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🐔Chick-fil-A is closed on Sundays, forgoing billions in sales.

Yet the company has become wildly popular over the past couple of decades. It’s so profitable, in fact, that its average restaurant makes about $8 million in annual sales, more per restaurant than McDonald’s and Subway combined.

How?

Today, we’ll discuss the incredible story of Chick-fil-A.

All this, and more, in just 4 minutes to read.

QUOTE OF THE DAY

“We live in a changing world, but we need to be reminded that the important things have not changed, and the important things will not change if we keep our priorities in proper order.

We must motivate ourselves to do our very best.”

— S. Truett Cathy

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How Chick-fil-A Came to Dominate Fast Food

The little things

“My pleasure.”

Chick-fil-A workers are instructed to reply to every “thank you” from customers with the phrase, “my pleasure,” a subtle move credited with helping bring customers back to its restaurants repeatedly. Not “no problem.” Not “you’re welcome,” either.

“My pleasure” could be the most-repeated phrase in the restaurant’s history.

Two decades ago, Chick-fil-A borrowed the tactic from a luxury hotel company, The Ritz-Carlton, to create a sense of warmth in its stores. The restaurant also places flowers on tables and instructs employees to smile throughout their shifts.

The tiny codes of conduct have created a loyal customer base that adores its restaurants and its famous fried chicken sandwiches. In a way, Chick-fil-A takes care of the “big things” by taking care of the “little things” that separate them from competitors.

“We’re not just in the chicken business,” said its late founder, S. Cathy Truett. “We’re in the people business.”

Depression origins

Today, Chick-fil-A has the highest sales per store for any fast-food chain. But to understand the full story, you must return to the 1930s and 1940s.

Cathy, the founder, grew up watching his mother cook chicken in traditional southern fashion. He lived in a tiny apartment during the Great Depression. But he watched his mother prepare home-cooked meals, and he worked odd jobs, including selling Coca-Cola and delivering papers. He eventually became the family breadwinner in his early 20s, with a strong work ethic and natural business sense.

In the 1940s, he recognized the American diner scene was taking off. He felt he could capitalize. In 1946, at 25, he and his brother cobbled together about $10,000 to open a diner after selling their car and taking out a loan. It had only four tables.

“I exhausted myself, but it was a temporary price to pay for the future,” Truett said.

Years later, with their mother’s chicken recipe in mind, they tested a few similar recipes for years until they stumbled on an original chicken sandwich recipe with chicken fried peanut oil and served on a bun with pickles.

The process was time-consuming, but it became a big hit in the restaurant’s early days in the Atlanta suburbs. By the mid-1960s, Truett opened the first Chick-fil-A with a focus on selling boneless chicken sandwiches, using a pressure cooker to create a speedier process. The first location was only 384 square feet in Atlanta’s Greenbriar Mall.

It was profitable by week one.

Grade-A quality

At Chick-fil-A, nearly everything has a purpose, from “my pleasure” to the restaurant’s name, which derives from “chicken filet,” with the capital “A” symbolizing “Grade-A” quality chicken.

The business operated in malls in the 1970s as Americans flocked to the indoor shopping centers for big-box department stores. The company tripled in size from 1971 to 1974 alone as malls boomed.

But mall development slowed in the 1980s, so Chick-fil-A adapted to standalone stores. The original chicken sandwich recipe remained unchanged, and while the company kept growing, it intentionally didn’t grow too quickly; executives didn’t want to accumulate too much debt.

A different approach to franchising

Chick-fil-A has relied on independent operators who run a single franchise for years. While some McDonald’s and Dunkin’ franchisees run many restaurants, nearly all Chick-fil-A franchisees focus all their time and money on a single store.

Chick-fil-A has an extremely low cost to start a franchise at just $10,000, compared with McDonald’s ($45,000) and Wendy’s ($40,000). But there’s a catch, as ongoing fees are above the industry average.

It’s also harder to be accepted to run a Chick-fil-A than it is to get into Harvard. The restaurant receives more than 20,000 inquiries from candidates annually yet selects only about 75 per year.

• With about 3,000 locations, Chick-fil-A has become the third-biggest restaurant chain in the U.S., trailing only McDonald’s and Starbucks
• The company says two-thirds of employees grow up working with the company in high school and college, then go full time
• One survey found employees smile about 91% of the time, the highest in the industry; it seeks to be an experience rather than a quick fast food transaction

No Sunday, no problem

Chick-fil-A has never opened on Sunday, which analysts estimate might cost the company about $1.7 billion in annual sales revenue.

At the same time, the day off could improve service, as employees know they’ll get Sundays off no matter what. Reducing operating days by one day could create a sense of scarcity and urgency: Guests know they can’t eat there on Sunday, so they might squeeze in a visit on Friday or Saturday.

While all other chains are open on Sundays, Chick-fil-A stays closed. Yet the average non-mall restaurant makes about $8 million in annual sales, more per restaurant than McDonald’s and Subway combined.

Dive deeper

For more, check out this video on the economics of the company’s franchising.