{"id":3818,"date":"2015-12-09T01:30:36","date_gmt":"2015-12-09T06:30:36","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/chick-fil-a-the-top-performing-fast-food-chain\/"},"modified":"2015-12-09T19:13:51","modified_gmt":"2015-12-10T00:13:51","slug":"chick-fil-a-the-top-performing-fast-food-chain","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/chick-fil-a-the-top-performing-fast-food-chain\/","title":{"rendered":"Chick-Fil-A: The Top-Performing Fast-Food Chain"},"content":{"rendered":"

Background<\/b><\/p>\n

From one restaurant originally named “Dwarf Grill” in Hapeville, Georgia,\u00a0Truett Cathy invented a recipe for a chicken sandwich in 1964 and with that, Chick-Fil-A was born.\u00a0Today, there are more than 1,900\u00a0Chick-Fil-A restaurants in 42 states (1). In 2014, the chain collectively\u00a0received $5.8 billion dollars\u00a0in sales, which is an average of $3.1 million per store (2). This is the highest sales per store in the fast-food industry — greater than traditional powerhouses such as McDonald’s ($2.5 million)\u00a0and Wendy’s ($1.6 million),\u00a0but also greater than popular newcomers such as Chipotle ($2.5 million)\u00a0and Panera Bread ($2.5 million) (2). These impressive numbers lead many to wonder how Chick-Fil-A has achieved this, especially\u00a0considering its company-wide policy to close on Sundays\u00a0(1).<\/p>\n

Business Model<\/strong><\/p>\n

Its implied\u00a0business model is to provide high-quality chicken products\u00a0with superior customer service to command premium prices in the fast-food industry.<\/p>\n

Success Story: Business Model and Operating Model Working Together<\/strong><\/p>\n

I think the company has been\u00a0very successful thus far because of the alignment between its business and operating models. Specifically, I found four main areas\u00a0of its business\u00a0or\u00a0operating models that integrate well together:\u00a0superior product, unique franchise model,\u00a0execution of\u00a0customer service, and focus on brand building.<\/p>\n

Superior Product<\/strong><\/p>\n

First, the company aims to create both differentiated and quality products. These products can command higher prices. Operationally, Chick-Fil-A has aligned with this strategy by implementing a very thorough product development program\u00a0(3). This emphasis on creating a quality product began with its founder, who took years developing the perfect recipe for the original chicken sandwich (1). While Chick-Fil-A holds the exact product development processes secret, we can get a sense of how important this operation is to Chick-Fil-A by observing allocated resources. The company spent $50 million dollars and took 11 years to develop the recipe and\u00a0cooking method\u00a0for the new grilled chicken sandwich (3). Clearly, the new product operations seem tightly aligned with the strategy to produce a quality, differentiated product.<\/p>\n

Original Chicken Sandwich\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Grilled Chicken Sandwich<\/p>\n

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Unique Franchise Model<\/strong><\/p>\n

Second, Chick-Fil-A has employed a unique franchise model to allow for controlled growth that aligns with the company’s goals. Unlike most fast-food franchises that\u00a0typically\u00a0allow franchisees to own their stores with up-front capital,\u00a0Chick-Fil-A owns all of\u00a0its operating stores. Rather than requiring franchisees to provide significant capital, Chick-Fil-A requires potential franchisees to provide $10,000 up front (versus the\u00a0hundreds of thousands\u00a0or millions\u00a0typically required) and to go through a selective screening process (4).\u00a0Chick-Fil-A reported that it receives approximately 20,000 applications per year while only selecting 75-80 new franchise operators\u00a0 (.4% acceptance rate) (5). This kind of selectivity allows Chick-Fil-A to differentiate between franchisees not by a minimum amount of capital, but by quality of character and fit within the organization. It looks for those committed to\u00a0its mission and who will be actively involved in the day-to-day store management (5). This is important because\u00a0these are the types of operators who can obtain and sustain high levels of customer service – a critical piece of the business model. Video 1 shows an operator and her commitment to the organization.<\/p>\n

Video 1<\/p>\n