Chick-fil-A Business Model Analyzed and Explained

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Chick-fil-A is a food chain in the US that believes in delivering quality food to its customers. The business model of this restaurant revolves around customer service and offering a limited but quality food menu. The restaurant does not provide a diverse menu to attract a customer base like its competitors. The business model of chick-fil-A remains focused on selling the best quality chicken sandwiches. The sandwiches of Chick-fil-A are very delicious and famous at the same time.

The capital letter A in the name of Chick-fil-A stands for A-top quality, and the focus on service has made it one of the finest eateries in the fast food industry, with customer satisfaction. They own all of its restaurants, and selected franchisees with an initial investment of $10,000 will also go through comprehensive training sessions to qualify them to manage the business.

Who Started Chick-fil-A

The Cathy family is the owner and founder of Chick-fil-A. Truett Cathy and his brother, Ben, started the food business The Dwarf Grill in Hapeville, Georgia.

In 1946, the Cathy brothers started their restaurant with $10,000 and four dining tables. The Dwarf Grill had a simple and short menu, and their earnings increased year after year. Their restaurant was open seven days a week, 24 hours a day.

Truett Cathy has two sons, Dan and Bubba Cathy, who later took over the family business. Dan is the current chairman, Andrew Cathy, son of Dan, is the CEO, and Bubba is the executive vice president.

History of Chick-fil-A

Every successful company has a story behind it. Chick-fil-A also has a great story behind its success. Its competitors want to know the secrets behind the perfection and business success of Chick-fil-A.

Truett Cathy opened a restaurant in 1946 in Hapeville, Georgia, near the historic Ford Motor Company Atlanta Assembly site. The staff of the automobile industry was frequent customers of the Dwarf Grill.

In 1961, Cathy discovered a pressure fryer to cook the chicken sandwich. So he decided to focus exclusively on chicken sandwiches. He registered the trademark and named the company “Chick-fil-A” Inc. The fried chicken sandwich is the restaurant’s main menu item, and it also copyrighted the tagline “We didn’t invent the chicken, only the chicken sandwich.”

The sandwich got licensed to more than fifty restaurants in 1964. However, the permission to sell the sandwich was canceled in 1967, when the first stand-alone restaurant launched in Greenbrier Mall in Atlanta. The brand developed independently From the 1970s until the 1980s by opening locations in mall food courts.

The firm was the first national chain to make the fried chicken sandwich a signature item. In 2008, Chick-fil-A was the first fast-food restaurant to eliminate trans fats from its menu.

Chick-fil-A Business Growth Strategy

Chick-fil-A is a quick-service restaurant. They have a customer-appropriate plan that largely depends on a savory snack, high-quality food, and a culture that value family-friendly systems. They involve customer communication and respect their feedback. They provide an ideal dining experience to their customers who have come to expect from the restaurant an experience that is most likely the outcome of the company culture. Chick-fil-A is constantly getting good reviews for its flavor and services.

Chick-fil-A’s business growth plan trusts the vision that happy workers yield happy customers. They accomplish this by constantly practicing the following legendary principles.

1.  Clean Atmosphere

People used to go to good restaurants while traveling not for the meal but for the reputation of having a clean restroom. So, Chick-fil-A has taken that concept further by creating a clean environment.

The staff keeps the tables and booths clean all the time. They practically wait for you to finish eating so they can wipe the floor. This franchise takes great pleasure in being spotless, and it reflects in the revenues they earn every year.

2. Company Vision

Although Chick-fil-A has a great menu, you will note that most options focus on one thing, which is chicken.

From chicken biscuit sandwiches to grilled chicken salads or milkshakes, this brand has combined the American mom-and-pop love for customers. They provide a beef-free restaurant experience by following QSR principles to produce quick and pleasant service. They highlight that tunnel vision in their marketing materials, something most fast-food restaurants do not even try to develop.

3. High-quality Food

Although Chick-fil-A is not a casual dining restaurant, the pricing ideas of the food do not compromise on food quality. Instead of competing with every other chicken restaurant for the lowest price, Chick-fil-A concentrates on giving the delicious sandwich at a reasonable price. They know that the higher pricing gives higher profits which can also increase the pay of the restaurant employees who provides an equally better experience to everyone.

4. Motivation.

Each Chick-fil-A restaurant gives unique offers to engage and inspire the local community. Some emphasize the chain history, and some select other local mementos to display on the walls. They organize family nights so the parents and children can spend quality time with each other, have dinner together, and watch a movie without going out of their budget.

5. Community Collaboration

If there is one major hurdle in the Chick-fil-A business strategy, it is right here, Chick-fil-A adheres strictly to its Christian ideals, which means it may oppose some community decisions. Their stance on same-sex marriages made news headlines. It made some customers against the brand and also attracted many towards it. They also regularly support child sports, make donations to local non-profits, and have an active social media presence. They do not attempt to hide who they are or what they undertake. This honesty enables the customers to stay connected with the chain regardless of whether people agree or disagree with their political and social beliefs.

Chick-fil-Business A’s Model

Chick-fil-A’s business model emphasizes the iconic features of any fast food restaurant founded in the United States. A quick turnaround and a variety of menu options help the brand to grow faster. Chick-fil-business A’s model is distinct in that it focuses on developing relationships with each customer.

You feel special when you eat a chicken sandwich or waffle at a Chick-fil-A, or this chain will do its best to make you feel that way. That is the reason why people come back. Having a great-tasting chicken sandwich is a great treat for anyone.

Chick-fil-A earns most of its money from two sources. First, the company gets 15% of overall sales from franchisees and 50% from all licensees. Profit is significant in the food chain business because of its customer segment and value propositions. According to QSR Magazine, the average Chick-fil-A generates $4.4 million in revenue yearly. It makes $1.7 million more than the top restaurant in the United States.

1. Customer Support

Chick-Fil-A gives remarkable attention to customer service as it is the main component of its success. The Company takes pleasure in going above and beyond for its clients by delivering amenities in a quick-service restaurant. Staff provides all the essential services, including placing fresh ground pepper, refilling beverages, and lifting heavy trays for customers.

Furthermore, Chick-Fil-A personnel routinely use the term “My pleasure,” which is also used by Ritz Carlton employees. The aim of customer happiness has produced a passionate subculture,  enhanced customer loyalty, and allowed the corporation to charge a premium price.

2. Restaurant Operations

Chick-Fil-A concentrates solely on chicken meals, which results in a simplified menu and a consistent operational method. The method for preparing the chicken sandwich has not changed in over fifty years. It is so easy that a younger employee can learn it.

Moreover, the cooks use boneless chicken in the recipes. The boneless chicken cooks faster and takes less preparation time than the bone-in chicken. This method provides staff more time to focus on quality and service while also eliminating the need to prepare meals ahead of time or keep them warm in warming cabinets. Because none of the chicken is pre-breaded or partially cooked, the brand always emphasizes quality and freshness.

Instead, staff hand-open each chicken breast to ensure it is fully unfurled before hand-breading each piece before cooking. Chick-Fil-A Offers an efficient working style that allows them to pay attention to quality and freshness.

3.  Non-Traditional Franchising

Chick-fil-A is unusually expanding its franchises. They do not require a specific net worth from investors before investing money in their brand name in exchange for a percentage of sales as other companies do. Chick-fil-A franchisees, also known as operators, do not require a minimum net worth. The franchise fee is also only $10,000.

Chick-fil-A is responsible for acquiring and developing locations and property that range from $350k to $2m. The Franchisee provides less than 10%, and the company contributes more than 90%. Chick-fil-A retains ownership of the firm, but the operators handle its operations. As a result, the company enjoys the most incredible return of 15% of sales plus 50% of any profit.

Chick-fil-A retains ownership of the firm, but the operators handle its operations. They enjoy the most incredible return of 15% of sales and 50% of any profit.

4. Staff Recruitment

Employees are the heart of Chick-fil-A, who makes the dining experience pleasant for their customers. They are very focused on finding employees who share their commitment to service. The screening procedure for operators is rigorous, with many individuals going through a year-long testing period that may involve more than twenty interviews. In the end, they hire just 75 applications out of 10,000 that play a vital role in the core services at Chick-fil-A.

As a result, they hire devoted employees to the industry resulting in high turnover.  The average turnover rate for Chick-fil-A operators and hourly workers is 5% and 60%, respectively, compared to 30% and 107% for the company.

Moreover, operators are not allowed to operate in more than one restaurant. It ensures they are on duty at the restaurant and maintain quality and customer service. It results in increased sales and profitability for both Chick-fil-A and the operator.

Future of Chick-fil-A

Chick-fil-A can make its future brighter, but it must be ready to go beyond its traditional operations and adopt a new menu, location, and commercial prospects. Chick-fil-A has become one of America’s favorite fast-food restaurants due to its exceptional customer service and popular menu, which has kept customers delighted for many years. The company cooks only chicken and maintains the operators, unlikely other restaurants, which might be a reason for its success. Apart from its food and service quality, the company is famous for its CSR, which includes sponsorship of events and public gifts to non-profit groups for charitable purposes. The company values its workers and provides a pleasant working environment and opportunities for them to grow.

Competitors of Chick-fil-A

Chick-fil-A produces more overall revenue than any other food chain, including McDonald’s and Starbucks, despite having just 2,700 locations.  Chick-fil-A earns more per restaurant than McDonald’s, Subway, and Starbucks, even being closed on Sundays.

Chick-fil-A has jumped ahead of the competition because of its excellent customer service and focus on selling chicken sandwiches. People no longer grab a sandwich or burger for lunch from Subway because they like to eat a chicken sandwich at Chick-fil-A. Chick-fil-A has the following competitors;

McDonald

McDonald’s is the best-known and oldest fast-food restaurant in the world. It has more than 38,000 outlets in over 100 countries. It is also famous for its quality food and serves 70 million people daily. The specialty of the restaurant is hamburgers.

KFC

KFC has more than 22,600 outlets in 150 countries worldwide. This establishment is only second in number to McDonald’s, and it franchises over 60% of its fast-food operations. The restaurant is most renowned for its special fried chicken, which is a one-of-a-kind species with a unique recipe and method.

Wendy’s

Wendy’s food chain is vast. They have more than 5,900 restaurants at different locations worldwide. They are the third-largest hamburger seller in the United State.

Wendy’s keeps a competitive edge by focusing on price reduction and larger serving sizes. It uses bigger patties in the burgers than Chick-fil-A.

Subway

Subway is a popular fast-food restaurant. A college lecturer and a student started this restaurant years ago. The company provides licenses exclusively with approximately 21,700 sites of the operators are franchisees. The vegan menu is the specialty of Subway that distinguishes it from other competitors.

SWOT Analysis of Chick-fil-A

Here is the detailed SWOT analysis of Chick-fil-A

Strengths

It is no secret that Chick-fil-A’s greatest strength is the time and effort devoted to delivering good customer service; this pattern is frequently rare in other fast food restaurants, therefore distinguishing branding Chick-fil-A services. Chick-fil-A has mastered its chicken sandwiches, which has kept customers loyal to the brand over the years. The business has also gained a good reputation as a big sponsor of certain main events and a donor of a charity and non-profit organization. The unique franchising arrangement ensures that the company holds brand decision-making. The organization values its employees and is concerned with their objectives. It gives prospects for job advancement as well as emergency finances.

Weaknesses

One downside of Chick-fil-A is its limited menu, which limits the opportunity for new customers interested in various types of food.

Chick-fil-A has a smaller worldwide presence. Because it has been recognized primarily in the United States, the company has not capitalized on the worldwide market.

Chick-fil-A pricing is excessive compared to competitors is higher. They are not popular with the lower-income group in the United States.

Chick-fil-A has maintained its established structure for years, making innovation more difficult. The company is more comfortable with its strategy, leaving less room for change.

Opportunities

The company can grow worldwide to enhance profits and global exposure.

It can increase customer engagement by introducing a new menu. The vast majority of the population understands the importance of eating healthier foods and is ready to invest in a fast food business that serves healthy, enjoyable meals.

Threats

Economic and political reforms can impact business stability, whether through price increases or the implementation of anti-business policies.

Another threat to the company is tough competition. Many competitors in the fast-food industry are continually creating new methods to draw more customers to their businesses.

Conclusion

Chick-fil-A has shown how human capital is a firm’s most valuable resource. It has also strained the limits of the premise of perfect competition in the fast food market. With an innovative approach to leadership, service, and continual growth, the chain has launched itself as the industry, business, and service leader. It has become a model for all types of companies. Chick-fil-A has conquered the QSR industry by ensuring that it is business and operations strategies are perfectly aligned. All the employees and operations of the company are in harmony and work together to serve you a delicious fried chicken sandwich.