One of the biggest fast food chains in America, Chick-fil-A’s unusual business model and controversial leadership mean that it’s not to every franchisee’s tastes.
An Overview of Chick-fil-A
One of the biggest companies in the fast food industry, Chick-fil-A has made itself popular through the familiar and comfortable. It offers a limited but reliable menu and focuses on high quality customer service. Its success has led others to move into chicken sandwiches, with the so-called “chicken sandwich wars” in 2019, but Chick-fil-A remains the defining chicken sandwich.
Aside from chicken, Chick-fil-A is best known for the Southern Baptist Christianity of its leaders. Its corporate purpose begins with glorifying God, and religious principles shape its business practices. Chick-fil-A shops don’t open on Sundays, Thanksgiving, or Christmas, and while the company doesn’t offer a fish option during lent anymore, it’s still mentioned on its website. Many franchisees might appreciate the time off, but the more ambitious might see this as a lost opportunity.
Because of its popularity, there’s a lot of competition to become an operator, as Chick-fil-A calls its franchisees. The company is very selective in who it brings on, and emphasizes active management – this isn’t a franchise that can provide you with passive income while a manager handles the work. It’s not one with prospects for expansion either, as Chick-fil-A rarely lets franchisees run more than a single outlet.
Chick-fil-A in Context – the State of the Industry
Takeaway chicken is one of the most widely consumed foods in America, with industry revenues over $59 billion. Rising disposable incomes led to a growth in business before Covid, and an emphasis on takeout and drive thru helped weather the pandemic. There’s every reason to expect revenues to keep growing.
70% of the industry belongs to the top four players, including Chick-fil-A. The main source of competition is therefore other big brands, both in chicken and elsewhere in the quick service restaurant (QSR) market. QSR has been forecast to see $111 billion in growth over the next fifteen years, so there’s plenty of revenue for Chick-fil-A to gobble up.
For such large brands, a lot of the market is driven by successful advertising campaigns, but Chick-fil-A operators may be in a better position than most to shape their own fate. The company emphasizes joining in the local community, and operators can use those connections to drive their own success.
There are reasons to expect a shift away from beef and toward chicken. Chicken is more environmentally friendly to rear, healthier to eat, and has cultural associations with hip-hop that have given it cultural capital. The chicken industry is well placed to grow.
The Finances of a Chick-fil-A Franchise
The finances of Chick-fil-A work differently from most. The initial franchise fee is only $10,000 and the franchisee doesn’t get to own the business. Instead, Chick-fil-A owns the business and premises, and the franchisee is effectively a manager.
Chick-fil-A estimates that the initial costs to set up one of its locations are $444,243 to $2,338,786, most of these costs coming under the catch-all heading of “additional funds.” Instead of the franchisee paying up front, most of it comes out of the share of the profits that you earn. The financial pain of getting started is therefore much lower. Chick-fil-A is deliberately choosing operators for their character and skills rather than their wealth.
This unusual franchise model means that you’re not building up wealth through business ownership, and you can’t sell the business on. Being a Chick-fil-A operator means taking on a potentially high paying managerial job, rather than building up a business of your own.
The average annual sales volume for franchised Chick-fil-A restaurants located in non-malls, based on data from 2,049 locations, was $9,374,320 in 2023.
Recent Developments at Chick-fil-A
In the early 2010s, Chick-fil-A caused controversy through donations to organizations opposing marriage equality, as well as its president’s outspoken opposition to equal marriage rights. Though it gained some support from Christian conservatives, the company quickly began to pull back from this stance in the face of boycotts. It has since publicly stopped donating to groups opposed to equal rights, so may be less uncomfortable for LGBTQ-supporting franchisees than it once was. But while the company may be less outspoken in its social conservatism, it’s still run by a family attached to these values, and you should think about how your values align before joining the franchise.
More recently, the success of its drive-thru locations has caused some criticism due to traffic disruption. This is less of a Chick-fil-A problem than one that any successful drive-thru could face, and the company is looking at ways to tackle these problems.
Meanwhile, experiments with new menu items indicate that the company may be preparing to broaden its menu and, for better or worse, adopt a more mainstream approach to QSR.
Chick-fil-A is one of the most successful restaurant chains in America. That can make it appealing as a franchise, but it’s worth considering the company’s leadership, its shifting direction, and its unusual franchising model before deciding if you’re comfortable joining them.
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