Chick-fil-A is a typical example of a company that believes in “what is worth doing is worth doing well”. Chick-fil-A’s business model is centered on customer service and providing a small-size menu. Unlike most restaurants with a wide range of food menus used as a strategy to attract a larger customer base, the Chick-fil-A business model remains laser-focused on selling chicken sandwiches.
The capital A in the name is referred to as “A-top quality” and the emphasis on customer service has made the business one of the best fast food industries with commendable customer satisfaction. The business retains ownership of all its restaurants, while selected franchisees with an initial investment of $10,000 will also go through a series of meticulous training that qualifies them to operate the business.
The business racks up billions every year with an average of 8% increment yearly.
Contents
A restaurant was opened in 1946 by the former CEO S.Truett Cathy. The restaurant is located in Hapeville Georgia, which shares a close distance from the former Ford Motor Company Atlanta Assembly plant. The employees of the motor company were major patrons of the business.
In 1961, Cathy stumbled upon a pressure fryer that could cook the chicken sandwich similarly to the time it took to cook a fast-food hamburger, thus he decided to venture primarily into the chicken sandwiches. He registered the brand and called it Chick-fil-A Inc. The company’s flagship menu item was the fried chicken sandwich as it also trademarked the slogan “We didn’t invent the chicken, just the chicken sandwich”. The company was the first national chain to flagship the fried chicken sandwich.
The sandwich became licensed in 1964 to over fifty eateries, unfortunately, in 1967, the right to sell the sandwich was withdrawn when the first stand-alone eatery was opened in Greenbriar Mall, Atlanta. From the ’70s and ’80s, the chain expanded by opening locations in malls’ food courts, to independently expand outward.
The company has been actively involved in major CSR (Corporate Social Responsibility) such as:
In the 21st century, Chick-fil-A has shown that the business is concerned about customer welfare and satisfaction.
Chick-fil-A is the Cathy family business, passed on from the founder S.Truett Cathy to his two sons, Dan and Bubba Cathy. Currently, Dan is the chairman, Andrew Cathy (the son of Dan Cathy) is the CEO, and Bubba remains the executive vice president.
Chick-fil-A makes money majorly from two sources: 15% of the total sales from the franchisees and also 50% from all their franchisees. The returns are one of the highest in the food chain industry, and there is a reason why it is so.
Chick-fil-A operates its franchise in an unusual way compared to other companies in the food national chain. Other food chain industries operate by ensuring that the franchisees are valued at a certain net worth before paying a huge amount of money to use their brand name in exchange for a percentage cut in sales.
The franchisee is responsible for acquiring and developing properties with their own money, in simple terms the brand contributes 20% to 30% of the business while the franchisee takes the entire 70% to 80% of the business expenses and costs which are often six digits above, resulting to why franchisee earns a majority of the profits and royalties paid to the fast-food franchises are within 4% to 8%, excluding the 2% to 6% of the advertising fee.
Chick-fil-A is quite the opposite as it has no minimum net worth requirements from the franchisee often referred to as operators, its franchise fee is as low as $10k, and Chick-fil-A is responsible for the acquiring and development of properties, often runs from $343k to $2m. In simple terms, the Franchisee contributes less than 10% while the business contributes above 90%. Chick-fil-A retains ownership of the business while the operators manage the affairs of the business, the business has the highest return of 15% of sales, plus 50% of any profit made.
The Chick-fil-A Business Model can be explained in the following business model canvas:
Chick-fil-A’s customer segments consist of:
Buyers: These set of people are loyal customers to the traditional quality of the brand and are satisfied with the menu and customers care service;
Chick-fil-A’s value propositions consist of:
Chick-fil-A’s channels consist of:
Chick-fil-A’s customer relationships consist of:
Chick-fil-A’s revenue streams consist of:
Chick-fil-A’s key resources consist of:
Chick-fil-A’s key activities consist of:
Chick-fil-A’s key partners consist of:
Chick-fil-A’s cost structure consists of:
Below, there is a detailed swot analysis of Chick-fil-A:
Chick-fil-A has proven to be one of America’s favorite fast food restaurants because of its excellent customer service and its famous menu that has kept customers satisfied over the years. The business has an unusual mode of operation from other types of franchises, but that could be a contributing factor to its success. Apart from its food and customer service, the business is also known for its CSR in sponsoring major events and public donations to non-profit organizations for charity. The business pays attention to its employees and ensures a conducive work environment and space for career development.
Chick-fil-A has the potential to expand as such, it must be willing to go beyond its conventional operation and embrace a new menu, new geographic location, and business opportunities.
Johnson & Johnson, a pharmaceutical and consumer goods company established over a century ago, prides…
Caterpillar, a renowned global manufacturing company, has dominated the industry for decades. With its extensive…
Instacart, founded in 2012, has quickly become a leading online grocery delivery platform. It offers…
The Quora Business Model revolves around creating a platform where users can ask questions, share…
Who owns Dollar General? A prominent discount retailer, Dollar General is not owned by a…
The Getaround Business Model revolves around providing a peer-to-peer car-sharing platform that allows individuals to…
This website uses cookies.