Chick-Fil-A is one of the largest American fast food restaurant chains and the largest whose specialty is chicken sandwich
Chick-Fil-A was founded in 1946 nearly seventy-five years. With over 2,774 restaurants, locations, and $11 billion in annual sales, the Company has grown to become the largest quick-service chicken restaurant (QSR) while generating more revenue per restaurant than any other fast-food chain in the United States. Given Chick-Fil-A’s success to date, I chose to further investigate the business in order to identify the core drivers of its success.
Many of the company's values are influenced by the Christian religious beliefs of its late founder, S. Truett Cathy, a devout Southern Baptist. Reflecting a commitment to Sunday Sabbatarianism, all Chick-fil-A restaurants are closed for business on Sundays, as well as on Thanksgiving and Christmas Day.
Even with fewer working days, they beat the profit per store of any other QSR brand. Each Chick-fil-A restaurant brings on an average of $5.4 million in sales revenue. Compare to McDonald who comes in second place bringing $2.1 million in sales revenue.
Let's breakdown and understand how Chick-fil-A is so successful:
1. Simple Menu
Their menu option is relatively very small compared to its completion with only 12 addition compare to the industry average addition of about 35. This means the franchisee doesn't have to spend a lot on training the staff and the orders are quickly freshly made since it is a small menu. And cause Low food wastage that means for profit for the company & franchisees.
2. Customer Service
A critical component of Chick-Fil-A’s success is its uncanny focus on customer service. The Company prides itself on going the extra mile by providing amenities to customers that are not common in a quick-service restaurant. Amenities such as offering fresh ground pepper, refilling drinks, or carrying heavy trays for customers, are all common practices.
Employees are instructed to not say you're welcome but instead to say my the pleasure that phrase and the overall positive attitude was emphasized by Truett Kathy himself to a point where it's become part of their identity it's pretty simple customers want to be in that environment so they keep coming back leading to high sales in packed.
3. Ordering Process
Many Chick-fil-A restaurants use a practice known as upstream ordering where an associate will take a customer's order while they're still waiting in line. This is very different from other QSRs where in Drive-Thrus you have to speak to a speaker to order food, This sometimes results in miscommunication. You can also order before in Chick-fil-A's mobile app and website which give customer loyalty points like Starbucks.
4. Growth & Franchise
Unlike other fast-food chains whose franchisees typically spend approximately $1.9 million in start-up costs, Chick-fil-A franchisees need only a $5,000 initial investment to become an operator. The Company funds the entire cost of its new restaurants (~$3 million) and selects all store locations. As a result, Chick-fil-A retains ownership of the restaurant, gets 15% of sales (versus 8-10% at most franchises), collects rent on the property, and splits the remaining pretax profits 50/50 with the store operator. A typical operator earns >$100k a year.
By providing a lucrative profit-sharing arrangement for operators, Chick-Fil-A is able to attract highly motivated individuals who will drive sales and remain loyal to the Company. By maintaining ownership of its units, Chick-Fil-A retains the power and flexibility to upgrade restaurants, launch new products, and/or change operators when deemed necessary – a luxury not typically realized by other fast-food franchises.
In summary, Chick-fil-A has mastered the QSR space by creating great alignment in both its business and operating models. The company’s strategy, people, and operations are highly synchronized, resulting in great-tasting fried chicken sandwiches (and waffle fries) for all to enjoy!
