Chick-fil-A Reports Record Revenue in 2019, Profits Up 54.2 Percent
Chick-fil-A reported record sales and earnings in 2019. The Atlanta-based quick serve operator, ranked last year by Franchise Times magazine as the 12th largest franchise company in the U.S., was poised for another strong year in 2020. However, dining room closures and restrictions to operate drive-thru lanes only because of the coronavirus,will set back the chain in 2020.
Earlier this month Chick-fil-A, Inc. filed its annual franchise disclosure document and included in that report audited financial statements for the year ended December 31, 2019.
Highlights for the year included:
Total company revenue was $3.8 billion in 2019 compared to $3.0 billion in 2018, an increase of 26.7 percent. Solid revenue gains were reported in all income categories—base operating and business service fees (royalties), additional operating service fees (profit sharing with franchisees) and rental income;
Net earnings were $670.1 million in 2019 versus $434.5 million in 2018, an increase of 54.2%;
As of December 31, 2019, the company had 2,111 franchised and company-operated Chick-fil-A restaurants, compared to 1,989 locations in 2018, an increase of 122 locations;
The company also licenses contract foodservice management companies operating in airports and on college campuses and as of December 31, 2019, had 382 licensed restaurants in operation compared to 363 locations in 2018, an increase of 19 locations;
Total systemwide sales generated from franchised and company-operated restaurants were $12.2 billion in 2019, compared to $10.0 billion in 2018, an increase of 21.4 percent;
Of the approximately 1,633 domestic franchised restaurants not located in malls that were open for at least one full calendar year, the median annual sales volume in 2019 was $6,417,073 and the average annual sales volume was $6,565,233;
Of the approximately 230 domestic franchised restaurants located in malls that were open for at least one full calendar year, the median annual sales volume in 2019 was $2,127,168 and the average annual sales volume was $2,569,472;
Net cash provided by operating activities was $1.35 billion in 2019 compared to $910.4 million in 2018, an increase of 48.2 percent;
Other financial statement observations:
Total advertising expense for the Chick-fil-A system was approximately $148.8 million in 2019, compared to $99.6 million in 2018.
The company purchased $1.1 billion in property and equipment in 2019, compared to $804 million in 2018.
Chick-fil-A entered into a new credit agreement totaling $800 million in 2018 with a syndicate of lenders lead by Wells Fargo Bank N.A. In March 2020, the company drew down $400 million on its outstanding loan facility in response to the COVID-19 outbreak.
Chick-fil-A charges franchisees an operating service fee equal to 15 percent of restaurant sales, less amounts charged to franchisees for equipment rentals and business services fees. The company also receives from franchisees an additional operating service fee equal to 50 percent of the net profit of franchised restaurants. The base operating service fee and additional operating service fees are charged to franchisees monthly and are recognized as revenue in the period earned.
To review of copy of Chick-fil-A’s most recent FDD click here.