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September 3, 2024
Is Chick-fil-A the Fast-Food Chain To Beat?
Chick-fil-A seems to be maintaining a lead in the fast-food industry without much of a hitch.
In the retail food sector, competition is volatile, and the recent California minimum wage increase has contributed to rising fast-food prices across the state, on top of increases due to inflation over the last few years.
Yet, according to Chick-fil-A’s 2024 franchise disclosure document, its non-mall locations generated an average of $9.4 million in unit revenues last year, as reported by Restaurant Business Online. More surprisingly, despite not having a value menu, Chick-fil-A’s average unit volume is over double that of McDonald’s, which approached $4 million last year, and it also surpasses Portillo’s, which posted average unit volumes of $9.1 million during the same period.
The publication also explained that over the past decade, Chick-fil-A has “added the sales equivalent of a combined Taco Bell and Raising Cane’s to its system.” The brand’s success can be largely attributed to its ability to generate increasing sales from a relatively small number of locations.
This growth has been achieved despite rising inflation, increased operational costs, most other food retailers offering value meals, and reduced consumer spending.
Amidst the price wars between fast-food chains and traditional restaurants, Chick-fil-A seems to be taking different approaches.
For starters, Chick-fil-A debuted its first elevated drive-thru restaurant on Aug. 22 in McDonough, Georgia, near Atlanta. The new location features a unique design with four drive-thru lanes and an elevated kitchen equipped with a fast-food conveyor system, enabling meals to be delivered every six seconds. This design aims to enhance service speed and simplify the drive-thru experience, with the kitchen being twice the size of a standard Chick-fil-A kitchen.
The restaurant does not include a dine-in option, focusing instead on optimizing the drive-thru service. This innovation follows the introduction of Chick-fil-A’s mobile pickup concept in New York City this past March and is part of the company’s broader strategy to improve customer service and efficiency.
Moreover, Chick-fil-A is going beyond fast food and venturing into the streaming industry with its own channel, aiming to provide family-friendly content. The fast-food chain is collaborating with major production companies to create unscripted programming, including a new game show from Glassman Media and Sugar23. The streaming network will feature unscripted content with budgets of around $400,000 per episode, with scripted and animated projects also in development. The launch is planned for later this year, and the move is seen as a strategic response to the current challenges in the reality TV market.
Chick-fil-A has also made some questionable changes that have left many disappointed, but it is yet to be seen if these will negatively affect the company’s business in the long term.
For example, many have taken to social media and Reddit to express their frustration with the chain’s menu prices being too expensive. Some have explained that paying upwards of $7 for a chicken sandwich alone is not worth it, even though Chick-fil-A is trendy and promises quality. A full rotisserie chicken can be purchased from a Walmart or Costco for the same price, while a full combo meal at Chick-fil-A now costs about the same amount as a full takeout meal from a restaurant like Chili’s, according to another Redditor.
Additionally, Chick-fil-A announced a change in its chicken sourcing standards in March, transitioning from its previous No Antibiotics Ever (NAE) policy to a new standard called No Antibiotics Important To Human Medicine (NAIHM). According to the chain’s website, “NAIHM restricts the use of those antibiotics that are important to human medicine and commonly used to treat people, and allows use of animal antibiotics only if the animal and those around it were to become sick.”
This shift, which occurred in the spring, comes in response to challenges in maintaining a consistent supply of high-quality chicken, a problem that became apparent after the company initially adopted antibiotic-free chicken in 2014. The update aligns with other food establishments, as chains like Panera Bread and Tyson Foods have made similar adjustments due to supply chain issues. It also reflects a broader industry trend where fast-food chains must balance maintaining high-quality standards with navigating supply chain complexities.
Discussion Questions
How do Chick-fil-A’s recent innovations reflect broader trends in retail and fast food in response to changing consumer behaviors and market pressures?
What does Chick-fil-A’s shift from No Antibiotics Ever (NAE) to No Antibiotics Important To Human Medicine (NAIHM) reveal about the challenges fast-food chains face in balancing quality with supply chain issues?
With Chick-fil-A’s high average unit revenues, how might its unique service models and content diversification affect its market position and influence industry practices?
Poll
Loading …BrainTrust
Dick Seesel
Principal, Retailing In Focus LLC
Richard J. George, Ph.D.
Professor of Food Marketing, Haub School of Business, Saint Joseph's University
Brad Halverson
Principal, Clearbrand CX
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Chick-fil-A gets a lot right. Good product, excellent customer service, and reasonable prices. And it executes this consistently across its restaurants. It has been rewarded with strong loyalty and good growth. Interesting that popularity actually causes one slight issue: slow times for the drive thru!
Just don’t be gay. They don’t like LGBT people, so even if I ate meat (which I don’t), I wouldn’t eat it there.
Drive-through times have become a focus for their innovation and seem to be improving dramatically based on my recent experience.
It’s enjoyable to watch how organized it is with so many moving parts. And team members are super friendly to boot.
In any industry, the brand must innovate to keep up and, as in Chick-fil-A’s case, stay ahead of its competition. Chick-fil-A has become a benchmark company for not only competitors to aspire to, but also admirers from other industries. They deliver an incredible level of customer service. They innovate and focus on what makes their customers/guests happy.
As for the content Chick-fil-A is creating (family style entertainment), I see it in alignment with the company’s values, but I’m not sure how this ties into the restaurant business. That said, the exposure could be a creative way to get more brand awareness.
I agree with Neil Saunders. Chick-fil-A’s excellence in product, service, and pricing fosters strong loyalty and growth, though high demand can slow drive-thru times. Its innovative service models and content diversification boost customer loyalty and set new industry standards, encouraging competitors to blend convenience, quality, and entertainment to stay competitive.
A fast food franchise like Chick Fil A has all the ingredients for a near-perfect operation. Customers are treated with genuine hospitality and kindness as part of their customer service philosophy. All employees are trained to provide a pleasant dining experience. Customers are loyal to the brand due to this commitment to exceptional service. This is unmatched by any other fast food chain.
Chick Fil A’s success is a testament to the power of customer service and customer loyalty. This sets an example for other fast food chains to follow. However, I do not believe it is realistic to expect any other existing fast food chain to emulate Chick Fil A.
Chick Fil A has a unique business model that is based on personal relationships and customer satisfaction. This level of customer service is difficult to achieve and replicate, and no other fast food chain has been able to replicate its success.
It goes without saying, well, okay, I’ll mention that Chick Fil A’s food products are excellent and consistent across the country.
Other fast food chains face significant challenges in replicating Chick Fil A’s model due to differences in company culture and operational priorities. Many chains focus primarily on speed and cost efficiency, often at the expense of personalized customer service.
Additionally, achieving the same level of employee training and dedication requires substantial investment and a deep-rooted commitment to customer satisfaction that not all chains are willing or able to make. Db
Chick-fil-a is a great model to follow in the fast food industry…most of the time. Creating content for their customers at $400k per episode is pushing their core competency a little too far. They need to stick to food, focus on improving their customer experience (like their quad-drive thru) and keep expanding their locations. Less is more for Chick-fil-a, and they shouldn’t change their winning formula!
Chick-fil-A leads with high quality food and unparalleled customer service. Their ability to excel in hiring and staffing is their game changer, especially with the labor market over the past few years. It’s actually surprising that other chains haven’t tried to borrow from their hiring/training playbook.
Their pricing pushes the edge of fast food affordability, but given their focus in upscale suburban markets, they haven’t hit a wall yet.
It always surprises me that few other fast food chains haven’t been able to copy Chick-fil-A’s playbook for hiring, training, culture and customer service delivery. They are the gold standard in fast food, particularly, in drive thru operations. I have been to many locations across a variety of states and no matter the location, the service, quality and experience is consistently outstanding. Yes, the price point is a little higher than other fast food chains, but consumers know what they’re getting and don’t have an issue paying it.
100%. When a customer feels they are getting something consistently better than other options (make a promise, then deliver on it) loyalty supersedes price issues.
Chick-fil-A absolutely sets the standard for operational and customer experience excellence. The fact that its average unit revenue is more than double that of a McDonald’s is mind-boggling.
I do question the long-term viability of getting into the entertainment streaming business. That space is not for the faint of heart and will require an enormous investment of capital over the long-term that might be better deployed elsewhere. I have trouble understanding just how this move aligns with the brand. I also wonder if they’ll name the channel Chick Flix?!
The local Chick-fil-A in our town ALWAYS has car lines for the drive through-big ones. I wonder how much revenue they forfeit with their closed on Sunday initiative, it has to be a lot!
This is a chain that executes flawlessly, with a product that seemingly everyone loves. What is not to like?
4-strip entree and large Diet Dr. Pepper, light on the ice, with Chick-fil-A sauce and honey mustard, please!
Chick-fil-A is definitely the reigning star in the fast food segment and they don’t appear to be slowing down. They have a quality product and an extremely loyal fan base. Barring a misatep like a food-borne illness or something that alienates its customers, they appear to have a promising future.
That average revenue per location is even more remarkable considering that Chick-fil-A is closed on Sundays. I can think of a few reasons for its success:
Other fast food companies have a lot to learn from Chick-fil-A but its singular focus on one menu item may be its superpower.
Chick-filet-A is an “experience design” company. They are one of the few corporations that looks at the entire value chain around it’s operations from the sourcing of food, a core menu, passionate service members, brutal consistency, precision and adaptable execution, while leaving you no reason not to return. Customers don’t just buy your food, they buy CONFIDENCE above all else.
Lotsa love for Chick-fil-A in my town (and also here in this forum).
It’s stores’ productivity is all the more remarkable considering they are open six days a week. Judging by the queue outside the double-laned drive-thru at the location nearest to me in Tucson, the public is not put off by its prices.
Like others commenting here, I would counsel Chick-fil-A not to alter its winning and disciplined menu formula much. (Except I would like to see them bring back the coleslaw it eliminated in 2016!)
Healthy sourcing should remain its bedrock value. Yet it is inevitable that its own growth will put increased pressure on sources of supply. That includes giant supplier Tyson Foods. For my money, truly antibiotic-free chicken is an important promise, and NAIHM sounds like a dodge.
Full disclosure: I am a CFA addict and I have worked with CFA several times in my career. I believe they will continue to be a powerhouse in the QSR space for several reasons, including offering a high quality product always, quality service most of the time, quality value. In addition, they have an innovation department that is always looking at things from the customer’s point of view and has a relentless focus on delivering quality customer experience. Unlike many others, they walk the talk of CX!
Chik-fil-A is a testament in how to confidently and consistently package up a quality fast food offering, in a clean environment, with friendly service – and deliver on it nearly 100% of the time.
But even more impressive is the efficiency at newer locations with multiple lane drive-thru systems, with employees standing outside using tablets to speed up and confirm order accuracy. That alone pushes through the volume delivering high revenue per location (well over fast food industry average), but more importantly makes for a great customer experience (CX).
With the exception of the planned streaming channel, which takes them outside of their core competency, Chick-fil-A has done just about everything right. Its products & innovation are second to none in the industry. Its continued hallmark is its legendary customer service, unmatched in the fast food business.