chick-fil-a-business-model

Chick-fil-A Business Model

Chick-fil-A is an American fast-food restaurant chain that was founded in 1946 by S. Truett Cathy. The company operates around 2,860 restaurants across the United States with approximately 33% located in Texas, Georgia, and Florida.

Chick-fil-A’s business model focuses on serving tasty food in a clean restaurant with superb customer service. The company also creates value for the customer with its employee recruitment and franchise practices.

Franchise agreements

According to a Business Insider article, Chick-fil-A’s dominance in the competitive American fast-food industry is primarily down to its unique franchise agreements.

Unlike other companies whose franchises may own hundreds of restaurants, Chick-fil-A franchisees can only operate one store.

This ensures that the franchisee deals with customers directly and is a member of the local community they serve. The company’s screening process is also stringent, with just 0.4% of franchise applicants accepted

Franchise owners are encouraged to participate in community groups and events and are also responsible for employee recruitment.

This strategy has enabled Chick-fil-A to establish a presence in local areas where other companies that open “faceless” franchises have struggled.

With only one store to manage, Chick-fil-A franchisees also take ownership of their stores and work hard to ensure they succeed.

Tasty fast-food

Chick-fil-A’s menu is less varied than some others in the industry, but this allows the company to focus on cooking chicken well.

The process for making its signature chicken sandwich has not changed much since 1946 and, like McDonald’s, its menu items are simple and easy to prepare. 

To maintain the quality and freshness for which it is known, Chick-fil-A chicken does not arrive at the restaurant pre-cooked or crumbed.

The company also uses boneless chicken pieces which cook faster and enable employees to spend more time with the customer.

What’s more, the company marinates its chicken in pickle brine to deliver a unique and juicy texture that stands out from the competition.

Clean restaurants

A 2018 survey found that Chick-fil-A restaurants were some of the cleanest eateries in the country.

Staff are required to adhere to a strict daily checklist to ensure standards are maintained, and when stores experience quieter periods, employees are redirected to cleaning jobs as required. 

Chick-fil-A makes a point to keep its bathrooms clean – a common sore point for customers in restaurants – and developed its “Safe Service” program to keep diners safe and healthy in response to the COVID-19 pandemic.

Customer service

Most companies preach superior customer service, but relatively few embody it in practice. After a survey of 20,000 consumers, Chick-fil-A was voted as having the best customer service in the U.S. fast-food industry in 2021.

It was also ranked fifth overall in over 160 categories amongst the likes of Disney and The Ritz-Carlton.

The company has developed various standards to ensure customer service standards are upheld across its franchises.

These include small touches that are not typically present in a fast-food establishment.

For example, Chick-fil-A offers free food, places flowers on tables, and directs service staff to say “my pleasure” instead of “you’re welcome”. 

Recruitment and staff retention

Chick-fil-A will only recruit employees who share its passion for customer service. The company’s extremely selective franchisee recruitment process can last for twelve months or more with candidates required to attend as many as 20 interviews.

While this may seem exhaustive, it has enabled the company to retain more of its staff in an industry typically characterized by high turnover.

Chick-fil-A also invests heavily in recruiting and retaining frontline staff. To process the colossal amount of applications it receives, Chick-fil-A has automated aspects of the process such as interview scheduling where candidates can select a time that suits them. 

Once employed, staff are offered career advancement within their restaurant in addition to a college scholarship program and community engagement opportunities. 

Chick-fil-A vs. McDonald’s Franchising Model

While growth in opening new locations is much slower in comparison to the fast pace, players like McDonald’s, the focus is on making sure the store would be successful.

In fact, the initial fee requested from franchisees is way lower compared to McDonald’s ($10,000 vs. $45,000):

chick-fil-a-franchising

While the entry fee is lower, operating Chick-fil-A franchisees will have to pay a 15% royalty fee.

As the company explains in the franchise disclosure document as 15% of franchised restaurant sales, fewer amounts charged to franchisees for equipment rentals and business services fees, and 50% of net profits.

In short, the Chick-fil-A franchising model has the following features:

  • It doesn’t require a net worth, compared to other franchising operations such as McDonald’s, as it’s the company that undertakes the expenses to open up a new restaurant.
  • The franchising fee (entry fee) is just $10,000, compared to, for instance, McDonald’s $45,000 fee.
  • However, the franchisee has to pay 15% of the net sales and 50% of the net sales.
  • This makes sense as the franchisor and not the franchisee is the owner of the business, where the franchisee primarily operates the business.
  • Therefore, the Chick-fil-A franchising operations look more like a chain model, while it skews its playbook in finding the right people to operate the business. In fact, of the applicants, only a tiny percentage of those make it up to become franchisees.

Key takeaways:

  • Chick-fil-A’s business model focuses on serving tasty food in a clean and wholesome restaurant with superb customer service.
  • Chick-fil-A’s franchisee recruitment process is exhaustive and stringent, with only 0.5% of applications successful and individuals limited to operating one store. This ensures that franchisees are active members of their local community and represent the company in the most favorable light. 
  • Chick-fil-A’s business model is also built on a simple menu of quality chicken that does not arrive pre-cooked or crumbed. The company’s simple menu items are easy to prepare which frees up more time for employees to interact with customers.

Read Next: Franchising Business Model

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