Chick-fil-A corporate strategy

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        Chick-fil-A’s unique corporate strategy has been embedded in the company since the first store opened in 1967. The Chick-fil-A chain itself is a product of related diversification, born from a single, southern family restaurant. In 1946, founders Ben and Truett Cathy had opened a restaurant called The Dwarf House in Hapeville, Georgia. The restaurant ran successfully and after Ben was killed in a plane crash, Truett was the sole owner. Truett went on to open two more Dwarf House restaurants, where he created and served his first fried chicken filet sandwich. This became the prototype Chick-fil-A sandwich that we know today and soon began to outsell their famous hamburgers on the Dwarf House menu. In 1963, Cathy patented the name Chick-fil-A, incorporated the company and began to sell the sandwich to other restaurants. Worried that a larger chain would take his chicken sandwich idea, Truett Cathy opened the first Chick-fil-A restaurant in 1967. By 1974, there were 21 Chick-fil-A stores in Geogia and the Carolinas alone and each reflected the same four basic tenets. First of all, the company would grow not by selling franchises, but forming joint ventures with independent operators. This guarantees quality, supervision and motivation of partnership. Second, stores will be operated only in major shopping malls. Obviously this tenet was eventually abandoned, but at the time shopping malls provided the perfect atmosphere for a Chick-fil-A store. This minimized capital cost per store and maximized exposure to customers, as malls were becoming increasingly popular at this time. Third, financing would come not thru debt, but primarily from the company’s own profits. This allowed Cathy to keep ownership control and run the business in accordance with his own personal principals. This also forced the firm to be more aware of profits and prohibited the chain from growing too quickly, avoiding the risk of losing operating and quality controls. Chick-fil-A began to grow for growth’s sake, not just for profit. Lastly, and most importantly, the chief emphasis will be on the people. This refers to both the customers and the employees of Chick-fil-A. These tenets have become the core competencies of the company, placing emphasis on what is best for the company and its customers. Not venturing too far from their roots, the only diversification strategy Chick-fil-A has implemented since the opening of its first store has been the creation of Truette’s Grill. Truette’s Grill opened in 1996 as a 50’s diner themed restaurant, which features the full Chick-fil-A menu as well as items from the original Dwarf Grill restaurant. Truette’s Grill is located exclusively in Gerogia and opened its third restaurant in 2006.

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        A huge part of their corporate strategy is the way they create the joint ventures with their independent operators. Rather than selling franchises the firm seeks out individuals, often from within the organization, to become an operator. Once approved, the operator invests $5,000 to sublease the restaurant, which Chick-fil-A has already purchased and built. Chick-fil-A provides the operators with training, technology and anything else they need. Each operator is only allowed to operate one restaurant, working full time in the restaurant they built, supervising a loyal team of employees. In 2002, more than half of the Chick-fil-A operators were making ...

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