This Franchise Chatter Guide on the nation’s top chicken franchises was written by Brian Bixler.
Why did the restaurateur cross the road? To build a better chicken franchise, naturally. As chicken consumption in America increases and franchise brands find new ways to serve up the staple, the chicken segment of limited-service restaurants is taking wing. Chicken is offered by many quick-service restaurants grilled, fried, wrapped, by the wing, in nuggets, strips or atop a bun with various toppings.
There have been some significant changes in the chicken franchise industry in recent years, with two big developments in 2014 alone. First, a report from Janney Capital Markets just last month confirms that Chick-fil-A has surpassed Yum! Brands’ KFC as the top chicken fast food chain and may be poised to take a significant bite out of McDonald’s sales as well.
“Chick-fil-A’s rise from a distant No. 2 to a clear-cut No. 1 in the U.S limited-service category over the years 1999 to 2013 may hint that it could become a larger competitive threat to many more fast-food brands over 2014 and beyond—and not just chains traditionally defined as ‘chicken’ brands. Keep in mind, McDonald’s sells a lot of chicken-based items (Chicken McNuggets, McChicken and its various line extensions, etc.),” writes Janney analyst Mark Kalinowski in the report.
Steady Sales Climb
To illustrate how the Chick-fil-A franchise brand has risen to prominence during the last decade, Chick-fil-A had just 9 percent market share in 1999 compared to KFC’s dominant 40 percent, according to the Janney report. Today, Chick-fil-A is the “category leader” with a 26 percent share compared with KFC’s 22 percent.
Chick-fil-A also beat KFC in sales in 2013, according to Technomic research firm. Chick-fil-A’s sales in 2013 passed $5 billion, compared with KFC’s $4.2 billion. That was a more than 9 percent jump in sales for Chick-fil-A compared to a 6.7 percent year-to-year decline for KFC.
Moreover, Chick-fil-A, a privately held family company, has 1,775 units, far fewer than KFC’s 4,438. And, Chick-fil-A is able to achieve its growth results despite being closed on Sundays for religious reasons.
Plus, Chick-fil-A tops the entire fast food industry in terms of average sales per restaurant. In 2012, Chick-fil-A averaged $3.2 million in sales per store, topping even those of second-place McDonald’s Corp. ($2.6 million), which has eight times the number of restaurants in the U.S., according to QSR magazine.
Chicken Consumption Up
In addition to the Janney report, the other major development for the chicken franchise industry was a recent study about consumption that shows promising numbers for just about any restaurant that has chicken on the menu. Chicken consumption is up 17 percent in the United States from 2012, according to new research presented last month by the National Chicken Council and conducted online by PKS Research Partners earlier this year.
When it came to dining out, 20 percent of respondents said they were likely to buy more chicken at restaurants and other food service establishments. This indicates a net gain in purchasing among 9 percent of the population, the report states.
The primary reasons for eating more chicken at restaurants are taste (25 percent) and health/nutrition (24 percent). Overall, among the total sample, 90 percent of respondents had eaten a meal or snack that contained chicken in the two weeks prior to the survey, which was in line with results of the 2012 survey.
In the Technomic 2014 Top 500 Chain Restaurant Report, chicken brands such as Wingstop, Raising Cane’s Chicken Fingers, Pollo Tropical, Golden Chick, Pollo Campero and Wing Zone were named among the fastest-growing in the segment.
The Importance of Taste
With the Technomic report stressing the importance of taste among consumers, there was also good news for Chick-fil-A franchisees when Consumer Reports did a cover story in its August 2014 issue about the best and worst fast food in America. Chick-fil-A topped all chicken competitors as “taste champ.” It was also rated very high by readers for clean surroundings and top service.
As for taste, the surveyed readers rated chicken chains on a scale from 1 to 10, with 10 being the most delicious. Here’s how some of the other brands fared with the taste scores:
- 8.0 Chick-fil-A
- 7.7 El Pollo Loco
- 7.7 Popeyes Louisiana Kitchen
- 7.7 Boston Market
- 7.6 Bojangles’ Famous Chicken ‘n Biscuits
- 7.3 Zaxby’s
- 7.3 Church’s Chicken
- 7.1 KFC
In its Fast Food Restaurants in the U.S. report updated in March of this year, IBISWorld market research firm said quick-service restaurants will continue to diversify their menus and chicken offerings will be among the new products they are sure to introduce.
“Major operators will seek to expand revenue and profit by offering healthier alternatives to red meat products, such as chicken burgers, pasta and fresh salads,” the report states.
That’s just one of the notable trends for all restaurants. Those that focus specifically on chicken are seeing other trends, Technomic reports.
- Some restaurants in the limited-service chicken category are revamping core menus to offer a broader range of foods and beverages. For example, Zaxby’s added a new line of milkshakes to its permanent menu, including flavors such as Birthday Cake, Banana Pudding and Chocolate Cookie.
- Some chicken chains are testing expansion into new dayparts. For example, Popeyes Louisiana Kitchen tested a Louisiana’s Best Breakfast menu at a Mooresville, N.C., unit. The breakfast menu includes grits; a country-fried steak biscuit; a chicken biscuit; a sausage, egg and cheese biscuit; breakfast wraps made with chicken, sausage or bacon; and a blackberry and cream cheese turnover.
- Because consumers are demanding healthier and purer foods without additives like hormones and preservatives, in an effort to improve ingredient quality, Chick-fil-A tested new products in about 200 Georgia locations, including reformulated white buns with no corn syrup. In late December 2013, the chain began offering in all restaurants a new-recipe chicken soup without yellow dye. This year, Chick-fil-A plans to test new sauces and dressings with no artificial coloring.
- KFC is still trying to stave off the competition with its own strategies. It opened its first KFC eleven concept store in Louisville, Ky. The National Chicken Council reports that Millennial respondents to its survey (ages 18-34) remain the most likely to eat chicken meals or snacks frequently, and the KFC eleven concept is designed to capture that demographic. The restaurant features a more contemporary design with wood and brick as well as soft earth tones. The menu is broader than at traditional KFC units; it includes flatbread sandwiches, rice bowls, fresh salads, boneless chicken and smoothies.
Popeyes Louisiana Kitchen
Popeyes founder Alvin C. Copeland, Sr., struggled with his first Southern fried chicken venture in New Orleans called Chicken on the Run. But when he turned up the flavor a notch, changing it to spicy, New Orleans-style chicken, and renamed his business after the lead character in the film “The French Connection” in the early ’70s, an iconic brand was born.
More than 40 years later, Popeyes remains a force in the limited-service chicken segment in the U.S. with more than 2,225 units operating in the United States, three territories and 28 foreign countries. In recent years, it has undergone a re-imaging campaign that has resulted successfully in increased market share and sales.
Technomic estimates Popeyes’ market share to be 11.4 percent. In 2013, it opened 194 new restaurants, the highest opening count in 15 years. More than 550 domestic restaurants were remodeled, bringing the total to more than 60 percent of the domestic system in the new Popeyes Louisiana Kitchen image.
One of the fast-casual entries in the chicken segment, Zaxby’s calls itself “an alternative to fast food” by offering prepared-to-order Chicken Fingerz, traditional or boneless chicken wings, sandwiches, salads and appetizers, along with a variety of nine sauces ranging from Wimpy and Tongue Torch to Nuclear and Insane.
The chain was started by childhood friends Zach McLeroy and Tony Townley in Athens, Ga., in 1990. It began 2014 by opening its 600th location in the U.S. That milestone was reached after a very successful 2013 during which the brand reached the $1 billion sales mark for the first time.
Now located in some 15 states, Zaxby’s continues to expand its geographic footprint, focusing on expansion in markets, including Oklahoma, Utah, Louisiana, Texas and Indiana.
For a second consecutive year, Technomic ranked Zaxby’s America’s “Most Craveable Fast Casual” in 2014. Janney estimates Zaxby’s market share to be about 5.6 percent.
Bojangles’ Famous Chicken ‘n Biscuits
Founded in 1977 in Charlotte, N.C., by Jack Fulk and Richard Thomas, Bojangles’ is one of the oldest brands among the established chains. Like Zaxby’s, Bojangles also celebrated the milestone of its 600th store opening this summer, which took place also in Charlotte, where the chain got its start.
Focusing on “Cajun-style” chicken to differentiate itself, Bojangles’ serves proprietary menu items, such as made-from-scratch buttermilk biscuits, iced tea and sides along with what it touts to be “specially seasoned, never-frozen, fried chicken.”
Today’s units are a far cry from the first Bojangles’, a walk-up chicken spot with no seating. Fresh-baked biscuits and fried chicken remain the cornerstones of the menu, but Bojangles’ is also one of the first of its competitors to make breakfast an important daypart.
This venerable brand has been around for more than 60 years, beginning with the very first Church’s opened in the 1950s by its namesake, George W. Church, Sr., across from the Alamo in downtown San Antonio, Texas. It spent most of those early years trying to differentiate itself from KFC, which was the most important competitor at the time.
Over the years, Church’s has seen a refreshing of its brand several times. It has also gone from a publicly traded company back to being held by a private equity firm.
It continues to generate sales healthy enough for Technomic to put it among the top 10 limited-service chicken chains. Sales were down slightly in 2013 at more than $855 million, while the number of units in the United States went up slightly. Church’s has more than 1,000 units throughout the country.
El Pollo Loco
The biggest news for El Pollo Loco this summer is the completion of an IPO in July and initial stock purchase volumes that invited some analysts to make favorable comparisons between it and Chipotle. El Pollo Loco Holdings began trading on the NASDAQ exchange on July 25.
Spanish for “the crazy chicken,” the company has been around since 1980 when the first unit opened in Los Angeles. It differentiates itself with a signature product: citrus-marinated, fire-grilled chicken. Whole chickens are grilled, hand-cut, and served with burritos, salads, soups, tacos and quesadillas. At a self-serve salsa bar, customers can ladle unlimited amounts of salsa, jalapenos and cilantro onto their dishes.
While it is a growing concept, in which customers can watch the chicken being roasted on a fire grill, the greatest concentration of units is still in the Southwest. The company topped 400 units in 2013.
Up and Comers
Founded in 1994 and headquartered in Dallas, Texas, Wingstop has more than 600 restaurants open across the United States, Mexico, Russia and Singapore. The company differentiates itself from others in the chicken segment by offering classic and boneless wings with 11 distinctive flavors including Original Hot, Mango Habanero, Cajun, Atomic, Mild, Teriyaki, Lemon Pepper, Hawaiian, Garlic Parmesan, Hickory Smoked BBQ and Louisiana Rub.
The company has experienced 10 consecutive years of positive sales increases and was named a Top 10 Best Franchise Deal by QSR magazine. The company is owned by affiliates of Roark Capital Group, an Atlanta-based private equity firm, whose portfolio includes many leading franchising brands, including those of FOCUS Brands: Auntie Anne’s, Carvel, Cinnabon, Moe’s Southwest Grill and Schlotzsky’s.
Bush’s Chicken is a quick-service chain known for Southern-style fried chicken and sweet tea serviced primarily via drive-though windows, but also in a family-friendly environment. With a focus on value, Bush’s closed out 2013 with 52 units, up 6.1 percent from the previous year, according to Technomic.
PDQ might be able to serve up chicken pretty darn quick, but such skill would have nothing to do with the name of the chain, which stands for People Dedicated to Quality, according to the company’s website.
Two of those people are former Outback Steakhouse co-founder Bob Basham and MVP Holdings CEO Nick Reader, who spent more than two years developing the concept based primarily on fresh, hand-battered chicken tenders, before opening the first store in Tampa, Fla., in 2011.
PDQ now has locations in Alabama, North Carolina, South Carolina and Texas as well as the Sunshine State and closed 2013 with 18 units.