Concordia University Kipley Pereles

Research Methods

Individual Project

1. What is the overall philosophy adopted by “Chick-Fil-A?” How does it differ from other fast food restaurants?

Chick-Fil-A’s core philosophy is to make business decisions on biblical principles. Chick-Fil-A

has maintained the original Christian values established by its founder, S. Truett Cathy. This

relates to all facets of the business. "My dad's determination and industry knowledge

combined with his endless dedication to his faith and moral values continue to inspire our

business goals and our daily excitement," said Dan Cathy, president and COO of Chick-Fil-A.

The company’s corporate mission statement is to “glorify God”.

Chick-Fil-A differs from other fast food restaurants in that they are closed on Sunday so that

their employees can worship and spend the day with family.

2. What is the competitive advantage, if any, of “Chick-Fil-A’s? If it exists, is it sustainable?

Chick-fil-A’s unique position in the market, specializing in chicken-based entrées, has lead to

a competitive advantage which the company has been able to capitalize on. However, the

successful growth of the franchise has been attributed to employee loyalty and unusually low

turnover among Chick-fil-A operators as low as 5% a year. Part of this loyalty and satisfaction

stems from offering an attractive profit sharing plan (up to 50% of profits), which helps attract

new investors and entrepreneurs over the competition.

3. Will the approach taken by “Chick-Fil-A” limit or enhance its future growth potential?

Ultimately this approach will help “Chick-Fil-A” grow in mass, however I would be cautious

about its profitability because of its profit sharing plan. Its profit sharing plan requires the

franchiser to invest an initial $5,000 while Chick-Fil-A absorbs the remaining infrastructure

costs and shares 50% of the profit. I think that is a very generous model that may limit its

profitability. It will grow by volume because of the interest from entrepreneurs alike but the

bottom line will not be as healthy as some other competing restaurants, like McDonalds.

4. In your opinion, can the corporate philosophy of “Chick-Fil-A” be implemented in other service industries? Should it?

While I commend Chick-Fil-A for supporting its core values, the corporate philosophy should

not be implemented in other industries. Chick-Fil-A, the corporate parent, has been sued at

least 12 times since 1988 on charges of employment discrimination, according to records in

U.S. District Courts. Aziz Latif, a former Chick-fil-A restaurant manager in Houston, sued the

company in 2002 after Latif, a Muslim, says he was fired a day after he didn't participate in a

group prayer to Jesus Christ at a company training program in 2000. The suit was settled on

undisclosed terms. This presents significant implications for any maturing entity and a

compounding source of liability.

5. Would you buy a “Chick-Fil-A” franchise? Why or why not?

Chick-Fil-A pays for the land, the construction and the equipment. It then rents everything to

the franchisee for 15% of the restaurant's sales plus 50% of the pretax profit remaining.

Operators, who are discouraged from running more than a few restaurants, take home

$100,000 a year on average from a single outlet. A solo franchisee can expect to earn

$330,000 (EBITDA) on sales of $1.7 million. Coming off of a record-breaking $3.2 billion

sales year in 2009, the chain is already enjoying a positive start to 2010 with a 3.6 percent

same-store sales gain and a 9.3 percent overall sales increase. While these figures appear to

be very positive, I would not invest in a Chick-Fil-A today because I am not knowledgeable in

the food industry and do not have the proper training to run and operate this type of business.