Since the restaurant’s foundation in 1946, Chick-Fil-A has served millions of American fried chicken sandwiches. The family-owned business has grown to be one of the largest and most profitable restaurant chains.
Chick-Fil-A‘s dominance in the fast-food industry makes most people wonder what’s the restaurant’s business model. I looked into the matter, and here is what I uncovered!
What Is Chick-Fil-A’s Business Model In [currentyear]?
Chick-Fil-A bases its business model on the franchise model as of [currentyear]. In this model, the parent company enters into a working relationship with independent business owners who are licensed to use the company’s branding, intellectual property, and operational model. Unlike other franchisors, Chick-Fil-A covers most start-up costs and maintains ownership of the franchised locations.
If you want to find more information on Chick-Fil-A’s business model, the strategies used to maintain the model, and much more, keep reading!
What Strategy Does Chick-Fil-A Use?
To adequately achieve the success of the company’s business model, Chick-Fil-A uses several unique strategies that help the company maintain its large following.
That said, below are some of Chick-Fil-A’s strategies:
Franchise Affordability
Unlike other franchises that require the franchisee to spend almost $1.9 million as the start-up cost, Chick-Fil-A franchisees only pay $10,000 as the franchise fee.
Normally, the parent company funds the entire cost of setting up a franchise in a new location; hence the $10,000 paid by the franchisee is a commitment fee to the franchisor.
As a result of this agreement, Chick-Fil-A’s parent company retains the franchise’s ownership, gets 15% of sales, rent on the property, and 50% of the remaining pretax profits.
So, through the lucrative profit-sharing arrangement, the company attracts highly motivated individuals who will maintain high efficiency in the restaurants.
On the other hand, maintaining restaurant ownership helps Chick-Fil-A retain the power and flexibility to upgrade restaurants, introduce new products, or change operators when necessary.
Quality Food Items
Among the vital aspects of Chick-Fil-A’s business model is the quality of the food items.
That said, the efficiency of the company’s operating model ensures that the company pays attention to the quality and freshness of the food items.
Also, Chick-Fil-A has always focused on chicken products resulting in a simple menu and a standardized operation process.
On top of that, making the iconic chicken sandwiches has remained unchanged for over 50 years, making it easy for an employee to learn.
Furthermore, the restaurant uses boneless chicken pieces that cook quicker and more even than bone-in chicken pieces.
As a result, this efficiency in cooking time gives the employees more time to focus on the quality of food and customer service, which increases the company’s sales.
Additionally, the quality of the food items and freshness are emphasized by the company strategy of having all the chicken breaded on-site.
Therefore, the employees hand-bread each piece by hand to ensure they are completely unfolded before cooking.
The Strategy Of Employee Recruitment
The employee recruitment strategy is the core of Chick-Fil-A’s business strategy and dining experience.
Throughout the years, the company has focused on recruiting individuals who demonstrate a passion for great service.
Further, for operators interested in securing franchises, Chick-Fil-A conducts a rigorous screening process to get the best individuals out of the several applicants who apply annually.
Typically, about 75 out of every 10,000 applicants get selected, making Chick-Fil-A one of the most selective restaurants.
Due to this strict selection process, Chick-Fil-A normally gets the most dedicated individuals within an industry that’s recognized for high turnover.
However, Chick-Fil-A’s average turnover for hourly workers and operators is extremely low, ranging at 60% and 5%, respectively.
In comparison, the turnover rate for the same positions within similar restaurants is 30% for operators and 107% for hourly workers.
In addition to this, the selected operators are typically discouraged from operating more than one restaurant to avail themselves of day-to-day operations within a franchise.
This way, the operators are in the store to help drive customer service and quality, leading to higher sales and profits for both the operator and the parent company.
Innovation Strategies
Chick-Fil-A has developed a strong focus on innovation since its foundation by Truett Cathy.
In 1964, Cathy came up with the idea of making chicken sandwiches when a local poultry supplier produced too many chicken breasts and inquired if he could utilize them.
Through this inquiry, the founder saw an opportunity to create a chicken sandwich that would be a unique alternative to the standard hamburger.
He, therefore, decided to make the alternative food item delicious and quick to prepare.
As a result, he became motivated to find a pressure-fryer, an innovative cooking method that could cook the chicken breasts in the same amount of time it would take to make a hamburger.
Also, Cathy introduced the idea of food courts by opening his first Chick-Fil-A inside Greenbriar in Atlanta.
Even with Cathy’s death in 2014, the company continues to seize opportunities through its innovative techniques.
For example, Chick-Fil-A’s Technology Innovation Center in Georgia Tech’s Technology Square focuses on technological strategies that would improve customer experience.
Good Customer Experience
Chick-Fil-A focuses on customer service to ensure that customers get exemplary customer service.
Therefore, the company ensures that the restaurants are well-maintained and neatly kept to enhance customers’ dining experience.
Apart from the dining experience, the restaurant provides customers with amenities such as ground pepper, refilling drinks, and assisting customers in carrying heavy trays.
Also, the team members frequently say “my pleasure” to make customers feel welcomed at the premises.
As you can imagine, these and other actions increase customer satisfaction that substantially increases customer loyalty.
Marketing Promotions
Through several marketing promotions, Chick-Fil-A has developed a culture of engaging its customers and improving customer relationships.
Apart from free food giveaways, the company’s marketing strategies create a memorable atmosphere that keeps people engaged.
For instance, “Cow Appreciation Day,” where patrons dress as cows get free entrée. Even though the free food is the draw, the experience is memorable for the customers.
Furthermore, the “Cellphone Coop Challenge,” where families place their cell phones in a small box to receive free ice cream cones; if they leave them there, increases memorability.
Overall, the challenge helps promote family togetherness since they spend the meal talking to each other.
Employee Empowerment
As part of the growth strategies for the country, Chick-Fil-A has a strong focus on the empowerment of its employees.
First, the company is invested in training its employees so that they can grow as individuals.
Also, the employees are often asked about their future career goals, which helps the management team help the employee work towards the goal, even when it’s not within the food industry.
Since 1973, the company has awarded employees scholarship donations worth millions of dollars to pursue their long-term aspirations.
Apart from the generosity towards the employees, there’s generosity towards the communities in which they live.
With that, for employees with goals that align with the industry, the restaurant motivates them with opportunities to advance within the company.
For instance, the company offers promotions to director positions in areas such as kitchen operations, drive-thru operations, sanitation, and much more.
Essentially, empowering the workforce makes Chick-Fil-A team members feel happy and satisfied, motivating them to work hard and serve customers well.
How Is The Chick-Fil-A Franchise Model Different From Other Franchise Models?
Chick-Fil-A’s franchise model differs from several other franchisors and has led to the company being one of the most successful franchisors in America’s food industry.
That said, here’s how the Chick-Fil-A’s franchise model differs from other franchise models:
Selective Hiring Process
The company is recognized as one of the most selective chains in the industry because it only accepts about 70-80 applicants out of 10,000 who apply annually.
For other franchises, however, applicants are gauged based on their financial capacity and previous work experience.
Price Of The Franchises
As previously mentioned, it is less expensive to open a Chick-Fil-A franchise than any other chain.
With only $10,000, a franchisee gets the assistance of the parent company to set up a restaurant in a new location.
Ownership Of The Franchises
The operators of Chick-Fil-A do not own or receive equity in the business opened. Furthermore, they are also prohibited from operating in more than one location.
To learn more, you can also read our posts on Chick-Fil-A SWOT analysis, Chick-Fil-A vs Popeyes, and is Chick-Fil-A publicly traded.
Conclusion
In conclusion, Chick-Fil-A’s business model revolves around franchising, where independent businesses are provided with licenses to brand and operate as Chick-Fil-A.
At Chick-Fil-A, starting a franchise doesn’t cost as much as competitors, but the company only chooses a select few annually to run its franchise locations.
