Chick-Fil -- A is a fast food restaurant that specializes in chicken meals, in particular the chicken sandwich. The company is privately-held, owned by the firm's 90-year-old founder Truett Cathy, who started the company in the early 1960s (Chick-Fil-A.com, 2011). The store's mission and vision still focus on Cathy's personal values, such that the culture of the company has become an extension of these values, making it nearly unique among quick service restaurants in the United States.
The mission statement at Chick-Fil -- A is simple: "Be America's best quick-service restaurant" (Chick-Fil-A.com, 2011). This statement is not qualified so as to provide any guidance for employees, such as defining "best" in any way. But is a simple guideline that can be referred back to in times of decision-making. The company does not have a vision statement, but it can be inferred from the company website that the company's vision combines innovation with charitable activities in keeping with Cathy's religious beliefs. In business terms, the company is now the second-largest quick service chicken restaurant and has a 43-year track record of sales growth to show for an aggressive expansion policy that seeks to make Chick-Fil -- A a national player in the quick service business. There are currently over 1500 locations in 39 states, and annual sales now top $3.5 billion (Chick-Fil-A.com, 2011).
The objective of Chick-Fil -- A at present is focused on growth, and the company believes that building out its network of stores is critical to this growth. Same store sales growth is also important, as the company recorded 5.6% same store sales growth in fiscal 2010 and 11.4% growth overall (Chick-Fil-A.com, 2011). All firms within the quick service restaurant business compete with a cost leadership platform, but because of the intensity of competition in the industry, each must differentiate itself from its competitors in order to generate the high volumes necessary to support such a strategy. Chick-Fil -- A is differentiated from most quick service restaurants because of its chicken focus -- something that has formed a large part of its promotional campaigns -- and differentiated from chicken leader KFC in having a chicken sandwich focus instead of a fried chicken focus.
The company's growth strategy is focused primarily on stand-alone restaurants, which accounted for 66 of the 80 new stores opened in 2010 and on new product development, including its recent entry into the Chicago area. The company also focuses on renovating older restaurants to rejuvenate sales (Baldwin & McKanders, 2011). The company is driven by a desire "to glorify God" and this religious sensibility drives much of the company's philosophy, if not its actions (Donovan, 2010).
The company's current vision and mission are at this point serving it well. Chick-Fil -- A is enjoying strong expansion and continued sales growth. The economic slowdown did not have a significant adverse impact on the company's business. The mission statement might be vague, but it serves as a guidepost. The vision is equally vague with respect to how it applies to strategy, but the centralized command structure within the organization has unstated visions that it is implementing. The company's strategy has changed little in recent years, and is likely to remain unchanged now that it has carved out a niche for itself in the quick service business.
External Opportunities and Threats
There are several opportunities for Chick-Fil-A. The most important of these is continued expansion. The company only operates in 39 states and has just entered the Chicago area, highlighting how much room there is for continued domestic growth. The chain is not nearly as saturated as some of its competitors (especially KFC, McDonalds and Subway). There are also international growth opportunities should the company choose to expand -- Canada and the UK are easy markets and some American chains have become successful in Asia. The company has opportunities to grow its partnership business. It is only presently opening about a dozen stores in airports, hospitals or other institutional sites, yet this business has tremendous potential. There is room for growth by pursuing these partnerships.
There are also significant threats in the external environment. The quick service restaurant industry is intensely competitive. According to QSR Magazine, Chick-Fil -- A is the 11th-largest quick service restaurant chain in America, behind the burger giants, KFC, Taco Bell, Starbucks, Pizza Hut and Dunkin Donuts. Some of these are more direct competitors than others, but the sheer number of competitors in this space indicates that differentiation is difficult and consumers must constantly be cultivated. Chick-Fil -- A faces chicken competition from KFC, Popeye's, Church's, Zaxby's, Bojangles, El Pollo Loco and Krystal (Oches, 2011). Another threat is customer perception -- that Chick-Fil -- A is a southern brand, something that could hurt it as it starts to take its concept nationally. The company's popularity remains rooted in its home markets in the southern states, with QSR reporting that the chain has the highest customer satisfaction among consumers in Atlanta, Houston and Washington, DC.
Competitive Profile Matrix (CPM)
The competitive profile matrix highlights how customers differentiate between competitors in an industry (Kulzick, 2002). A basic competitive profile matrix for Chick-Fil -- A is as follows:
Competitive Profile Matrix
Chick-Fil-A
KFC
McDonalds
Subway
Competitive Factor
Weight
Rating
Extended
Rating
Extended
Rating
Extended
Rating
Extended
Location
0.2
3
0.6
4
0.8
5
1
5
1
Menu Choices/Food type
0.25
3
0.75
3
0.75
4
1
4
1
Price
0.15
4
0.6
3
0.45
External Factor Evaluation Matrix (EFE)
The External Factor Evaluation Matrix (EFE) is used to help evaluate the external factors driving the business. The factors can come from multiple different parts of the external environment -- competitive, political, legal, environment, social factors and more. The ratings below are on a scale of 1 to 4 in terms of the company's response. The higher the score the better the company is managing its external environment.
External Factor Evaluation
Weighted
Opportunities
Weight
Rating
Score
Geographic expansion
0.3
5
1.5
Other countries
0.05
0
0
Partnerships
0.15
2
0.3
Threats
Competition
0.3
3
0.9
Social changes
0.05
2
0.1
Economic downturn
0.15
5
0.75
1
3.55
The EFE shows that Chick-Fil -- A is managing its external environment well. The most important opportunity is geographic expansion, the chain having just entered major markets like Chicago and LA (Oches, 2011). The company is handling this opportunity very well, opening a significant number of new locations and having a long-term expansion strategy. Chick-Fil -- A has also handled the economic downturn well, managing to grow its revenues despite the downturn. It handles its competition well by differentiating itself and focusing on its strong home base in the South.
Internal Strengths and Weaknesses
There are a number of strengths that Chick-Fil -- A uses to drive its success. The first is the corporate culture, which is strongly influenced by the founder's personal beliefs. The commonality of this culture -- notwithstanding individual employees who may have other beliefs -- provides a common mission for the organization, allowing management to operate with a clear sense of direction. Another strength is its base in the South, where the company has high customer satisfaction ratings and from which it derives a significant portion of its business. Chick-Fil -- A is also differentiated from its main competitors, allowing it to grow without having to directly win over customers from competitors -- although it also seeks to grow by winning customers away from burger chains
There are also weaknesses internally, however. Chick-Fil -- A has focused its business model on the chicken sandwich, and this rules out customers who are not interested in chicken. In other words, the company is self-limiting growth to an extent. The other main weakness at Chick-Fil -- A is the reliance on family management. The company could be limiting its talent pool unnecessarily and may also be ensuring that there is no succession plan should the current COO, Dan Cathy, not be able to step into the executive suite adequately when his father retires.
These internal factors can be captured in an internal factor evaluation (IFE) matrix. This is constructed in the same way as the external factor evaluation (EFE) matrix.
Internal Factor Evaluation
Weighted
Strengths
Weight
Rating
Score
Corporate Culture
0.2
4
0.8
Strong local market
0.1
4
0.4
Differentiation
0.2
4
0.8
Weaknesses
Narrow product focus
0.25
2
0.5
Leadership questions?
0.25
3
0.75
1
3.25
This evaluation shows that Chick-Fil -- A has historically played to its strengths. The company may only do a few things well, but it does those things very well, and that has allowed it to thrive and become the #11 quick service chain. When juxtaposed against the EFE in an IE matrix, the finding is that the company should "grow and build" because it has relatively high scores in both the internal and external factors. This matches Chick-Fil-A's current growth-oriented strategy.
Other Tools
There are many other management analysis tools that can be used to understand a company. These will be covered in brief. The SWOT analysis reprises the EFE and IFE:
Strengths:
Corporate Culture
Opportunities:
Geographic expansion
Strong home market
Other countries
Differentiation
Partnerships
Weaknesses:
Narrow product focus
Threats:
Competition
Leadership questions?
Social changes
Economic downturn
The Grand…
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