 13:16
  Speaker 3: blaze image and so you know many times you you
• 13:19
  Speaker 3: try to figure out what is the one that's going
• 13:21
  Speaker 3: to resonate to guests the good news is that's one
• 13:23
  Speaker 3: thing that that we had that really was resonating was
• 13:25
  Speaker 3: the image itself our guests are are very you know
• 13:29
  Speaker 3: if you do the fundamentals with our guests like they
• 13:31
  Speaker 3: really repay you with with um with their business more
• 13:35
  Speaker 3: often with more frequency The buildings, because we were 75
• 13:39
  Speaker 3: years in the business, a lot of our buildings needed
• 13:41
  Speaker 3: a lot of love and were overdue. So part of
• 13:44
  Speaker 3: it was that it's not like you're refreshing an already
• 13:47
  Speaker 3: remodeled building. It's like you kind of have gone through
• 13:50
  Speaker 3: a couple of cycles where you've needed to do a remodel.
• 13:52
  Speaker 3: And when you finally do it, it's like, wow, it
• 13:54
  Speaker 3: really pops. And so that's been part of it. There's
• 13:57
  Speaker 3: also like deferred maintenance, like parking lots and things like that,
• 14:00
  Speaker 3: that you wouldn't technically categorize as a remodel, but makes
• 14:04
  Speaker 3: a big difference. in our world, even lighting. So if
• 14:07
  Speaker 3: you think about the type of neighborhoods in which we operate,
• 14:11
  Speaker 3: like lighting and safety is really important. And so updating
• 14:14
  Speaker 3: those is going to automatically get you some additional traffic.
• 14:19
  Speaker 3: So yeah, 15%, 20%. We've actually seen even upwards of 30%
• 14:23
  Speaker 3: in our company locations. That's why we recently announced a
• 14:29
  Speaker 3: deal with Golub Capital, who came in as a minority
• 14:34
  Speaker 3: equity partner, we've worked with them in the past. They've
• 14:36
  Speaker 3: been great partners with us who've come in and we
• 14:39
  Speaker 3: were already in a strong position on our balance sheet,
• 14:41
  Speaker 3: but now we have even more cash to go faster.
• 14:44
  Speaker 3: So we're going to be accelerating a ton of remodels
• 14:46
  Speaker 3: in our company locations so that we can get better,
• 14:49
  Speaker 3: give better guest experience, but also see those incredibly high returns.
• 14:53
  Speaker 3: And then we're also going to be opening new restaurants
• 14:56
  Speaker 3: in white space areas, which is also really exciting in
• 14:59
  Speaker 3: the Northeast, maybe coming to a place near you, Mike.
• 15:01
  Speaker 2: All right, good stuff.
• 15:03
  Speaker 1: You know, digital has increased from roughly 6% of sales
• 15:06
  Speaker 1: to around 20. You know, I imagine the guest check
• 15:08
  Speaker 1: averages received the boost. How else has it impacted your business?
• 15:12
  Speaker 3: Yeah, that was, you know, when you talk about sequencing,
• 15:16
  Speaker 3: modernizing the brand is really important. And so we did
• 15:21
  Speaker 3: not have a first party app at all. And so
• 15:24
  Speaker 3: launching that from, you know, from scratch, we now have
• 15:27
  Speaker 3: 3 million loyalty members that we did have before that
• 15:29
  Speaker 3: are engaging with the brands. So when you think about
• 15:32
  Speaker 3: just learning what our guests like, how they like things packaged,
• 15:36
  Speaker 3: how they like to be communicated with, that expands beyond
• 15:39
  Speaker 3: the first party app into other different things, whether it's
• 15:42
  Speaker 3: social media, whether it's the way that we position our media.
• 15:46
  Speaker 3: We've learned a lot through that program. That's allowed us
• 15:49
  Speaker 3: to just build on it. And we're just scratching the surface.
• 15:51
  Speaker 3: I think when you think about future levers in 27,
• 15:53
  Speaker 3: 28 and beyond, that really important piece of the business
• 15:58
  Speaker 3: for us is going to pay dividends. So Yeah, just
• 16:01
  Speaker 3: modernizing the brand, engaging in guests the way they want
• 16:04
  Speaker 3: to be engaged with. We just launched catering this summer.
• 16:07
  Speaker 3: I think catering has also been an untapped platform. We're
• 16:10
  Speaker 3: building that. Our food travels really well. We just have
• 16:13
  Speaker 3: to get the word out that we can do it
• 16:15
  Speaker 3: and have good experiences. And then when you think about digital,
• 16:20
  Speaker 3: a lot of folks, like as you mentioned, we're approaching 20%.
• 16:24
  Speaker 3: A lot of folks in our competitive segment and others
• 16:26
  Speaker 3: in the QSR industry attach kiosks, for example, as part
• 16:30
  Speaker 3: of digital. We don't have a kiosk in any restaurant
• 16:33
  Speaker 3: right now. So we're just getting that off the ground.
• 16:36
  Speaker 3: And I think that's another big lever for us when
• 16:38
  Speaker 3: you think about 10% or 15% higher checks coming in
• 16:42
  Speaker 3: through that vehicle. I think that that is frictionless. It's
• 16:48
  Speaker 3: going to help. I don't like to say it saves
• 16:50
  Speaker 3: labor in the restaurant, but you can reallocate that labor
• 16:52
  Speaker 3: to do other things. And that's how I personally look
• 16:54
  Speaker 3: at it. So a ton of benefits there. And that's
• 16:57
  Speaker 3: one thing when you think about the tail end of
• 16:59
  Speaker 3: this year in 27, you're going to see a lot
• 17:01
  Speaker 3: of a lot more kiosks in the restaurants, which will
• 17:03
  Speaker 3: help us get to that 30 plus on the digital
• 17:06
  Speaker 3: side of things.
• 17:07
  Speaker 2: Good stuff.
• 17:09
  Speaker 1: With average unit volume now above 1.2 million, the franchisee
• 17:12
  Speaker 1: economics have improved and you've returned to net store growth.
• 17:17
  Speaker 1: where do you think AUVs can go in the next
• 17:19
  Speaker 1: few years? And what are the biggest levers to get there?
• 17:23
  Speaker 1: And what can that do for your net unit growth?
• 17:26
  Speaker 3: Yeah. So as part of the traffic, which has been
• 17:29
  Speaker 3: the healthiest growth, of course, sales have followed. And so
• 17:32
  Speaker 3: you would be hard pressed to find another brand that
• 17:34
  Speaker 3: has grown 35% plus over the last four years in
• 17:38
  Speaker 3: terms of sales. So we've gone from 950,000 a unit
• 17:41
  Speaker 3: to now, like you said, 1.2 or above. on the
• 17:46
  Speaker 3: average of the system. If you look at just new
• 17:48
  Speaker 3: restaurants and, you know, they're averaging 1.4 to 1.6. And
• 17:53
  Speaker 3: so I think that that's extremely attainable for the system
• 17:56
  Speaker 3: when you think about moving the rest of the boats up.
• 17:58
  Speaker 3: So 1.4, 1.6. For us, even at 1.2, which is
• 18:04
  Speaker 3: where we're at right now, we see very, very strong margins.
• 18:08
  Speaker 3: We can go into places that others won't go or
• 18:12
  Speaker 3: can go. Our occupancy costs are very low. Our labor
• 18:15
  Speaker 3: costs are very low in the way that our model is.
• 18:18
  Speaker 3: Our cash on cash returns are 20%, you know, with
• 18:21
  Speaker 3: that model. So it's a lower barrier of entry. So
• 18:24
  Speaker 3: I think we can get AUVs to 1416. If we
• 18:27
  Speaker 3: can get there, I think that's just going to continue
• 18:29
  Speaker 3: to accelerate the growth. Franchisees are signing up more than
• 18:32
  Speaker 3: they ever have existing franchisees and new franchisees to build
• 18:35
  Speaker 3: new units. We brought on Bobby Marina as our chief
• 18:38
  Speaker 3: development officer, who's done a great job developing that pipeline.
• 18:43
  Speaker 3: We went from flat in 2024 to growth. This is
• 18:47
  Speaker 3: a brand that had been shedding units for a while. We,
• 18:51
  Speaker 3: in 2024, kind of kept it flat, grew close to
• 18:54
  Speaker 3: 10 units last year. We'll do that again this year.
• 18:58
  Speaker 3: And then I'm really looking forward to a breakout 27
• 19:01
  Speaker 3: because that's when all the pipeline that we've been building
• 19:03
  Speaker 3: is really going to make a huge impact. And I
• 19:05
  Speaker 3: wouldn't be surprised if we hit 30 or 40 net
• 19:07
  Speaker 3: new units this in 2027, which is going to be really,
• 19:11
  Speaker 3: really exciting for us. And that's just in the US, right?
• 19:14
  Speaker 3: We're going to be opening 100 plus units internationally in 27.
• 19:18
  Speaker 3: We've already been opening north of the 80s on the
• 19:22
  Speaker 3: international side.
• 19:22
  Speaker 2: All right, good stuff. And I want to get back
• 19:24
  Speaker 2: to that.
• 19:25
  Speaker 1: But before we do, you and the team are using
• 19:28
  Speaker 1: company capital to seed markets where churches has little or
• 19:31
  Speaker 1: no presence, you know, Philly and Cleveland, or I think
• 19:34
  Speaker 1: two that you mentioned to me, Please walk us through
• 19:37
  Speaker 1: that strategy and how the Philadelphia expansion is going.
• 19:41
  Speaker 3: Yeah, really exciting for us. It's just another way for
• 19:45
  Speaker 3: us to show, we can grow where we're already in.
• 19:49
  Speaker 3: So if you look at the country, we're close to
• 19:52
  Speaker 3: 800 locations today. Through our SiteWise model, we have about
• 19:58
  Speaker 3: 2,000 seed points that allow us to have north of
• 20:01
  Speaker 3: that $ 1. 3 million AUV that we talked about. And so
• 20:06
  Speaker 3: part of that is growing where we already are, but
• 20:08
  Speaker 3: There's a ton of white space that when you look
• 20:10
  Speaker 3: at DMAs, which we win at, they just jump off
• 20:13
  Speaker 3: the page. Philly's one of them. Cleveland. We look at Baltimore.
• 20:17
  Speaker 3: There's others. We've already broke the ice in Philly. The
• 20:21
  Speaker 3: first restaurant that we opened there opened with more than
• 20:26
  Speaker 3: $ 90, 000 a week in sales. So it broke the record
• 20:30
  Speaker 3: for the largest company location restaurant. It's settling in nicely.
• 20:34
  Speaker 3: We're also learning a ton of optimizing that since it's
• 20:38
  Speaker 3: the first white space kind of market that we've been in.
• 20:40
  Speaker 3: We opened our second location. That's settling in at like
• 20:43
  Speaker 3: $ 50, 000 a week in Philadelphia now. And so really, really exciting.
• 20:48
  Speaker 3: The goal there is to prove out that you can
• 20:50
  Speaker 3: go to these new spaces, get people really fired up
• 20:53
  Speaker 3: about it. And it's a really great example of like
• 20:56
  Speaker 3: an area where we were in Philadelphia before. We had
• 20:59
  Speaker 3: more than a dozen restaurants in Philadelphia at one point
• 21:01
  Speaker 3: in time during the 75-year journey. So when you go
• 21:04
  Speaker 3: with your, you know, when I go through the airport
• 21:07
  Speaker 3: with the church's logo or, you know, renting a car
• 21:09
  Speaker 3: or something, they're like, oh my gosh, this church is
• 21:11
  Speaker 3: coming back. So you don't have to reeducate a lot
• 21:14
  Speaker 3: of the consumers about churches. It's already, they already know
• 21:17
  Speaker 3: the brand. And now when we come back, it's looking fresher.
• 21:20
  Speaker 3: Operations are better, right? Food is better. And so they're
• 21:24
  Speaker 3: just like, wow, you know, they're really excited for it
• 21:27
  Speaker 3: to come back. And I think that's what we're seeing
• 21:29
  Speaker 3: in Philadelphia. We'll open another one in the beginning of
• 21:32
  Speaker 3: the new year. And then we're going to start packaging, right?
• 21:36
  Speaker 3: Who are the franchisees that are really interested in the market?
• 21:39
  Speaker 3: We're already getting a lot of knocks on the door there.
• 21:41
  Speaker 3: And the idea would be to prove it out, sell
• 21:45
  Speaker 3: those locations in exchange for a development agreement, and then
• 21:49
  Speaker 3: continue to rinse and repeat that. And so we're already
• 21:51
  Speaker 3: down the line in Cleveland as well to replicate that.
• 21:54
  Speaker 3: It's just another way, again, to go faster in terms
• 21:57
  Speaker 3: of our development. Great.
• 21:59
  Speaker 1: You still have roughly 160 company-owned restaurants, and you've talked
• 22:03
  Speaker 1: about refranchising a few dozen to get to 100 to 120.
• 22:08
  Speaker 1: Why is that the right long-term level? And who do
• 22:11
  Speaker 1: you think is best suited to take on those units
• 22:13
  Speaker 1: that you sell?
• 22:14
  Speaker 3: Yeah, our company units are doing really, really well. Credit
• 22:18
  Speaker 3: to the teams that are working on getting there. We
• 22:22
  Speaker 3: don't need to sell them, I'll say that, right? So
• 22:24
  Speaker 3: it's allowed us, I'll say, to have a ton of credibility.
• 22:27
  Speaker 3: So having that large amount of restaurants across the country
• 22:32
  Speaker 3: allows us to, to really feel what's going on, right?
• 22:35
  Speaker 3: Is our strategy working? How do we tweak this? How
• 22:37
  Speaker 3: do we tweak that to, that will affect the general
• 22:39
  Speaker 3: franchise system? I would say if we stayed at 160
• 22:43
  Speaker 3: and continue to grow a franchise, which is, which is
• 22:47
  Speaker 3: going to be our primary ways of growth, like we're
• 22:49
  Speaker 3: still going to be a very highly franchised system. So
• 22:51
  Speaker 3: we don't need to sell, but, um, We want to grow.
• 22:55
  Speaker 2: Right.
• 22:55
  Speaker 3: And we believe that franchisees are the best way to
• 22:59
  Speaker 3: grow that. We want to find the right partners. There's
• 23:02
  Speaker 3: whether it's existing or new to take on some of
• 23:04
  Speaker 3: these territories and grow them out. But it has to
• 23:07
  Speaker 3: be the right deal. You know, like I said, they're
• 23:09
  Speaker 3: really great functioning restaurants. And so for us to give
• 23:12
  Speaker 3: up those restaurants, it really needs to come with a
• 23:14
  Speaker 3: credible partnership and someone that we really believe in to
• 23:18
  Speaker 3: grow that market out and make it even better. I
• 23:21
  Speaker 3: will say, you know, there's a couple of areas percolating
• 23:24
  Speaker 3: out there where we can make that happen. And so
• 23:27
  Speaker 3: if we can get to, you know, 120 to 100
• 23:30
  Speaker 3: to 120, I would be fine with that as long
• 23:34
  Speaker 3: as it's growing the brand. And my goal is to
• 23:37
  Speaker 3: really get churches into more guests and households all over
• 23:41
  Speaker 3: the country. And so how whatever the best way to
• 23:43
  Speaker 3: do that, I'm going to be a proponent of it.
• 23:46
  Speaker 1: And you mentioned, you know, you're close to opening 100
• 23:48
  Speaker 1: restaurants a year overseas. What makes the brand translate so well?
• 23:52
  Speaker 3: Yeah, ton of credit to the team there. People internationally,
• 23:55
  Speaker 3: they love chicken. It's a fast-growing category, even more so
• 24:00
  Speaker 3: in the U.S., you could argue, in different parts of
• 24:02
  Speaker 3: the different countries out there in the world. I think
• 24:05
  Speaker 3: whenever we go into a new country, and one of
• 24:08
  Speaker 3: the things that the team has done really well, historically,
• 24:11
  Speaker 3: I'm talking about through Church's history, is get incredible partners internationally.
• 24:16
  Speaker 3: I mean, these guys are all very well-capitalized, run tremendous restaurants.
• 24:20
  Speaker 3: When I looked at the overall satisfaction scores, they're like
• 24:24
  Speaker 3: all in the nineties. And I'm like, what, something's wrong here.
• 24:26
  Speaker 3: There's gotta be some sort of gaming in the system.
• 24:29
  Speaker 3: These are like, you know, really crazy numbers. Then I
• 24:32
  Speaker 3: went to the countries and you see it, they're like
• 24:35
  Speaker 3: sparkling clean. They're like two stories high. Everybody's smiling. The get,
• 24:39
  Speaker 3: you know, the speed is fast. They run really good
• 24:42
  Speaker 3: restaurants are very consistent. So great. But, but again, credit
• 24:45
  Speaker 3: goes to the partners there. We have For example, we
• 24:48
  Speaker 3: have 100 plus restaurants in Malaysia. We have 115 in
• 24:50
  Speaker 3: Puerto Rico with AUVs of three and a half million dollars.
• 24:54
  Speaker 3: And these type of countries are one unit operators. We
• 24:58
  Speaker 3: don't have a lot of, you know, majority of our
• 25:00
  Speaker 3: countries are one unit operators, not even master franchise with
• 25:04
  Speaker 3: the exception of Mexico. We just run great restaurants who love,
• 25:07
  Speaker 3: who are making a lot of money and are wanting
• 25:09
  Speaker 3: to grow. So that's the key number one of what
• 25:13
  Speaker 3: has allowed us to be successful. Key number two is
• 25:15
  Speaker 3: we're data driven completely. So when we go into a
• 25:18
  Speaker 3: new country, if we don't have, like our biscuit in
• 25:22
  Speaker 3: the US is iconic. We just won the award USA
• 25:24
  Speaker 3: Today Best Biscuit. I mean, that's my Achilles heel. I
• 25:27
  Speaker 3: have to have at least three of them when I
• 25:28
  Speaker 3: go to the restaurant. But internationally, there's some countries that
• 25:33
  Speaker 3: they don't, like the biscuit is just foreign to them.
• 25:35
  Speaker 3: Is it a dessert? Is it something else? And it
• 25:37
  Speaker 3: just doesn't sell. And so guess what? We don't have
• 25:40
  Speaker 3: the biscuit there, right? And we're okay with that. We
• 25:42
  Speaker 3: don't force it down to franchisees. We let the data
• 25:44
  Speaker 3: guide us. There's other countries where, bone-in chicken is not
• 25:47
  Speaker 3: necessarily the number one item in the pea mix, but
• 25:51
  Speaker 3: instead it's handheld, what they call burgers, right? But it's chicken.
• 25:55
  Speaker 3: And so we have to innovate on that platform as
• 25:58
  Speaker 3: our lead. And we will do that and we will
• 26:00
  Speaker 3: win with better chicken. So I think that's where other
• 26:04
  Speaker 3: brands go wrong sometimes, where they try to be a
• 26:06
  Speaker 3: little bit too draconian as they expand into other countries, because,
• 26:10
  Speaker 3: you know, the standards are the standards here. And you
• 26:11
  Speaker 3: do have to have standards, don't get me wrong. We
• 26:13
  Speaker 3: do not have any, we're unequivocal on what the food
• 26:16
  Speaker 3: safety standards are, things like that. But spices, flavors, I mean,
• 26:22
  Speaker 3: we are in different countries. We need to adapt to
• 26:24
  Speaker 3: the local. So that's, I think, been one of our
• 26:28
  Speaker 3: big success. We have an incredible international chef, Eric Stein, incredible.
• 26:34
  Speaker 3: And that's very reflective in our new country entry into China,
• 26:37
  Speaker 3: where others have failed. We started to blow the doors
• 26:40
  Speaker 3: off as we opened the first restaurant there three weeks ago.
• 26:44
  Speaker 2: Oh, cool.
• 26:44
  Speaker 1: You know, chicken has been such a, like, competitive space
• 26:49
  Speaker 1: in quick service in the last few years, whether it's
• 26:51
  Speaker 1: from chicken brands or, you know, burger chains improving their
• 26:56
  Speaker 1: chicken sandwich and their chicken tender offerings. And we're seeing
• 27:01
  Speaker 1: some chains like Wingstop and Popeye's struggle mightily in this environment.
• 27:06
  Speaker 1: You know, do you think the segment's getting oversaturated?
• 27:08
  Speaker 3: I mean, I do think that there's... traffic loss occurring
• 27:13
  Speaker 3: in a lot of different brands. I do think that
• 27:17
  Speaker 3: you need to have a differentiated product somehow, some way, right?
• 27:20
  Speaker 3: For us, like we talked about, it's valued at incredible quality.
• 27:24
  Speaker 3: You have to know who your guest is. I would
• 27:26
  Speaker 3: say there's still plenty of room for brands to win
• 27:30
  Speaker 3: across the segment, but you have to be true to
• 27:33
  Speaker 3: who you are. I will say Wings in particular, I
• 27:36
  Speaker 3: do think has softened. But I do think that that
• 27:39
  Speaker 3: has been, when you think about the category of chicken,
• 27:41
  Speaker 3: going back to price again, that's the one that's been
• 27:43
  Speaker 3: affected the most, it seems like. So it's hard to
• 27:47
  Speaker 3: have the right margins. You have to raise price for
• 27:50
  Speaker 3: it to make sense. And guests are like, well, do
• 27:53
  Speaker 3: I want to have four to six wings? Or do
• 27:56
  Speaker 3: I want to have like three large pieces of chicken?
• 27:58
  Speaker 3: Or do I want to have like six or seven
• 28:00
  Speaker 3: pieces of tenders? I don't think that they're seeing the
• 28:02
  Speaker 3: value and the quantity of the wings as they are
• 28:05
  Speaker 3: the other categories. So I do think Even our LTO
• 28:09
  Speaker 3: with the wings that we have right now, it's doing okay,
• 28:13
  Speaker 3: but it's not having the impact that you would think
• 28:15
  Speaker 3: it would have in the type of, you know, some
• 28:18
  Speaker 3: of the success we've had with other promotions. But it's
• 28:21
  Speaker 3: because of the price. We're not able to, you know,
• 28:25
  Speaker 3: sharply price those as much as we would something else.
• 28:27
  Speaker 3: And then you combine that with the value perception that
• 28:30
  Speaker 3: the guest has. I do think there is a little
• 28:32
  Speaker 3: bit of headwind for wings in particular.
• 28:34
  Speaker 2: Yeah, that makes a lot of sense.
• 28:37
  Speaker 1: And I have to finish with the food other than
• 28:39
  Speaker 1: the three biscuits, which, which your go-to order.
• 28:42
  Speaker 3: Man, the biscuits. I'm a white meat guy. So I do,
• 28:45
  Speaker 3: you know, the, the breasts and the wings. So I'll
• 28:48
  Speaker 3: definitely have at least three pieces of chicken, usually two
• 28:51
  Speaker 3: wings and a large breast with the chicken. My, my
• 28:54
  Speaker 3: go-to side are the jalapeno poppers that we have are
• 28:57
  Speaker 3: the bombers. They're very, very good. Um, We have probably
• 29:02
  Speaker 3: what's the most polarizing side of any menu item in
• 29:06
  Speaker 3: the QSR industry, which is fried okra. And so people
• 29:10
  Speaker 3: will either not eat it or you'll have people that
• 29:13
  Speaker 3: just go to churches because of the fried okra. And
• 29:16
  Speaker 3: so that's a staple of ours for sure that every
• 29:18
  Speaker 3: now and then I'll like to try.
• 29:20
  Speaker 2: Very cool.
• 29:22
  Speaker 3: Roland, that was great.
• 29:23
  Speaker 2: Thanks for joining me.
• 29:24
  Speaker 3: I really appreciate it. Yeah, thanks a lot. It was
• 29:25
  Speaker 3: a lot of fun.
• 29:26
  Speaker 1: And I want to also thank the audience for listening in.
• 29:29
  Speaker 1: Check back soon for another interview on Chopping It Up.