Competition | August 2015 | By Nicole Duncan

Where Good Meets Gracious

Chick-fil-A continues to dazzle on the QSR 50, proving that constant change isn’t always a winning formula.
QSR leader Chickfila a big success through good food and great hospitality.
Experts cite Chick-fil-A’s service model, with its emphasis on hospitality, as a key ingredient to the brand’s success. chick-fil-a

The limited-service restaurant industry has become a sort of dichotomy. On one side are legacy brands that have defined the way Americans have eaten for generations, brands that have grown big enough to survive bad publicity and creative stagnation. On the other are fast-growing brands that are changing the way the game is played, forcing the legacy brands to adapt as they meet consumer demand for innovation and creativity.

Chick-fil-A, though, is somewhere in the middle. Neither a fast-food king nor a fast-moving newbie, the nearly 50-year-old Atlanta-based brand simply keeps doing what it does best and, in doing so, has positioned itself as one of the greatest success stories in the business.

Jumping Pizza Hut to claim the QSR 50’s No. 8 spot, Chick-fil-A raked in $5.78 billion in 2014, about $700 million more than 2013. It’s worth repeating: Chick-fil-A, a mostly regional chicken brand, is now bigger than the country’s largest pizza chain.

What led to its massive success in the last year? The company kept busy with the launch of grilled chicken, fair trade coffee, and a commitment to phase out all antibiotics from its chicken by 2019. True to form, Chick-fil-A rolled these developments out in a way that emphasized what the top chicken brand on the QSR 50 is best known for: its integrity.

“They’re staying true to their brand. … It’s what they do,” says Randy Lopez, senior marketing strategist at Synergy Restaurant Consultants. “[Chick-fil-A] seems like it’s something that has more integrity and doesn’t feel fast food-ish. It feels a little more artisan, and even the growth of their brand has always been for quality.”

Chick-fil-A’s enduring reputation for consistency sets it ahead of the pack at a time when many fast-food chains are scrambling to improve the quality of their operation—or at least the perception of it.

Beyond the quality of the food, the company also focuses on the quality of its hospitality more than the average brand, which is demonstrated by its intense customer loyalty and impressive employee retention.

Amanda Norris, senior director of product development at Chick-fil-A, cites this commitment to genuine hospitality and “craveable” food as two distinguishing factors in the company’s service model. “We like to say ‘the-better-for-you fast food.’ It’s all about where good meets gracious,” Norris says. “We’re all about connecting with that customer. It’s not just about transactions for us; we really want to create a relationship.”

In fact, Norris says, the idea to offer grilled chicken and premium coffee came from listening to customers. The grilled chicken recipe reportedly took seven years and more than $50 million to create.

“The magic in it is 50 percent recipe and 50 percent grill,” Norris says. “We wanted it to taste like you grilled this piece of chicken on your backyard grill at home.”

Given the volume of business that Chick-fil-A restaurants do (an average unit volume of about $3 million, a QSR 50 high), Norris says it wasn’t feasible to set up full-sized grills in the kitchen. Instead, the company worked with Garland Grills to develop a new grill that could cook quickly and consistently. When the grilled chicken first launched, Bloomberg Business described the new kitchen technology as an “industrial-scale George Foreman Grill [that will] slash the cooking time.”

Lopez praises the innovation for its cost-effectiveness: The new grills didn’t require kitchen remodeling, nor did they slow throughput.

“It’s a way to create a new product that is truly original, and it utilizes a new cooking process without creating major retrofit costs; that benefits the operators and franchisees,” Lopez says. “Obviously they’re very smart and good at what they do, but they definitely hit this one out of the park because they took the time to test and create a signature product that is on-brand.”

Aaron Noveshen, founder and president of restaurant consultancy The Culinary Edge, says he can see how something as seemingly simple as grilled chicken would require such an investment of time and money. Not all chicken sandwiches, he says, are created equally.

“Fried chicken holds pretty well; you can cook it in batches and hold it for a little bit of time, and it stands up pretty well. Grilled chicken is not as forgiving,” Noveshen says. Without breading, white meat has a tendency to dry out and shrink. Whereas a 3-ounce piece of chicken will cook to about 4.5 ounces with the added breading, a 3-ounce piece of chicken without breading will only yield around 2.5 ounces once cooked. Because of this shrinkage, cost and yield are big issues to consider.

“Any time you’re dealing with a naked product like that, you’re going to have to figure out how to engineer the pricing to function properly to be able to give the same type of value coefficient that you’re providing with the fried
product,” Noveshen says.

With many consumers eschewing fried foods altogether, introducing a grilled product differentiates Chick-fil-A in the better-for-you fast-food space, Noveshen says. He adds that the Grilled Nuggets were probably the most revolutionary product among the grilled chicken lineup because so few operators are doing grilled renditions of nuggets or strips.

In addition to the healthier grilled chicken option, Chick-fil-A also boosted its health reputation in 2014 by making a commitment to eliminate all antibiotics from it chicken by 2019. Norris says that roughly 70 percent of Chick-fil-A consumers were concerned about antibiotics in their food, which inspired the company to set that goal. Although the no-antibiotics announcement predated McDonald’s similar commitment by more than a year, it garnered far less media attention.

Brand-building expert and QSR columnist Denise Lee Yohn says this could be explained by the fact that, unlike McDonald’s, Chick-fil-A has never been vilified for its food quality or nutrition. “The difference is that Chick-fil-A already has this positive, wholesome, healthy halo where people aren’t necessarily questioning the healthfulness of their food or the quality or the safety,” Yohn says. By taking a proactive approach to these issues, Chick-fil-A ensures its place as a top operator. “Great brands don’t sit back and wait to be a target; they actually really try to understand what their customers care about and use innovation to always improve what they’re doing.”

The grilled chicken and no-antibiotics commitment debuted in early 2014. By fall, Chick-fil-A was already launching another new product, its specialty-grade coffee.

Norris says customers would come into Chick-fil-A for breakfast with a coffee from a competitor. To address this gap, the company wanted to make a coffee that would not only pair well with the breakfast fare, but could also stand alone.

Chick-fil-A partnered with Thrive Farmers Coffee to create a proprietary blend specifically for the brand. The medium-roast coffee meets the Specialty Coffee Association of America’s standards for specialty grade. Compared with other quick serves, Chick-fil-A was already ahead of the game even before it introduced Thrive, Noveshen says. With a strong breakfast program already established, the new coffee could add even greater credibility to the morning daypart.

Synergy’s Lopez sees the company’s entry into the premium coffee space as reminiscent of Dunkin’ Donuts, which began making espresso drinks in 2003 and later asserted its place as a quality-without-frills competitor to Starbucks in 2006. Dunkin’ was able to attract a new consumer segment and become more mainstream through its coffee program.

“You really have to go big or go home in terms of putting something like that together,” Lopez says. “I’m seeing more fast-food places not even marketing food items or LTOs anymore. … They’re now marketing quality [and] freshness cues to talk about those attributes, and that’s kind of where this whole direction has changed.”


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