Boston Chicken Case
Boston Chicken was founded by Scott Beck in 1989 as a company that sold chicken along with sides as a home meal replacement with take out or dine in options. The management team that was hired was full of prior experience and success. The company went public in 1993 and their stock price went from $10 initially to $26.50. Their second public offering was in 1994, not nearly as successful as their IPO but they still managed to raise $105 million in capital.
BC grew rapidly in the early 1990’s through 1995 reaching 750 stores and revenues of $96.2 million. They were heavily invested in their computer systems both employee facing as well as customer facing. Their largest competitor was KFC, even more so when KFC launched its rotisserie chicken campaign in 1993. However one of their biggest challenges was meeting their own goals that they had set.
BC mostly sold their franchises to area developers with 10-15 years of experience who would have 50-100 stores. This way they were able to reach all 60 main metropolitan areas. BC collected a one-time fee from area developers as well as royalties. The royalties that they collected were for revenues and national ad campaigns as well as interest from extending a line of credit to developers who were looking to expand their business in the area.
Boston Chicken also had what they called flagship stores where they were able to do a lot of the prep work and send the food to the satellite stores. This resulted in fresher, better tasting food because the deliveries from the flagship store to the satellite store was very frequent.
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