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It costs $10k to ‘own’ a Chick-fil-A franchise

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Re: It costs $10k to ‘own’ a Chick-fil-A franchise

#91

Post by froindt »

xwowsersx wrote: post #45

> At $4.2m per store, Chick-fil-A’s average revenue is the highest of any fast-food chain in America, dwarfing both direct competitors (KFC; $1.2m) and bigger brands (McDonald’s; $2.8m) Wow, I did not know this. Why is that?

I'm an industrial engineer, so these sorts of questions fascinate me.

My intuition is their revenue is so much higher because of a mix of higher service people are willing to pay for (almost casual versus definitively fast food), higher average cost per person, and cheaper inputs (chicken versus beef price per pound).

# Speed of Service

I've ordered Chick-fil-a and literally been handed my food before the credit was done processing. That's not the norm, but was surprising. They get fast casual pricing while still being able to complete orders in a fast food

#Cost per Person

Chick-fil-a doesn't have a value menu. As a quick reference, look at the menu prices for Chick-fil-a [1] and McDonald's [2]. It's not a perfect datasource, but it roughly aligns with what I've seen.

At McDonald's you can get 2 cheeseburgers for $2. The cheapest sandwich at Chick-fil-a is listed at $3. Chick-fil-a doesn't have a "value menu" or "dollar menu" like other fast food chains do.

# Menu Simplicity

Chick-fil-a does a better job of keeping their menu simple. While it's not a direct effect on revenue, it would help training and there would probably be bigger containers of ingredients and fewer to reach over (reducing completion time).

Compare the unique ingredients between McDonald's [3] and Chick-fil-a [4]. There are way more combinations with McDonald's than Chick-fil-a. Additional complexity to be dealt with behind the scenes (though I've heard they make it dead simple to learn how to make the food). Taco Bell can (or used to be) be noted for only having about 8-10 ingredients which were mixed and matched into their entire menu!

[1] https://www.fastfoodmenuprices.com/chick-fil-a-prices/

[2] https://www.fastfoodmenuprices.com/mcdonalds-prices/

[3] https://www.mcdonalds.com/us/en-us/full-menu.html

[4] https://www.chick-fil-a.com/OrderFood

Re: It costs $10k to ‘own’ a Chick-fil-A franchise

#92

Post by indymike »

rjvir wrote: post #16
giancarlostoro wrote: post #7

Earlier quoted context omitted.

If you dont want to pay you join a different franchise or start your own restaurant. I fail to see the issue. Nobodys putting a gun to your head to open up a CFA restaurant.

It's possible to be predatory without holding people at gunpoint.

Is it really predatory? For many owners of a Chick-Fil-A, the money is life-changing, and would take 3-5 other franchise restaurants to equal their level of income as a CFA operator.

Re: It costs $10k to ‘own’ a Chick-fil-A franchise

#93

Post by sixtypoundhound »

i_am_proteus wrote: post #22
Nextgrid wrote: post #2

I always found franchise initial startup costs to be predatory, as they get paid either way regardless of whether the franchisee actually succeeds. In my opinion they should be abolished and franchisors should only rely on royalties, so that they have an incentive to help the franchisee succeed if they want to make money.

And yet people choose to buy franchises rather than start their own independent shops. Proliferation of franchises indicates that this is mutually beneficial. Also, bear in mind that the franchise's corporate brand reputationsuffers when a franchise fails, so there's inherently some risk sharing.

Sure - and franchises are actively marketed, by a commission sales force and any number of people who get a 'finders fee' should you happen to sign up through their channel. There is an active push to herd people into franchises.

They tend to target unemployed middle-aged managers, since that audience is often driven by ego to "be the boss" and has the disposable funds to pony up a large setup fee. I was aggressively targeted when I was laid off last year.

What they didn't know - until we got on the phone - is I'm the target prospect from hell. I certainly have the funds; however, I got them via two decades of finance and strategy work. Old habits die hard. Due Diligence? Don't mind if I do...

I was polite but I laid out my expectations in financial terms based on investments in businesses of similar size. Actual deals which I had managed. Made it clear I had the funds to deliver if they could meet my goals in writing.

They ran like hell.

Re: It costs $10k to ‘own’ a Chick-fil-A franchise

#94

Post by forrestthewoods »

all_blue_chucks wrote: post #74

After getting kicked out of their first store in England the owners announced they were ending ties with anti-gay groups.

> ending ties with anti-gay groups.

Salvation Army. The Fellowship of Christian Athletes.

Calling those groups "anti-gay" and protesting a fast food restaurant for donating to them is absurd.

Re: It costs $10k to ‘own’ a Chick-fil-A franchise

#95

Post by sixtypoundhound »

froindt wrote: post #91
xwowsersx wrote: post #45

> At $4.2m per store, Chick-fil-A’s average revenue is the highest of any fast-food chain in America, dwarfing both direct competitors (KFC; $1.2m) and bigger brands (McDonald’s; $2.8m) Wow, I did not know this. Why is that?

I'm an industrial engineer, so these sorts of questions fascinate me. My intuition is their revenue is so much higher because of a mix of higher service people are willing to pay for (almost casual versus definitively fast food), higher average cost per person, and cheaper inputs (chicken versus beef price per pound). # Speed of Service I've ordered Chick-fil-a and literally been handed my food before the credit was…

And ability to execute consistently across the chain. That's the real miracle here. Everyone else is hit or miss.

I don't think I've ever seen a bad Chick-fil-A...

Re: It costs $10k to ‘own’ a Chick-fil-A franchise

#96

Post by adaisadais »

oflannabhra wrote: post #86

I know several CFA owner-operators, and this article is mostly on point. Some of the comments I’ve seen are a bit off. 2 of the 3 owner-operators I know have multiple locations, although this is rare. Income estimates are a bit low for typical stores I’d be surprised if any owner operator of a freestanding unit is below $250k. Also, the estimates of worked hours are a bit high. All the owner operators I know have gre…

Extremely well put. I completely concur. My first cousin is in the process of getting his “own” store now. While it has been a grind (he often worked the mythical 100+ hour week while in the Leadership Development Program) it will pay off handsomely.

The best part of Chic-Fil-A (in my opinion) is not the food but their total devotion to the customer. The level of service you receive at a Chic-Fil-A freestanding store is unparalleled at virtually all other fast food joints (with the occasional exception of In-N-Out ((maybe the hyphens add to greater service?)) and most restaurants in general.

Re: It costs $10k to ‘own’ a Chick-fil-A franchise

#97

Post by reiichiroh »

sixtypoundhound wrote: post #84
kelnos wrote: post #69

Earlier quoted context omitted.

For Chik-fil-A, yes, since corporate fronts all the money and owns the location and improvements; there, you're maybe a little more than an employee-manager, but not by much. For most others, not so much, since you own the result of your initial investment.

Uh...this is a common conflict between owner-operators and franchise groups. Also a common area of abuse. There was a sandwich shop chain in the US where this got very ugly a few years ago...

Was it Quiznos with the franchisee committing suicide in the store bathroom with a shotgun?

Re: It costs $10k to ‘own’ a Chick-fil-A franchise

#98

Post by adaisadais »

forrestthewoods wrote: post #94
all_blue_chucks wrote: post #74

After getting kicked out of their first store in England the owners announced they were ending ties with anti-gay groups.

> ending ties with anti-gay groups. Salvation Army. The Fellowship of Christian Athletes. Calling those groups "anti-gay" and protesting a fast food restaurant for donating to them is absurd.

Couldn’t be more true. What a world we live in :)

Re: It costs $10k to ‘own’ a Chick-fil-A franchise

#99

Post by Kikawala »

oflannabhra wrote: post #86

I know several CFA owner-operators, and this article is mostly on point. Some of the comments I’ve seen are a bit off. 2 of the 3 owner-operators I know have multiple locations, although this is rare. Income estimates are a bit low for typical stores I’d be surprised if any owner operator of a freestanding unit is below $250k. Also, the estimates of worked hours are a bit high. All the owner operators I know have gre…

The take home for the owner of 3 CFAs in College Station, TX is $1.1m

Re: It costs $10k to ‘own’ a Chick-fil-A franchise

#100

Post by cryptoz »

all_blue_chucks wrote: post #74

After getting kicked out of their first store in England the owners announced they were ending ties with anti-gay groups.

I don't think that's true? Or if it is, they renounced that idea too and are continuing to donate money to anti-LGBTQ groups.

https://www.therainbowtimesmass.com/chick-fil-a-backpedals-o...

Chick-fil-a did not stop its anti-LGBTQ policies, they only pretended to do so for a few weeks last year.

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