Chick-Fil-A business model (what it is + strategy)
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Chick-Fil-A has served millions of American fried chicken sandwiches since the restaurant opened in 1946. The family business has grown into one of the largest and most profitable restaurant chains.
Chick-Fil-A’s dominance in the fast food industry has most people wondering what the restaurant’s business model is. I looked into this and this is what I found!
What is Chick-Fil-A’s business model for 2022?
From 2022, Chick-Fil-A’s business model is based on a franchise model. In this model, the parent company has a working relationship with an independent business owner who is licensed to use the company’s brand, intellectual property and operating model. Unlike other franchisees, Chick-Fil-A bears most of the startup costs and maintains ownership of the franchise location.
If you want to learn more about Chick-Fil-A’s business model, the strategy used to maintain it, and more, read on!
What strategy does Chick-Fil-A use?
To fully realize the success of the company’s business model, Chick-Fil-A employs several unique strategies to help the company maintain a large following.
That said, here are some strategies from Chick-Fil-A:
Franchise affordability
Unlike other franchisees that require franchisees to spend nearly $1.9 million in start-up costs, Chick-Fil-A franchisees only pay a $10,000 franchise fee.
Typically, the parent company pays the full cost of setting up the franchise in the new location; therefore, the $10,000 paid by the franchisee is a commitment fee to the franchisor.
As a result of the agreement, Chick-Fil-A’s parent company retains the franchise, receiving 15% of sales, property rentals and 50% of remaining pre-tax profits.
Thus, through lucrative profit-sharing arrangements, the company attracts motivated individuals who will remain productive in the restaurant.
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 if necessary.
quality food
One of the important aspects of Chick-Fil-A’s business model is the quality of the food.
That said, the efficiency of the company’s operating model ensures that the company focuses on the quality and freshness of its food.
In addition, Chick-Fil-A has been focusing on chicken products, resulting in a simple menu and standardized operating procedures.
Best of all, making the iconic chicken sandwich has remained the same for over 50 years, making it easy for employees to learn.
Also, restaurants use boneless chicken nuggets, which cook faster and more evenly than bone-in chicken nuggets.
As a result, this cooking time efficiency gives employees more time to focus on food quality and customer service, which increases the company’s sales.
Additionally, the company strategy emphasizes the quality and freshness of the food, i.e. all chicken is breaded on-site.
So employees knead each loaf by hand to make sure they are fully spread out before cooking.
Employee recruitment strategy
Employee recruitment strategies are at the heart of Chick-Fil-A’s business strategy and dining experience.
Over the years, the company has focused on recruiting individuals with a passion for quality service.
Additionally, for operators interested in obtaining a franchise, Chick-Fil-A conducts a rigorous screening process to select the best candidates from several applicants who apply each year.
Typically, about 75 out of every 10,000 applicants are selected, making Chick-Fil-A one of the most selective restaurants.
Because of this rigorous selection process, Chick-Fil-A typically selects the most dedicated talent in an industry known for its high turnover rates.
However, Chick-Fil-A’s hourly and operator turnover rates were extremely low at 60% and 5%, respectively.
This compares to 30% for operators and 107% for hourly workers for the same position within a similar restaurant.
Beyond that, selected operators are generally discouraged from operating more than one restaurant to take advantage of day-to-day operations within the franchise.
In this way, operators help improve customer service and quality in-store, resulting in higher sales and profits for both the operator and the parent company.
innovation strategy
Since the founding of Truett Cathy, Chick-Fil-A has been very focused on innovation.
The idea for a chicken sandwich came to Cathy in 1964 when a local poultry supplier was producing too many chicken breasts and asked him if he could use them.
Through this investigation, the founders saw an opportunity to create a chicken sandwich that would be a unique alternative to the standard hamburger.
So he decided to make the alternatives both delicious and quick to prepare.
So he was motivated to look for a pressure fryer, an innovative cooking method that could cook chicken breasts in the same amount of time as a hamburger.
Additionally, Cathy introduced the idea of a food court by opening his first Chick-Fil-A in Atlanta’s Greenbriar.
Even with Cathy’s passing in 2014, the company continued to seize opportunities through its innovative technology.
For example, the Chick-Fil-A Technology Innovation Center at Georgia Tech’s Technology Plaza focuses on technology strategies that improve the customer experience.
good customer experience
Chick-Fil-A focuses on customer service to ensure customers receive exemplary customer service.
Therefore, the company ensures that the restaurant is well maintained and clean to enhance the dining experience of its customers.
In addition to the dining experience, restaurants provide customers with amenities such as peppers, refills, and assisting customers with carrying heavy trays.
Additionally, team members often say “I’m glad” to make customers feel welcome in the store.
As you can imagine, these and other actions can increase customer satisfaction, which in turn greatly increases customer loyalty.
Marketing
Through multiple marketing promotions, Chick-Fil-A has developed a culture of attracting customers and improving customer relationships.
In addition to the free food giveaways, the company’s marketing strategy creates an unforgettable atmosphere that keeps people engaged.
For example, “Cow Appreciation Day,” customers wearing cows can enter for free. Although the free food is the attraction, the experience is unforgettable for the customers.
Also, the “Phone Co-op Challenge,” where families put their phones in a small box to get free ice cream cones; if they leave them there, it increases memory.
Overall, the challenge helped foster family reunion as they talked to each other over the meal.
Employee empowerment
As part of the country’s growth strategy, Chick-Fil-A places great emphasis on empowering its employees.
First, companies invest in training employees so they can grow as individuals.
Additionally, employees are often asked about their future career goals, which helps the management team help employees work toward that goal, even if it’s not within the food industry.
Since 1973, the company has provided multimillion-dollar scholarship grants to employees in pursuit of their long-term ambitions.
In addition to generosity to employees, generosity to the communities in which they live.
Therefore, for employees whose goals align with the industry, restaurants motivate them with opportunities for advancement within the company.
For example, the company offers advancement opportunities for executive positions in areas such as kitchen operations, drive-thru operations, and hygiene.
Essentially, empowering employees makes Chick-Fil-A team members happy and fulfilled, 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 franchisees, making the company one of the most successful franchisees in the U.S. food industry.
That said, Chick-Fil-A’s franchise model differs from other franchise models as follows:
Selective Recruitment Process
The company is recognized as one of the most selective chains in the industry, as it only accepts about 70-80 applicants out of 10,000 applicants per year.
However, for other franchises, applicants are measured based on their financial ability and previous work experience.
Franchise Price
As mentioned earlier, it is cheaper to open a Chick-Fil-A chain than any other chain.
For as little as $10,000, franchisees can open restaurants in new locations with help from the parent company.
Franchise Ownership
The operators of Chick-Fil-A do not own or acquire equity in the businesses they open. In addition, they are also prohibited from operating in multiple locations.
To learn more, you can also read our posts on Chick-Fil-A SWOT analysis, Chick-Fil-A vs Popeyes, and Chick-Fil-A public trade.
in conclusion
In summary, Chick-Fil-A’s business model revolves around franchising, where independent businesses license brands and operate as Chick-Fil-A.
At Chick-Fil-A, starting a franchise isn’t as expensive as its competitors, but the company selects only a handful of locations each year to operate its franchise locations.
