Chick fil a franchise profit margin

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Strategic Plan

Chick-fil-A

Strategic Management

Student Name

AMU/APUS. BUS 620

Date

http://www.chick-fil-a.com/
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Company Headquarters:

Chick-fil-A, Inc.

5200 Buffington Road

Atlanta, GA 30349-2998

(404) 765-8038

Executive Committee:

S. Truett Cathy, Founder, Chairman and Chief Executive Officer

Dan T. Cathy, President and Chief Operating Officer

Donald M. "Bubba" Cathy, Executive Vice President and Dwarf House President

James "Buck" McCabe, Executive Vice President, Finance and Chief Financial Officer

Steve Robinson, Executive Vice President, Chief Marketing Officer

Perry Ragsdale, Executive Vice President, Design, and Construction

Timothy Tassopoulos, Executive Vice President, Operations

Websites:

www.chick-fil-a.com

www.chick-fil-a.com/pressroom

www.cathyfamily.com

Charities and Scholarships:

1. Leadership and Family Enrichment Programs

2. Youth and Education Programs:

(Note: All information in regards to company headquarts address, executive committed,

websites and charities quoted directly from http://www.chick-fil-a.com)

http://www.chick-fil-a.com/
http://www.chick-fil-a.com/
http://www.chick-fil-a.com/Company/Pressroom
http://www.cathyfamily.com/
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Overview

Chick-fil-A is the number 2 market share older in the chicken industry. S. Truett Cathy

has built his private company around his family. As seen above in the company’s breakdown of

senior leaders. Chick-fil-A’s success and failures are a family matter. The company is now being

passed to the 3rd generation of Cathy’s family. Chick-fil-A has increased their market sales for 45

consecutive years cumulating in a 14% increase in 2012 with a 4.6 billion USD annual sales

year-end total. Chick-fil-A is a private company and is not publicly traded on the NASDAQ

stock exchange. Chick-fil-A began offering franchises in 1986. Chick-fil-a requires

approximately a 5,000 USD investment to operate a franchise. The types of locations involved

with the Chick-fil-A organization are Mall/In-line restaurants which are stand-alone restaurants,

drive thru only outlets, Dwarf House, Truett’s Grill and satellite restaurants.

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Timeline

The following timeline is a brief look at the evolution of Chick-fil-A. This list is not an all-

inclusive list but is only meant to show a brief outline to express the successful growth of the

company.

1946: First Dwarf Grill opened in Atlanta.

1963: The invention of the original chicken sandwich

1967: The establishment of the first Chick-fil-A in-mall restaurant in Atlanta, Georgia

1973: Team member scholarship established for employees

1977: Freshly squeezed lemonade introduced in Chick-fil-A restaurants

1984: WinShape Foundation (non-profit) established

1985: First full service Chick-fil-A restaurant established

1982: Chick-fil-A introduced the chicken nugget to their menu

1982: Chick-fil-A moved their headquarters into southwest Atlanta

1986: First free standing restaurant established

1992: Chi-fil-A expands to college campuses

1993: Chick-fil-A opens its 500th restaurant

1996: Chick-fil-A sponsors the college football series Peach Bowl

2000: Chick-fil-A passes one billion USD in sales

2001: Chick-fil-A opens its 1000th restaurant

2006: Chick-fil-A passes two billion in sales

2010: Chick-fil-A opens its 1500th restaurant

Disclaimer: all events taken from http://www.chickk-fil-a.com/Company/Highlights-

History)

http://www.chick-fil-a.com/
http://www.chickk-fil-a.com/Company/Highlights-History
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History

To begin to understand the now famous and successful Chick-fil-

A restaurant the first thing to explore is the Chief Operating Officer

(CEO), S. Truett Cathy. S. Truett Cathy is a devout southern Baptist

that served in the United States army during World War II. After

returning from the War in 1945 he began the first steps to building his

chicken empire. Cathy uses religion as a foundation in every aspect of his life. These principles

are shown through his Chick-fil-A enterprise. Truett Cathy established the first Chick-fil-A

restaurant in Hapeville, Georgia in 1946. Chick-fil-A is a family run business that has grown to

the second largest chicken restaurant chain in the United States (Chick-fil-A Website, 2013).

Chi-fil-A is a values based company that has prospered over the last 67 years and how increased

their bottom line each year. Truett Cathy started the Chick-fil-A business with his brother Ben.

The company has been integrated with Truett Cathy’s Christian beliefs and is the foundation of

how the business operates currently. One of the effects of this religious foundation is that Chick-

fil-A is closed every Sunday.

Chick-fil-A began as a restaurant named the Dwarf House but has grown to over 1,700

locations in 39 states and at the end of the fiscal year 2012 their annual sales were approximately

$4.6 billion (Chick-fil-A Website, 2013). Chick-fil-A is heavily involved with the business

community with annual Chick-fil-A leaders’ casts. The major goal of these leaders’ casts is to

gather successful business men and companies around the world and discuss and teach the

principles of leadership and growth.

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Products

Chick-fil-A offers a variety of

products, but their main ingredient is

chicken. The products include

several styles of chicken sandwiches,

wraps and salads, fires, a breakfast

menus and a variety of soft drinks.

The mainstay and image of the

company is the classic chicken

sandwich. With the revolutionary

invention of this sandwich Chick-fil-

a propelled itself in the restaurant

market. Although consumer tastes

and trends change the chicken sandwich offered at Chick-fil-A has become and image of the

organization such as the Big Mac or the Whopper offered at McDonalds and Burger King

respectively. The prices of Chick-fil-A main course sandwiches range from approximately 2 to 5

USD. Chick-fil-A has followed current trends of consumers wanting a more healthy diet.

Chick-fil-A has always wanted to separate its self from the image of a fast-food restaurant and

has begun to introduce salads and fruit options in their menus.

Chick fil-A’s prices are comparatively similar to the larger fast-food and restaurant

chains. One major strength is the limited diversity of the product Chick-fil-A offers. Chick-fil-

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A does limit its market by only offering chicken style products but it also limits its competition

with this maneuver.

Advertising

This strategy focused on a healthier hipster style

market segment. Through the use of billboard,

social media sites and television ads Chick-fil-A

is able to target each new generation while

keeping their older generations of consumers

due to their market name. Chick-fil-A spends

on average twenty-seven million ISD on advertising each year. The result of their advertising is

approximately 3 million annual sales volume each year per restaurant (Penn 2013). Chic-fil-A’s

expenditures do not compare with the fast-food giant McDonalds in terms of cash, but the results

are superior.

Operations

Chi-fil-a operates its franchising section differently that all other restaurant chains. A potential

investor only invest 5,000 USD to operate a store. Chick-fil-a retains ownership of the store,

picks the location and funds the entire upfront cost. Chick-fil-A has over 100,000 current

employees. Due to the fact that Chick-fil-A is a privately run company the Chief Executive

office is able to pick and choose who he allows to operate a restaurant. Also, with a low startup

cost many investors are likely to choose this franchise over another. According to Grantham

each owner makes a yearly wage of 190,000 USD (Grantham 2012)).

Community Programs

http://www.chick-fil-a.com/
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Chick-fil-A is heavily invested within the community. One of their most successful

developments is with the one day event labeled the Chick-fil-A leaders; cast. The event is held

in Atlanta, Georgia each year and is broad cast through over 150 leaders’ cast satellite locations

throughout the world. Noted speakers within the 2013 leader’s cast included Condoleezza Rice

and Duke Coach Mike Krzyzewski. The major goal of the leader’s cast is the development of

business leaders in each separate community. Business owners from all over the world request

to host a leader’s cast.

The second involvement Chick-fil-A has within the community is through education.

Chick-fil-A offers scholar ships throughout their work force and promoted education. One of the

last figures showed that Chick-fil-A has helped the over 10,000 employees receive funds to

continue their education (Chick-fil-A Website, 2013).

Vision

Chick-fil-A is one of the companies that promote intrinsic values over financial gain. In

the next three to five years the company will continue to bring in family members by involving

now the 3rd generation in the running of the company. Chick-fil-A will continue to grow and

expand their restaurant chain to add another 500 locations to reach the total of 2000 restaurants.

Chick-fil-A will continue to offer community services such as the expansion of their non-profit

organization, annual leaders’ casts and scholarship programs.

Mission Statement: Chick-fil-A's mission statement reveals their commitment to

service: "To be American's best quick-service restaurant at winning and keeping customers

(“Chick-fil-A CEO”, 2012)."

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Purpose: "That we might glorify God by being a faithful steward in all that is entrusted

to our care, and that we might have a positive influence on all the people that we might come in

contact with. (“Chick-fil-A CEO”, 2012)."

Corporate Values

Truett Cathy manages his company on his religious based values. These values have

been passed down through his family which also work within the company. Although there are

not religious symbols displayed in Chick-fil-A restaurant the values are evident. Truett Cathy

focuses on integrity in the business world and uses his values to attract likeminded employees.

The corporate values are based on the face that S. Truett Cathy is a devote Southern Baptist. He

is immensely involved in the community and his private company is family operated.

Business Objectives

Chick-fil-A does not have a maximize profit as much as possible type of an objective.

Chick-Fila does want to increase profits but not at the cost of the values of the organizations.

Chick-fil-A. Over the long term Chick-fil-A will continue to expand in the domestic market

focusing on upping there total number of locations in the western section of the United States.

Also, while continuing to strengthen their market within the United States. Chick-fil-A will

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establish a launch itself into the global market. The first step will be to move within the market

of Canada and then to Mexico. Chick-fil-A will continue to repair their public image in regards

to the gay population.

SWOT Analysis

The following chart illustrates Chick-fil-A’s Strengths, Weaknesses, Opportunities and

threats (SWOT) within their current operating environment:

Strengths

 Name recognition

 Longevity in restaurant chain

 Family run organization

 Community involvement

 Scholarship program

 Advertising campaign

 Low investor franchise cost

 History of growth for investors

 Credibility of leadership

 Strength of product

Weaknesses

 Christian based principles

 Closed on Sundays

 Lack product differential

 The company has not expanded into

the global market

 Majority of locations are focused in

the south

 Limited viewpoints in a family run

business

Opportunities

 Foreign Markets expansion

 Domestic expansion

 Growth through Truett's Grill

 Worldwide airport expansion

 Expansion into the United States

Threats

 Emerging competitors

 Economic recession

 Salmonella disease epidemic

 Animal rights activist

 Atheist campaign/bad publicity

 Saturation of market

 Supply power of competition

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Chick-fil-A’s Image

Chick-fil-A has suffered a relatively large set back with their image. This setback is supported

through the gay community. Due to the CEO’s religious beliefs he is against gay marriage and

expressed his viewpoint with an interview. Figure 1 shows the results in the company’s approval

rating in 2012. The company has since recovered but with the movement toward acceptance

within the population the company’s market share may decrease as the CEO’s religious beliefs

are brought forward.

Figure 1: QSR Sector. This figure illustrates the public image score of Chick-fil-A for June

2012 to July 2012 (Ford 2012)

Competition

In a door count survey Chick- fil-A was compared to several restaurants on food quality,

service, cleanliness, atmosphere and overall value. Chick-fil-A rates in the top two in each

category. Referee to figure 2 below for a comparison. Although KFC is the largest chicken

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serving restaurant in the nation their railings pale in comparison to Chick-fil-A. Chick-fil-A is

the number 2 leader in the market share in their competition within the chicken fast food market.

Although giants such as KFC and McDonalds have a larger supply power, Chick-fil-A is one of

the most preferred restaurants for purchasing chicken styled products.

Figure 2: Restaurant Quality Service. This figure illustrates and compares the ratings between

competitors in the chicken food service market (Scanlan, 2012).

Key Strategies

Future strategies are broken up into two different areas possible growth for Chick-fil-A to

continue their growth and raise their profit margins.

Strategy 1: The Chick-fil-A organization should continue to expand through their

franchise by keeping the 5,000 USD start-up cost. Chick-fil-A will need to average 100 new

stores a year. One of the main threats to domestic growth that will increase each generation is

the movement away from religion. Chick-fil-A has already received negative propaganda which

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actually increased sales, but in the long run this would inevitable cause damage. Currently the

Christian foundation has caused an increase in profits, but in the long term consumers may move

to different restaurants do to the public image of Chick-fil-A portrayed by the media.

Strategy 2: Chick-fil-A has used the same adverting scheme since 19995. The cow

characters have become synonymous with Chick-fil-A. Chick-fil-A should use the cow

characters to introduce a new character for the newer generations to continually gain new

customers. Although name recognition is important advertising still plays an important role.

The first step is this introduction to be done in social media sites such as Facebook and Twitter.

Strategy 3: As their popularity grew through expansion and the advertising campaign

Chick-fil-A will need to look on the global scale to continue their unprecedented growth. The

Market in the United States will become saturated by the Chick-fil-A brand name within 10

years. The best avenue for Chick-fil-A will be first in the western hemisphere. Focusing on

Canada and Mexico as potential markets will be one of the most cost effective plans for Chick-

fil-A. Although a large portion of their funds is utilized in the advertising campaigns their

results are more favorable and cost effective compared to such chains as McDonalds. Figure 3

below shows the current (2011) locations of Chick-fil-A restaurants. Although Chick-fil-A

locations appear to be spread throughout the United States the majority of their locations are in

the south. Without expansion into the western and northern states Chick-fil-A will not be able to

successfully compete with the larger fast-food chains in the future. The pure size of the

competition will begin to limit the growth of the Chick-fil-A business.

Strategy 4: One major concern is the public image of Chick-fil-A. The populous is

moving toward a more progressive and acceptance style viewpoint. One major concern is the

gay community. The religious background of the CEO needs to be kept within the family and

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not used when it comes to business practices. Of course many of the values are acceptable in the

business world, but private views on gay marriage and gay rights do not be associated with the

business. Not only do these viewpoints limit the market segment for Chick-fil-A it will alienate

customers throughout the United States.

FIGURE 3: Chick-fil-A Restaurant locations. This figure illustrates and shows the location of

all Chick-fil-A restaurant location by state in the United States (Dr. Gerdes, 2012).

Strategy 5: One of the major successes so far has been with keeping the company within

the family. One of the counter thoughts to this is the limitation of resource because of like

thinking between the family. One of the future strategies the family needs to consider as the

corporation continues to grow is the gradual recruitment of executives outside of the family to

pursue the market on the global level. The family is use to operating within the domestic market

and will need outside advisors to make a smooth transition into each countries market. One

family executive should be assigned to each new market with an expert on that country.

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Major Goals

The following goals should be achieved by the Chick-fil-A enterprises within in the next 3-4

years:

1. A separate sub headquarters established within Canada and Mexico.

2. An average increase of store front locations of 100 per year.

3. An yearly sales profit for each location to average 4 million USD

4. 50 new locations open within the borders of Canada and Mexico.

5. Continue to grow the Chick-fil-A leaders cast by added 20 new locations each year to

increase the total over the 200 mark.

6. Introduce a new marketing program with the use of the cow characters to include a

popular style character to reach the youth segment of the market share.

7. Expand Truett’s Grill style restaurants to 25 percent of the total number of locations

within the United States.

8. Increase Chick-fil-A market share by 20 percent to apply pressure to the leading share

holder.

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9. Increase public image of acceptance especially toward the gay community

10. Increase funding of Chick-fil-A bowl funding and have that bowl used as a national title

playoff game to increase advertising of the Chick-fil-A chain.

Strategic Action Programs

The following strategic action programs will need to be implemented to increase the

company’s profit margin:

1. The CEO, S. Truett Cathy needs to establish a plan for a successor prior to his death or

retirement within the next 6 months. With the use of family throughout the company his

death could cause arguments throughout the company.

2. Appoint senior executives to be project managers expanding the company within the

foreign market within the next 3-4 months.

3. Implementation of a program focusing on recovering the corporate image for the gay

community and reinforcing the business policy of accepting all consumer. The program

should include training seminars yearly for employees. This program should be

implemented within the next 6 months.

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References:

Chick-fil-A Website. (2013). Company Fact Sheet. Retrieved on July 28, 2013 from

http://www.chickk-fil-a.com/Company/Highlights-Fact-Sheets

Chick-fil-A CEO, S. Truett Cathy (2012). Christian News. Retrieved July 28, 2013 from

http://christiannews.christianet.com/1097585115.htm

Chick-fil-A, Inc.: Company Profile and SWOT Analysis - new company profile report. (2012,

February 02). TransWorldNews, Retrieved on July 28, 2013 from

http://nexus.som.yale.edu/chickk-fil-a/?q=node/114

CPA Properties, INC. (2011). About Truett Cathy. Retrieved on July 28, 2013 from

http://www.truettcathy.com/about.asp

Ford, Zack. (2012, July 30). Anti-gay Chic-fil-A attacks losers, repels prominent leaders,

universities and the public. LGBT. Retrieved on July 28, 2013 from

http://thinkprogress.org/tag/sarah-palin/?mobile=nc

Dr. Gerdes. (2012, August 8). How. To beat a bully: Lessons learned from Chick-fil-A. The

Professor’s Analysis. Retrieved on July 28, 2013 from

http://professorthink.wordpress.com/2012/08/

Grantham, Russell. (2011, December 29). Chick-fil-A model helps it lead. Atlanta Journal

Constitution. Retrieved on July 28, 2013 from http://www.ajc.com/news/business/chickk-

fil-a-model-helps-it-lead/nQPpn/

Penn, Mary S. (2010, October, 10). Media Manger outlines brand strategy for students. Chicago

Booth News. Retrieved on July 28, 2013 fromhttp://www.chicagobooth.edu/news/2010-

10-13-chick-fil-a.aspx

Scanlan, Rebecca. (2012, November 14). Chick-fil-A is America’s favorite chicken chain,

according to market force study. PRWEB. Retrieved on July 28, 2013 from

http://www.prweb.com/releases/chicken/qsrrestaurant/prweb10112156.htm

Scott, Sherri D. (2013). Truett’s family tree: Are the roots Truett Cathy planted strong enough to

sustain Chick-fil-A, Inc. into its third generation of family leadership? QSR. Retrieved on

July 28, 2013 from http://www2.qsrmagazine.com/articles/features/89/truett-2.phtml

Updated Chick-fil-A menu prices, (2012, August 12). Retrieved on July 28, 2013 from

http://menu-information.com/chick-fil-a-menu-prices/

http://www.chick-fil-a.com/
http://www.chick-fil-a.com/Company/Highlights-Fact-Sheets
http://christiannews.christianet.com/1097585115.htm
http://nexus.som.yale.edu/chick-fil-a/?q=node/114
http://www.truettcathy.com/about.asp
http://thinkprogress.org/tag/sarah-palin/?mobile=nc
http://professorthink.wordpress.com/2012/08/
http://www.ajc.com/news/business/chick-fil-a-model-helps-it-lead/nQPpn/
http://www.ajc.com/news/business/chick-fil-a-model-helps-it-lead/nQPpn/
http://www.chicagobooth.edu/news/2010-10-13-chick-fil-a.aspx
http://www.chicagobooth.edu/news/2010-10-13-chick-fil-a.aspx
http://www.prweb.com/releases/chicken/qsrrestaurant/prweb10112156.htm
http://www2.qsrmagazine.com/articles/features/89/truett-2.phtml
http://menu-information.com/chick-fil-a-menu-prices/