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FDD Talk 2016: The Chick-fil-A Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

by Franchise Chatter on August 1, 2016

in Chicken Franchises, FDD Talk 2017: Food Franchises, Franchise Earnings



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Chick-fil-A Sandwich Photo by roboppy

In this FDD Talk 2016 post, you’ll learn the following:

  • Section I – Background information on the Chick-fil-A franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Chick-fil-A franchise, based on Item 7 of the company’s 2016 FDD
  • Section III – Presentation and analysis of Chick-fil-A’s financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:
  • 2015 average, high, and low sales for the 290 domestic Chick-fil-A Restaurants located in malls that were open for at least one year as of December 31, 2015
  • percentage of domestic Chick-fil-A Restaurants located in malls that were open for at least one year as of December 31, 2015 and generated annual sales of less than $1,300,000; between $1,300,000 and $1,800,000; and over $1,800,000, respectively
  • 2015 average, high, and low sales for the 1,286 domestic Chick-fil-A Restaurants located in non-malls that were open for at least one year as of December 31, 2015
  • percentage of domestic Chick-fil-A Restaurants located in non-malls that were open for at least one year as of December 31, 2015 and generated annual sales of less than $4,000,000; between $4,000,000 and $4,800,000; and over $4,800,000, respectively

Section I – Background Information

Chick-fil-A to Expand on ‘Eat Mor Chikin,’ Drops The Richards Group

Chick-fil-A made a surprising change in July 2016 when it dropped the advertising agency The Richards Group, which created the chain’s famed “Eat Mor Chikin” campaign more than 20 years ago.

Stan Richards, founder of The Richards Group, told the Dallas News that he was shocked to learn of the change. Chick-fil-A intends to create new marketing campaigns that don’t star the iconic cows; the chain will work with McCann New York, Starcom Mediavest Group of Chicago, and other agencies to produce future campaigns.

The cows will still be part of the campaigns, but other stories will be told as well.

Chain Launches Popular App

Chick-fil-A launched a new app, Chick-fil-A One, which enables customers to order and pay for their food ahead of time. Upon arrival, they can pick up their orders at a designated counter. The app shortens the long lines customers are used to during regular meal times.

The app was downloaded more than a million times in its first three days and became the most downloaded free app on iTunes, perhaps helped along by the free chicken sandwiches offered to all who downloaded it between June 1 and June 11.

Pressure Fryer Launched Fast-Food Chicken

Chick-fil-A was founded in 1946 by S. Truett Cathy, who opened a restaurant called the Dwarf Grill (now the Dwarf House) in the Atlanta suburb of Hapeville, Georgia. In 1961, Cathy discovered a pressure-fryer that could cook a chicken sandwich in the same time as a fast-food hamburger. He then registered the name Chick-fil-A, Inc.

The first of Cathy’s restaurants named Chick-fil-A opened in 1967 in the food court of the Greenbriar Mall in Atlanta. The company began to focus on free-standing restaurants more than food-court locations after opening its first free-standing location in 1986 in Atlanta.

The chain, headquartered in College Park, an Atlanta suburb, currently has more than 2,000 locations, many of which are in the southeastern United States. Chick-fil-A posted $6 billion in revenue in 2015.

The restaurants are owned by Chick-fil-A, which selects the locations and builds the restaurants. A franchised operator makes an initial out-of-pocket investment of only $10,000.

Chicken Sandwich Stays the Course

The Chick-fil-A Chicken Sandwich has been the most popular menu item since it was introduced 52 years ago, featuring boneless chicken breast, seasoned and hand-breaded and cooked in peanut oil.

Chicken is the definite star of the menu, featured in sandwiches, wraps, salads, soup, and breakfast items, but customers can also order Waffle Potato Fries and other sides, as well as beverages and desserts. Chick-fil-A Frosted Lemonade joined the dessert menu in March 2015.

Chain Donates Food After Orlando Shooting

After the mass shooting on June 12, 2016, at Pulse, a gay nightclub in Orlando, Chick-fil-A was part of the outpouring of support that came from the city. Chick-fil-A, which had previously come under fire for being anti-gay after President Dan Cathy’s statements against gay marriage and donations by the company to anti-gay groups, gave sandwiches and ice tea to law enforcement officials and people who were waiting in line to donate blood.

A number of other businesses provided goods and services following the tragedy, in which 49 people were killed and 53 were injured.

Chick-fil-A staffers worked on a Sunday though the restaurants are closed on Sundays.

The company was founded on the Southern Baptist beliefs of Truett Cathy, who wanted to give workers a day for rest and worship.

Protein-Packed Egg White Grill Debuts Nationwide

Chick-fil-A debuted a new breakfast sandwich in July 2016 that features high protein without a high price.

The Egg White Grill, which has generated positive feedback in select markets over the past two years, is now available throughout the United States. The sandwich, which features grilled chicken, grilled egg whites and American cheese on a toasted multi-grain English muffin, has 300 calories and 25 grams of protein.

At the same time, the chain resized its Greek Yogurt Parfait, which was introduced in 2015. The current offering, which increased in size from 3.5 ounces to 5.5 ounces, has 180 calories and 12 grams of protein.

Chick-fil-A also added a new Sweet & Spicy Sriracha dipping sauce, as well as three new sauce flavors: Zesty Buffalo, Garlic & Herb Ranch and Smokehouse BBQ.

Gluten-Free Bun Tested

In April 2016, Chick-fil-A debuted a gluten-free sandwich bun, testing it in select markets in Washington, Idaho and Mississippi. The bun comes individually wrapped, so customers must assemble their sandwiches themselves. The Chick-fil-A kitchen itself is not gluten-free.

Chain Tops in US in Customer Satisfaction

Chick-fil-A got the highest marks for customer satisfaction among fast-food restaurants in the United States, according to the American Customer Satisfaction Index Restaurant Report released in June 2016.

The family-owned chicken chain scored 87 points out of 100 to earn the top spot. Pizza chain Papa John’s ranked second with a score of 82.

Chick-fil-A Plans 20 Locations in Michigan

Chick-fil-A broke ground on its first free-standing Michigan location in April 2016. The Lansing restaurant is the first of the 15 to 20 locations the chain anticipates opening by 2021. It joins the two food-court locations at Oakland University and Detroit Metro Airport.

Customers Get Rewarded for Unplugging

Chick-fil-A operator Brad Williams of Suwanee, Georgia, is rewarding families for enjoying their meals in his restaurants without looking at their mobile devices. Williams developed the Cell Phone Coop, a small box that holds the phones throughout the meal. If the phones remain untouched, the family gets free ice cream cones.

The challenge proved popular, and hundreds of Chick-fil-A restaurants have requested the Cell Phone Coops.

Section II – Estimated Costs

  • Please click here for detailed estimates of Chick-fil-A franchise costs, based on Item 7 of the company’s 2016 FDD (updated).

Section III – Financial Performance Representations (Item 19, 2016 FDD) and Analysis



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