Chick-Fil-A Analysis

FIU - PMBAO MAN6608: Group 22 Dr. Doreen J. Gooden Case Assignment 3 Title: Chick-Fil-A: International Expansion Challenges José A. Rangel Laura S. Hernandez Evelyn Perez Galvez Rashad Spence September 18, 2022

1. Discuss Chick-Fil-A's motivation to expand internationally Chick-Fil-A is one of the most prominent American restaurants in fast food. They were the innovators of the chicken sandwich in 1946 when founder S. Truett Cathy opened the first restaurant in Hapeville, GA. Chick-Fil-A, as of 2021, had revenues of $5.8B according to statista.com.3 The company has undoubtedly created a delicious sandwich that many agree is one of a kind. However, their number one item sold 1s waffle fries! Not only is Chick-Fil-A known for its chicken sandwich, but they are also known for being closed on Sundays and its controversial anti-LGBTQ community. Chick-Fil-A operated successfully in the United States until 2019, when they were motivated to expand internationally. They had some unsuccessful test markets in the mid-'90s in Africa and 2014 in Canada but were in the US. However, Chick-Fil-A's primary motivation to expand internationally came in 2019 for two main reasons. The first reason was that fast food industry experts argued that the market was saturated. Chick-Fil-A was also affected because most key competitors targeted their chicken sandwiches. In July 2019, Mcdonald's franchisees requested a premium chicken sandwich to compete specifically with Chick-Fil-A. Mcdonald's also invested $300MM in acquiring artificial intelligence company Dynamic Yield. In August of 2019, Popeyes' launched their spicy chicken sandwich. In January 2021, KFC introduced the KFC Chicken Sandwich, instantly a success. For these reasons, Chick-Fil-A had to return to the drawing board and revisit its international launch strategy. As of this case study, Chick-Fil-A operates in the United States, Canada, and Puerto Rico; according to their website.*

2. What challenges AND opportunities does Chick-Fil-A face: a. at home Chick-Fil-A has been a brand people love for many years and many reasons. Yet, they have had their difficulties both internationally and at home. One of the many opportunities at home that they have 1s the quality of food and service. Consumers not only think their food is of high quality, better than most fast-food chains, but they also like the service they receive so much that it makes them want to return. Employees were taught to say, "my pleasure" instead of "you're welcome," and the customers had a friendly experience compared to other fast-food chains. In 2018, the company was rated "America's most beloved fast-food chain" in the American Customer Satisfaction Index's annual survey. By 2019, they had franchises in every US state except three. In addition, they have significant market power and scale, which is represented by being the largest buyers of peanut oil. They also experimented with new products and were known for their humorous billboard advertisements featuring cows as messengers. Lastly, another opportunity is the franchise itself and opening costs. Chick-Fil-A franchise fees are deficient compared to the competition, making it more accessible for people to apply. On the other hand, they do have many challenges at home. One of these challenges is the level of competition. Fast food chains like McDonald's, Wendy's, Burger King, and Popeyes constantly bring new products, such as sandwiches, to attract more consumers. In addition, they are also relying on discounts, and it becomes a war of who will give more in a box for less money. Moreover, many have invested in technology. For example, Mcdonald's incorporated Uber Eats as