Plucky Chick-fil-A wows with marketing
Quick service restaurants are still some of the biggest players in the restaurant industry, fetching more than $235 billion in 2014 across various food segments from pizza to donuts and, of course, burgers.
As a whole, the segment grew 2.27 percent—no paltry number as it represents an additional $5 billion in revenue. Nearly 5,000 additional units (a 2.5 percent unit growth) is a clear indicator that while fast-casual restaurants shows explosive growth, many QSR franchises remain very strong.
At the top, it’s a collection of the usual suspects. McDonald’s tops the segment and the Top 200 list despite sales slipping by 1.5 percent to just under $88 billion. Next comes KFC, which grew sales to $23.4 billion and kept its No. 3 spot on the Top 200. Rounding out the top five segment earners is Burger King at No. 5, Pizza Hut at No. 8 and Wendy’s at No. 10.
Then there is this incongruous little concept that comes in at No. 19 on the Top 200 and No. 10 in the QSR segment despite having just 1,885 units: Chick-fil-A.
The chicken sandwich concept with a cult-like following brought in $6 billion in sales in 2014, according to the privately held company. Sales figures have grown by some $2.5 billion in the last five years.
That growth puts it just behind Domino’s Pizza; which grew by $2.7 billion in sales over the last five years. Surprisingly, Chick-fil-A managed that feat with roughly a tenth of the units. Oh, and they’re still closed on Sunday too.
CMO Jon Bridges said marketing and new menu items buoyed sales, but the unit-level operators were the real heroes in 2014. “Our operators are really engaged in the business and driven to run great operations in their restaurants and they attract great people,” said Bridges.
Outside the stores, a huge media ramp-up certainly helped customers meet those great operators. “We did ramp up our media. We chose to sponsor the playoff game for college football, the Chick-fil-A bowl,” said Bridges. “So the media ramp-up was felt by operators and customers.”
And as brand after brand thinks up their own better chicken sandwich in hopes of recreating Chick-fil-A’s success, the plucky Southerners are playing with new offerings to extend their absurd numbers.
“We launched the grilled product: both the grilled sandwich and the grilled nuggets,” said Bridges. “They’re great by themselves, but they’re also a great platform for the future.”
He said the new, healthier options have been well received, as has their commitment to sourcing chicken free from antibiotics. The grilled offerings are fired on a grill that cost $50 million and seven years to develop. The investment and the “more than 1,000” recipe iterations finally saw a return in 2014.
In the coming months and years, Chick-fil-A looks to experiment with face-to-face drive-thrus, a new app and more grilled sandwich offerings.
But don’t look for them to take on any debt. “Our growth strategy is financially fairly conservative, we have a certain set number of restaurants we build per year and we’re privately held and don’t use debt,” said Bridges. “I think that we are happy with our growth rate. Like Truett Cathy, our late founder, we just want to be conservative. He didn’t like owing money to anyone.”