{"id":6933,"date":"2015-12-09T22:46:17","date_gmt":"2015-12-10T03:46:17","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/chick-fil-a-a-recipe-for-success\/"},"modified":"2015-12-09T22:46:17","modified_gmt":"2015-12-10T03:46:17","slug":"chick-fil-a-recipe-for-success","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/chick-fil-a-recipe-for-success\/","title":{"rendered":"Chick-fil-A: Recipe for Success"},"content":{"rendered":"

Chick-fil-A traces its roots back to 1946 when founder Truett Cathy opened his first restaurant in Hapeville, GA. Since then, the company has grown to become the nation\u2019s largest quick-service chicken restaurant chain with over 1,900 locations, generating sales of nearly $6 billion in 2014. A devout Southern Baptist, Cathy built the brand with the mission \u201cTo glorify God by being a faithful steward of all that is entrusted to us\u2026 [and] To have a positive influence on all who come in contact with Chick-fil-A.\u201d[1]<\/p>\n

To achieve these lofty aims, Chick-fil-A pursues a business model of selling Cathy\u2019s original chicken sandwiches (and other chicken dishes) in a clean, comfortable environment with superior customer service and community-oriented values. While the business model of providing quick-service chicken certainly is not unique, Chick-fil-A is able to pair it effectively with its corporate operating model and its distinctive franchise model in particular. It is the close alignment of these two factors that has led to the company\u2019s wild success, helping its restaurants and franchisees to achieve the highest average sales in the industry of $3.2 million per restaurant for 2012, far outpacing second-place McDonald\u2019s $2.6 million.[2]<\/p>\n

Chick-fil-A likes to tout its slogan, \u201cWe Didn\u2019t Invent the Chicken, Just the Chicken Sandwich,\u201d<\/em> but chicken sandwiches today are not unique and can be purchased at any number of Chick-fil-A\u2019s fast food competitors with comparable quality and little-to-no difference in price. In this fragmented market environment, Chick-fil-A seeks to differentiate on customer service. Employees greet customers with a warm welcome, offer fresh ground pepper to patrons dining in and carry heavy trays for moms looking after small children.[3] Rather than \u201cyou\u2019re welcome\u201d or \u201cglad to help,\u201d employees are trained to end all transactions with \u201cmy pleasure,\u201d something Cathy borrowed from the Ritz Carlton\u2019s upscale client interaction practices.[4] It is Chick-fil-A\u2019s warm, friendly, comfortable service environment that has built brand loyalty among customers and turned the company into the most successful fast food restaurant in America.<\/p>\n

What is perhaps most remarkable about the company is the highly effective way in which the business model described above aligns with its operating model and its unique franchise model, specifically. Unlike other fast food franchises, Chick-fil-A corporate selects the locations of each restaurant, bankrolls the entire cost of construction and retains ownership of the property and equipment. Selected franchisees, which Chick-fil-A calls \u201coperators,\u201d pay an upfront fee of $5,000 (as compared to the $1.9 million required to open a KFC), rent the property and equipment from corporate at a rate of 15% of sales, operate the franchise, and split the profits evenly with the parent company. The low upfront franchisee investment enables the company to attract like-minded people who are committed to executing on Cathy\u2019s mission but might otherwise not be able to participate.[2][5]<\/p>\n

Most importantly, this model allows the company to maintain tight control over the quality of the product and customer service offering. Additionally, the franchise agreement requires that operators \u201cbe free of any other active business ventures and operate the Restaurant on a full-time, hands-on basis,\u201d ensuring that each is solely dedicated to the performance of his\/her location.[1] This model is unique, unlike that of any other fast food chain, and is mutually beneficial for both parties\u2014operators earn $190,000 a year on average, and while franchise turnover in the industry can run as high as 50-60%, turnover at Chick-fil-A has yet to surpass 3%, further bolstering the quality of the product and service offering over time.[2][5]<\/p>\n

Chick-fil-A is in the business of selling chicken, which in and of itself is unremarkable. However, by effectively aligning its franchise operating model with its corporate business model, Chick-fil-A has been able to incentivize franchise operators effectively, ensuring commitment and consistency of service, and driving value creation and long term success for all stakeholders.<\/p>\n

 <\/p>\n

[1] Chick-fil-A Corporate Website. www.chick-fil-a.com<\/a>.<\/p>\n

[2] \u201cWhat Investors Need to Know About the Chick-fil-A Franchise Opportunity.\u201d www.franchisechatter.com<\/a>.<\/p>\n

[3] \u201cA Lesson in Customer Service from Chick-fil-A President Dan Cathy.\u201d www.sas.com<\/a>.<\/p>\n

[4] \u201cChick-fil-A\u2019s Recipe for Customer Service.\u201d www.fastcompany.com<\/a>.<\/p>\n

[5] \u201cHow Chick-fil-A Hires: The Christian Way.\u201d www.linkedin.com<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Chick-fil-A traces its roots back to 1946 when founder Truett Cathy opened his first restaurant in Hapeville, GA. 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