In this FDD Talk 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 2020 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Chick-fil-A franchise, based on Items 5 and 6 of the company’s 2020 FDD
- Section IV – Number of franchised and company-owned Chick-fil-A outlets at the start of the year and the end of the year for 2017, 2018, and 2019, based on Item 20 of the company’s 2020 FDD
- Section V – Presentation and analysis of Chick-fil-A’s financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:
- 2019 average, median, high, and low sales for the 230 domestic non-satellite franchised Operator Chick-fil-A Restaurants located in malls that had been open and operated by Operators for at least one full calendar year as of December 31, 2019
- percentage of domestic non-satellite franchised Operator Chick-fil-A Restaurants located in malls that had been open and operated by Operators for at least one full calendar year as of December 31, 2019 and generated annual sales of less than $1,800,000; between $1,800,000 and $2,500,000; and over $2,500,000, respectively
- 2019 average, median, high, and low sales for the 1,633 domestic non-satellite franchised Operator Chick-fil-A Restaurants located in non-malls that had been open and operated by Operators for at least one full calendar year as of December 31, 2019
- percentage of domestic non-satellite franchised Operator Chick-fil-A Restaurants located in non-malls that had been open and operated by Operators for at least one full calendar year as of December 31, 2019 and generated annual sales of less than $5,900,000; between $5,900,000 and $6,950,000; and over $6,950,000, respectively
Section I – Background Information
21 Things You Need to Know About the Chick-fil-A Franchise
Launches Multi-Million Dollar COVID-19 Relief Effort
1. In late April 2020, Chick-fil-A announced a relief effort dedicated to helping local franchisees continue their support of those impacted by COVID-19 in the communities they serve. The COVID-19 relief effort is anchored by a $10.8 million fund that Chick-fil-A, Inc. will distribute to local communities through its network of more than 1,800 independent owner-operators.
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2. Funds will be made available to Chick-fil-A operators through June 2020 with the intent to have an immediate impact on the needs of local communities, including food donations or items to first responders, health care workers, Chick-fil-A team members and their families.
3. According to Dan Cathy, chairman and CEO of Chick-fil-A, “Striving to be a supportive, caring and generous neighbor is in our DNA. Our restaurant Operators give back locally in so many ways, and this time is no exception. I’m humbled by the incredible care our restaurant teams have shown – from offering free meals to health care workers to feeding school children in need to writing notes of encouragement for guests. They know where the need is in their local community, and our goal for this fund is to support their efforts.”
4. The chain’s food donation program, called Chick-fil-A Shared Table, was established in 2012 with more than 1,100 restaurants now participating. Restaurants that participate in the program donate their surplus food to local shelters, soup kitchens, and charities. More than 320,000 meals have been served through the program since the beginning of March 2020.
5. While many Chick-fil-A restaurants are donating food to first responders and others impacted by COVID-19 at the local level, Chick-fil-A, Inc. also is helping to feed those in need during this time. More than 5,000 meals have been donated to school systems, health care workers, and others on the front lines in the restaurant company’s hometown of Atlanta, Georgia. The Chick-fil-A supply chain has donated 7,715 cases of fresh produce to Feeding America.
6. Finally, in an annual tradition, Chick-fil-A, Inc. is continuing to invest in thousands of local restaurant employees this spring to support their educational dreams. Chick-fil-A will invest a total of $17 million in scholarships to 6,700 team members in 47 U.S. states and Canada this year. Scholarships can be applied to any area of study at any accredited institution.
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Strikes Delivery Partnership with Uber Eats
7. In mid-April 2020, Chick-fil-A announced a partnership with Uber Eats, offering a new, convenient way for customers to enjoy the Chick-fil-A Chicken Sandwich and other menu favorites without leaving home. Uber Eats and Chick-fil-A were offering no delivery fee on orders of $10 or more at participating restaurants nationwide through April 18.
8. Like Chick-fil-A drive-thru and pick-up orders, menu quality and customer well-being are a top priority with delivery. To maintain the highest quality of menu items, Uber Eats deliveries will typically be made to customers within a 10-minute radius of participating Chick-fil-A restaurants. Uber Eats also offers its “no contact” delivery option.
9. Michael Garrison, senior director of Chick-fil-A’s delivery team, said, “Families are balancing work, school, childcare and other obligations from home and offering a simple way to order breakfast, lunch, dinner or a snack is just one small way to care for guests during this time. Our partnership with Uber Eats will help us continue to serve nourishing meals in our communities with the added convenience of having the meal delivered to customers’ doors.”
10. To order Chick-fil-A with Uber Eats, download the Uber Eats app or visit ubereats.com. Once an address is entered, customers will search for Chick-fil-A or scroll through available restaurants in the area. Once menu options are selected, customers will see their address, an estimated delivery time, and pricing details before submitting the order. Uber Eats offers in-app tipping, which is tied to the card on file, so cash isn’t needed to tip delivery drivers.
11. Janelle Sallenave, head of Uber Eats, US and Canada, added, “Uber Eats brings your favorite restaurants to your front door, which is important now more than ever. We are thrilled to partner with Chick-fil-A as we continue to serve our communities with quick, affordable, and safe food options with the tap of a button.”
Introduces Family Meal Bundles
12. At the beginning of April 2020, Chick-fil-A launched Family Meal bundles to provide customers with a convenient and easy meal solution that’s great for small groups and families. The Family Meal bundles are another way that Chick-fil-A is looking out for its customers during these unprecedented times. Featuring many signature Chick-fil-A menu items, customers can build their own bundled family meal for a better overall value than an a la carte purchase.
13. Family Meals include:
- Entrées: Customers can choose from 30-count Chick-fil-A Nuggets, four Chick-fil-A Chicken Sandwiches, and four Spicy Chicken Sandwiches;
- Sides: Customers have their choice of four medium Waffle Potato Fries, four medium Mac & Cheeses, or four Chocolate Chunk Cookies;
- Beverages: Customers have the option of ordering one gallon of freshly-brewed Iced Tea (sweetened or unsweetened).
14. Family Meal bundles are priced starting at $13.25, and customers can easily increase the quantity of the menu items to serve groups larger than four people.
15. While Chick-fil-A dining rooms are currently closed to ensure the health and safety of guests and team members, customers can order Family Meals via the drive-thru, mobile ordering (carry-out, drive-thru, and curbside), or delivery.
16. Chick-fil-A traces its history to 1946 when Truett S. Cathy opened the Dwarf Grill in Hapeville, Georgia, a suburb of Atlanta. Dwarf Grill was a diner and Cathy served a wide variety of diner foods. Eventually, Cathy developed what would become Chick-fil-A’s signature chicken sandwich.
17. Initially, the chicken sandwich was cooked in a more traditional way, but in 1961, Cathy purchased a pressure fryer so that he could cook the chicken sandwich faster. The pressure fryer allowed Cathy to cook the chicken sandwich in the same amount of time it took to cook a fast food hamburger. Following this discovery, Cathy decided to focus on selling just chicken sandwiches and he registered the name Chick-fil-A, Inc.
18. The first Chick-fil-A restaurant was opened in 1967 in the Greenbriar Mall in an Atlanta suburb. Cathy continued to open more Chick-fil-A stores in malls around the Southern U.S. and the first standalone store was opened in 1986. After this, Chick-fil-A focused on opening standalone restaurants over locations in mall food courts.
19. Chick-fil-A continued to grow around the country in the 1990s and Chick-fil-A also opened its first international location in Canada in 1994. However, Chick-fil-A’s international locations did not do well and the brand did not try again until more recently in the 2010s.
20. Today, Chick-fil-A still has a strong presence in the Southern U.S., but there are now locations all across the country in standalone units, universities, hospitals, mall food courts, and airports.
Entrepreneur’s Franchise 500
21. Chick-fil-A did not rank on Entrepreneur’s 2020 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Chick-fil-A franchise costs, based on Item 7 of the company’s 2020 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Chick-fil-A’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2020 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 1,741
- Outlets at the End of the Year: 1,853
- Net Change: +112
- Outlets at the Start of the Year: 1,845
- Outlets at the End of the Year: 1,947
- Net Change: +102
- Outlets at the Start of the Year: 1,936
- Outlets at the End of the Year: 2,085
- Net Change: +149
- Outlets at the Start of the Year: 31
- Outlets at the End of the Year: 29
- Net Change: -2
- Outlets at the Start of the Year: 37
- Outlets at the End of the Year: 42
- Net Change: +5
- Outlets at the Start of the Year: 53
- Outlets at the End of the Year: 26
- Net Change: -27
Section V – Financial Performance Representations (Item 19, 2020 FDD) and Analysis
Domestic Chick-fil-A Restaurants Included in Sample
- As of December 31, 2019, there were approximately 2,493 domestic Chick-fil-A Restaurants open and operating, including approximately 2,111 domestic company-operated and franchised Operator Chick-fil-A Restaurants and 382 domestic Chick-fil-A Licensed Units.
- The domestic Chick-fil-A Licensed Units, which are operated by Chick-fil-A Licensees, and their annual sales volumes, are not the subject of these financial performance representations.
- As of December 31, 2019, approximately 2,085 of the 2,111 domestic Chick-fil-A Restaurants were being operated by Operators and 26 of the 2,111 domestic Chick-fil-A Restaurants were being operated by Chick-fil-A or its affiliates.
- The domestic Chick-fil-A Restaurants that are operated or were operated at any time during calendar year 2019 by Chick-fil-A or its affiliates, and their annual sales volumes, are not the subject of these financial performance representations.
- Approximately 1,877 of those 2,085 domestic Chick-fil-A Restaurants being operated by Operators had been open and operated by Operators for at least one full calendar year as of December 31, 2019 and had been operated by Operators during the entire year.
- Of these 1,877 domestic Chick-fil-A Restaurants operated by Operators, 14 were “satellite” locations, and their annual sales volumes are not the subject of these financial performance representations. The remaining 1,863 non-satellite domestic Chick-fil-A Restaurants that had been open and operated by Operators for at least one full calendar year as of December 31, 2019, and their annual sales volumes, are the subject of these financial performance representations and discussed below.
- Approximately 230 of the 1,863 domestic non-satellite franchised Operator Chick-fil-A Restaurants that had been open and operated by Operators for at least one full calendar year as of December 31, 2019 were located in malls, and approximately 1,633 of the 1,863 domestic non-satellite franchised Operator Chick-fil-A Restaurants that had been open and operated by Operators for at least one full calendar year as of December 31, 2019 were located in non-mall environments (e.g. free-standing or drive-thru only units).
- During the calendar year ending December 31, 2019, 2 domestic non-satellite franchised Operator Chick-fil-A Restaurant located in a mall unit permanently closed, of which 0 had been open for less than 12 months, and 5 domestic non-satellite franchised Operator Chick-fil-A Restaurants located in non-mall environments permanently closed, of which 0 had been open less than 12 months.
Annual Sales Volume of Domestic Chick-fil-A Restaurants
- For purposes of the financial performance representations set forth below, the term “annual sales volume” includes a franchised Operator Chick-fil-A Restaurant’s entire gross receipts (excluding only sales taxes levied upon retail sales and payable over to the appropriate governmental authority) from sales at, from, or related to the franchised Operator Chick-fil-A Restaurant during the applicable calendar year, whether for cash or on a charge, credit, or time basis, including sales and services (i) where orders originate and/or are accepted at, in, or away from the franchised Operator Chick-fil-A Restaurant, or (ii) pursuant to telephone or other similar orders received or filled at or in the franchised Operator Chick-fil-A Restaurant.
- Both non-satellite franchised Operator Chick-fil-A Restaurants located in malls and non-satellite franchised Operator Chick-fil-A Restaurants located in non-mall environments are similar with respect to their operations and receive similar services from Chick-fil-A.
- Because franchised non-satellite Operator Chick-fil-A Restaurants located in malls and franchised non-satellite Operator Chick-fil-A Restaurants located in non-mall environments achieve generally different levels of financial performance, financial performance representations have been included for each type of Restaurant in order to provide information relevant to prospective Operators.
- Some franchised Operator Chick-fil-A Restaurants have sold this amount. Your individual results may differ. There is no assurance that you’ll sell as much.