Notable Mention

‘Everybody Wants Chick-fil-A’: Why The Chicken Chain Is Dominating Fast Food

Bisnow Boston

The fast-food chicken experience has graduated from drive-thru three-piece buckets to three-block-long lines of customers on city streets, courtesy of one Atlanta-based chain.

Chick-fil-A locations generate more revenue than any other fast-food restaurant in the U.S. The average franchise of the chicken company saw $4.4M in sales in 2016, according to restaurant trade publication QSR. The next-closest chains in per-store sales were Panera Bread and Whataburger, at $2.7M each.

When it comes to making money in fast food, Chick-fil-A is in a class of its own.

“People are definitely shying away from the chains, the Chipotles and stuff like that. Everybody is looking for something new and different. Except for Chick-fil-A,” D.C.-based retail broker Tom Papadopoulos said. “Everybody wants Chick-fil-A, it’s just like a cult thing. Everybody wants them. Chick-fil-A is the In-N-Out Burger of the East Coast.”

Chick-fil-A originated as a Southern fast-food chain known for a simple menu and stores that close on Sundays, but the company has grown from its first location in a suburban Atlanta mall to a variety of locations in 47 states.

The chicken chain was the seventh-largest American fast-food company at the end of 2017, and it is poised to advance to third by 2020. At this point, other chicken chains are no longer apt comparisons. McDonald’s and Starbucks will be the only bigger fast-food chains by revenue in 2020, according to QSR.

The average KFC franchise made a little over $1M in sales in 2016. The entire company had 56% of the sales of Chick-fil-A despite having 2,000 more restaurants and being open for one extra day of business each week.

KFC closed 103 stores in 2016. McDonald’s earned an average of $2.5M at its nearly 27,000 locations. It closed 104 stores in 2016, and Subway, earning $422K per store, closed 359. Chick-fil-A opened 119 to bring its total store count to 2,102.

These days, Chick-fil-A is known just as much for the crowds clamoring to eat chicken sandwiches and waffle fries in its dining room as it is for the Christian values that permeate the company culture. But while CEO Dan Cathy’s comments regarding marriage equality may have given the chain a rash of bad press in 2012, sales never wavered.

While Chick-fil-A limits its growth to around 100 stores per year, sales have outpaced its measured physical growth. Chick-fil-A hit its $5B sales milestone in 2013 and is now on the cusp of $10B.

“Where you might see other fast-food places taking a hit is because they keep changing what they do, like that egg taco at Taco Bell,” said Andrew Selepak, a branding expert and director of the University of Florida’s graduate program in social media. “Chick-fil-A isn’t trying to appeal to anyone new, and it doesn’t have to. If you like them, great. If you don’t, there are plenty of people who do.”

A Southern Chicken Clucks Into The Yard Of The Yankee Crow

To keep sales at the level to which Chick-fil-A has grown accustomed, new chicken devotees across the country are needed. That has meant evolving from the mall to the dual drive-thru lane, and now to downtowns in some of America’s largest cities.

Chick-fil-A’s 2011 opening at Wabash and Chicago avenues in Chicago marked a departure from specializing in stand-alone stores to those with smaller footprints that often rely solely on foot traffic.

The Chicago expansion continued in 2013 to a location near the Chicago Theater at State and Lake streets. It became a lesson in how urban stores can’t be treated with cookie-cutter design. The State and Lake operator (how Chick-fil-A refers to its franchise owners) immediately noticed issues impacting the flow to the front and back of the house as soon as the venue opened for business. The company went to work to find a solution.

Chick-fil-A reconstructed the footprint of the Chicago restaurant at Hatch, its innovation center in Atlanta, adjusted the design of how customer lines flowed through the restaurant, and then made the changes in new construction at the actual store. Hatch was also pivotal in rolling out the chain’s New York expansion.

Chick-fil-A had an outpost in a New York University food court limited to students, but its first true Gotham foray open to the public arrived in 2015 at West 37th Street and Sixth Avenue.

Planning for the restaurant took years of research with focus groups and even building a mock-up New York restaurant at Hatch. Nearly 120 people worked simulations in a foam prototype Manhattan Chick-fil-A from the Atlanta innovation center. It enabled the company to know the ideal way to serve customers in line, how to prepare and package food with heavier volumes and the best way for a kitchen to be laid out in the urban setting.

With 60% of Chick-fil-A’s nationwide business going through the drive-thru lane, the company has previously focused its innovative operational strategy on car traffic. Heavy traffic is serviced by team members taking orders via a mobile device as soon as a car hits the parking lot.

A similar technique takes place with foot traffic at its New York locations, including a 12K SF outpost in the Financial District — its biggest location ever — that includes a roof deck and team members who walk through lines of customers taking orders on tablets to improve flows at the perennially crowded restaurant.

“I don’t think any of us look at it as a geographic thing. It’s more urban vs. suburban,” Chick-fil-A Vice President of Public Relations Carrie Kurlander said. “We work with what we have. Sometimes that requires more creativity and not the template we’ve grown used to.”

There’s No Such Thing As Bad Press 

Chick-fil-A’s market share grew 13% in the last four years, according to a 1010data report that places the company in the same sandwich category as Subway and Panera Bread. Subway’s market share declined by 15% in the same period.

But the Atlanta-based chain’s growth hasn’t come without its share of controversy.

After Chick-fil-A CEO Dan Cathy told the Baptist Press in 2012 his company was “guilty as charged” in his stance against marriage equality, then Boston Mayor Thomas Menino (who died in 2014) fired off an angry letter stating the chain was not welcome in his city. Chick-fil-A was said to be scouting locations around Faneuil Hall near Boston City Hall, but Menino wrote, “I urge you to back out of your plans to locate in Boston.”

Today, there is a Chick-fil-A in Dedham, Massachusetts, just across the Boston city line and roughly 2 miles from where Menino lived in Boston’s Hyde Park neighborhood. Car traffic to get into the restaurant often winds out the parking lot and down the highway the restaurant fronts, and the dining room usually feels more like a packed nightclub than something belonging to a company with conservative tendencies.

People even camped out ahead of its opening late last year, a now-normal tradition before a Chick-fil-A grand opening.  A spokesperson for current Boston Mayor Martin Walsh told Bisnow he will carefully review any business proposal that comes across his desk, including Chick-fil-A.

“They’ve become the holy grail,” Calkain Cos. Senior Managing Director Rick Fernandez said. “Brokers sell it as an investment asset. It’s a very desirable asset ranking toward the top of the top.”

Fernandez said he never saw investor or developer interest wane following Cathy’s remarks in 2012. His firm specializes in urban net leases around Washington, D.C., and has sold several Chick-fil-A properties in the region.

Fernandez and Calkain Executive Managing Director Andrew Fallon were retained to sell what was billed as an $8.4M trophy Chick-fil-A on H Street. While the company being private means financial information is limited, Fernandez said it is easy for a developer to recognize the lofty value in Chick-fil-A.

“From an average investor’s perspective, it’s very easy to evaluate a property like a Chick-fil-A just because every single one we’ve ever seen has a line around the building,” Fernandez said.

The arms-wide-open response by the northern markets may have been a surprise to the chain’s 2012 critics. New York City Mayor Bill de Blasio has continued to voice opposition against Chick-fil-A and has urged New Yorkers to boycott the company, but City Hall broadsides haven’t impacted sales.

The same year as the pro-traditional marriage statement, Chick-fil-A passed KFC as the best-selling chicken chain in the country. Average sales per store jumped from just over $3M in 2014 to nearly $4M the following year. Developers should take note of the press, and ensuing jump in sales, Gordon College Master of Science in Financial Analysis Executive Director Alexander Lowry said.

“If you’re a landlord, it’s all about your numbers,” he said. “A smart landlord will look at Chick-fil-A and see this is a big-pocketed company with a lot of publicity around it.”

Manhattan’s Garment District Chick-fil-A sells more than 3,000 sandwiches a day, and Kurlander said the company’s innovation team has mastered a system where customers have their food within four minutes of walking through the door. The company is bullish on New York with plans for more stores, including another 12K SF restaurant at 711 Lexington Ave. between East 57th and 58th streets.

Cathy admitted in 2014 it was a mistake to link his personal politics with the company his father started.

Chick-fil-A has since attempted to distance itself from the conservative ideology and even broke its closed-on-Sunday rule in 2016 to serve food to those assisting in the aftermath of the shooting at Pulse, a gay nightclub in Orlando. Chick-fil-A maintains even that gesture is following in Cathy’s intended vision and not just a way to placate a new audience.

“The onus is on us to earn our way into any market. What people generally find is a brand that is consistently delivering hospitality that is sincere and genuine,” Kurlander said. “We have 120,000 team members representing the Chick-fil-A brand, food, service and founder’s vision. Those people represent every facet and aspect of humanity.”  While a high level of customer service and community outreach may be one ingredient to the company’s success, others point to the original business strategy of simple food and continued cow-laden ads as what will continue to pack dining rooms in the years to come.

“Most people have seen that ‘Eat Mor Chikin’ ad. I can’t tell you I’ve ever seen a Zaxby’s ad,” Selepak said. “Plus, I even know vegetarians and vegans who go to Chick-fil-A for those waffle fries.”

Read on Bisnow here.

Traci Bidinger‘Everybody Wants Chick-fil-A’: Why The Chicken Chain Is Dominating Fast Food

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