
It costs $10k to ‘own’ a Chick-fil-A franchise - rmason
https://thehustle.co/why-it-only-costs-10k-to-own-a-chick-fil-a-franchise/
======
oflannabhra
I know several CFA owner-operators, and this article is mostly on point.

Some of the comments I’ve seen are a bit off. 2 of the 3 owner-operators I
know have multiple locations, although this is rare. Income estimates are a
bit low for typical stores I’d be surprised if any owner operator of a
freestanding unit is below $250k. Also, the estimates of worked hours are a
bit high. All the owner operators I know have great work-life balance, this is
a function of how well they hire and train their general managers.

There are also some significant advantages to non-ownership that are win-win
for both the company and operators. CFA provides significant support beyond
what other franchisers do: IT, capex for renovation, and training. CFA is
incredibly focused on efficiency in their stores. If you’ve seen a
freestanding store recently, you’ve probably seen it be renovated to allow for
double drive through lanes and a walkthrough parlor for pickup. That’s not the
type of thing many franchisees at other companies have the cash (or
willingness) to do.

~~~
adaisadais
Extremely well put. I completely concur. My first cousin is in the process of
getting his “own” store now. While it has been a grind (he often worked the
mythical 100+ hour week while in the Leadership Development Program) it will
pay off handsomely.

The best part of Chic-Fil-A (in my opinion) is not the food but their total
devotion to the customer. The level of service you receive at a Chic-Fil-A
freestanding store is unparalleled at virtually all other fast food joints
(with the occasional exception of In-N-Out ((maybe the hyphens add to greater
service?)) and most restaurants in general.

~~~
aabhay
And perhaps apostrophes destroy the service culture? (McDonald’s, Wendy’s,
Arby’s)

~~~
adaisadais
Haha you know, I think you are onto something! But the main thing is that most
fast food businesses (and businesses in general) are so focused on revenue
that their employees and customers suffer.

I recently used a self-serve machine at Taco Bell (love the dreadful beef
chalupa) and had a poor experience. The machine was too low for my height and
unadjustable. Poor design really brings out the worst in the fast food
experience.

------
goldcd
I have myriad issues with the personal ethics of the owners of Chick-fil-A -
but their model does make sense to me.

They're clearly not just wanting to sell their brand - they're wanting to own
their brand.

The 10k is just a token - It's maybe more than you have in your clearing
account, but a figure that most people could likely produce and is just an
indicator that "you're serious"

Important part is that they put you through the grinder to make sure you're
the person they want to run their store. To be honest just looks like a
regular job interview - with the exception that they charge you to join the
company, but you get a cut of the profits.

Not even sure if they're in the UK yet, but you can see the converse with
Subway that keeps appearing all over the place, despite not having any
customers.

~~~
OatsAndHoney
They closed immediately after they opened in the U.K.

[https://www.nbcnews.com/feature/nbc-out/u-k-s-first-chick-
fi...](https://www.nbcnews.com/feature/nbc-out/u-k-s-first-chick-fil-close-
following-lgbtq-protests-n1069621)

~~~
tenpies
> will close after its six-month lease expires

That's certainly not immediately. Also not by decision of CFA. The local
landlord folded and decided not to renew the lease, so after the initial 6
months, that CFA location would have to close.

------
csdreamer7
From the article. Already knew, but this summarizes the food business so
beautifully.

“As a fast-food franchise owner, you’re often fighting a war for pennies,”
says Rose. “Food is the most competitive industry known to man: It has the
highest investment level of any industry, the highest failure rate, and the
lowest margins.”

~~~
dv_dt
There are exceptions which indicate that may not be the whole story.

[https://www.businessinsider.com/in-n-out-employee-
pay-2018-1](https://www.businessinsider.com/in-n-out-employee-pay-2018-1)

* Store managers earn an average yearly salary of more than $160,000, more than what the typical tech worker in Silicon Valley makes for the year.

* High wages for fast-food workers can lead to increased productivity, less employee turnover, and bigger profits in the long run.

~~~
copperx
Tech worker salaries are higher if you look at the total compensation.

~~~
softawre
At top level companies, yes. But the average for all tech companies in SV is
likely lower than 160k.

------
hyperpape
Fun fact, related to the fact that Chick Fil-A handles much more of the
operations than a normal fast food chain: they apparently run Kubernetes on
the machines in a store ([https://medium.com/@cfatechblog/bare-
metal-k8s-clustering-at...](https://medium.com/@cfatechblog/bare-
metal-k8s-clustering-at-chick-fil-a-scale-7b0607bd3541)).

------
ConsiderCrying
My biggest takeaway from this is that Wendy's standards are surprisingly high.
Why do they require a net worth of $5 million when most seem to top out at $1
million? Is it a way of ensuring a lower closure rate as people with $5
million net worth are less likely to go bankrupt and shut down the restaurant?

~~~
ganoushoreilly
What's even more weird to me is that they have these high franchise standards,
but apparently they don't seem to hold the franchises to high standards (at
least not the stores I visit). They're always dirty / unkempt.

~~~
sosodev
The Wendy’s near me are all pretty high quality

------
xwowsersx
> At $4.2m per store, Chick-fil-A’s average revenue is the highest of any
> fast-food chain in America, dwarfing both direct competitors (KFC; $1.2m)
> and bigger brands (McDonald’s; $2.8m)

Wow, I did not know this. Why is that?

~~~
irrational
They opened up the first one near me in a Portland Oregon suburb. The place
was packed whenever they were open with drive-thru cars spilling out into the
street. I thought the madness would end after a few days/weeks, but it's been
years and they still have a huge draw. I went in there once just to try it. It
was good, but not the best thing I've ever had. I wonder if it is nostalgia
from people from the SE USA that is driving all the business.

~~~
CDSlice
Chick-Fil-A's in the SE (or at least NC) are also packed to the brim whenever
it is close to a meal time. Although they don't serve the best food in the
world the customer service is excellent, the food is pretty good for fast food
and it is consistent in matter which location you go to, and you can get your
food much faster than other places despite the massive crowds.

~~~
chiph
The one at Park Rd Shopping Center in Charlotte is going to be rebuilt as a
drive-thru only location at the (rather firm, supposedly) request of the city
because it's such a traffic nightmare.

[https://www.charlotteagenda.com/152719/chick-fil-a-
woodlawn-...](https://www.charlotteagenda.com/152719/chick-fil-a-woodlawn-
road/)

~~~
SmirkingRevenge
Honestly, the obnoxious lines at this location and others around the city are
one of the reasons I really hate the chain. It's typical fast food garbage -
lines spilling out into the street for that crap is just so stupid.

~~~
CDSlice
Odd that you would hate a chain for being successful, especially if they are
taking steps like redesigning their stores to help fix the problem. Also I
would have to disagree with calling Chick-Fil-A fast food crap. That's more
like value menu McDonald's burgers and Chick-Fil-A is a step above that (in
both price and quality) IMO

------
hinkley
When I was a teenager, I was told by a manager that the shake machine at
McDonald’s cost more than I make in a year _now_. The amount of credit you’re
operating under as a franchise owner... I don’t know how they sleep at night.

~~~
Mountain_Skies
Teens are often broke, but not as often as a McDonald's shake machine. Funny
they cost so much while being out of service so much of the time.

~~~
hinkley
I believe I was asking why we hadn't replaced a janky part. I was told the
price of the part and expressed incredulity.

Grown up me still doesn't understand why the equipment costs that much, except
that it's small production runs and captive audience.

~~~
sangnoir
There are high demands on reliability: the equipment is expected to run 10-24
hours a day for years, without harming the operator or leaking oil onto
customer's food.

~~~
jagged-chisel
I read comments like this as anthropomorphizing the machine - it's not like
the machine has to remember to not harm the operator or not to leak.

Anyway, I don't find this a compelling argument against allowing mechanical
failures. Manufacturers these days understand the trade-offs between cost to
manufacture, part reliability, and tolerance of failure.

(That said, mechanical failure might not even be a problem with the machines.
It could just be the need to claim their offline so that staff can service
other customers better.)

~~~
sangnoir
> Anyway, I don't find this a compelling argument against allowing mechanical
> failures. Manufacturers these days understand the trade-offs between cost to
> manufacture, part reliability, and tolerance of failure.

I fully agree - my point was not to anthropomorphize machines. However, as you
said, manufacturers understand the trade-offs, and for "industrial-grade"
products, they prioritize having longer Mean time to failure compared to
consumer goods. MTTF is sometimes baked into the contract/warrantees since any
downtime is money lost - McDonald's can't take the fry machine offline and
continue serving 95% of their meals

------
el_cujo
>found that 51% of food franchisees earn less than $50k per year and only
around 7% take in $250k

Unbelievable, owning a franchise seems pretty stressful just to be taking in
50k/year. I guess once you get it off the ground with good managers you don't
have to baby it as much, but still.

------
gbronner
Fundamentally it is a different employment model. The 10k fee is to inspire
commitment and weed out non-serious candidates. After that, the new manager is
essentially on commission.

This allows CFA to find people who are ambitious irrespective of current
wealth.

------
7thaccount
I have a manager friend at a Chick-fil-A. The waiting list to get a franchise
is years.

------
RugnirViking
Honestly, until now I always thought that chick-fil-A would do like wraps with
chickpeas in from the name. I wonder how little they realise their brand holds
weight in the UK. I know I'm only a single datapoint, but a lot of these
american fast food names that haven't come to the UK already have quite a
hurdle to jump.

~~~
QuercusMax
Their name literally means "Chicken Filet". Why would you think chickpeas?

~~~
pwinnski
Because in British English, that word is pronounced unlike the letter A.

------
tempsy
I was in Vegas a few months ago and saw construction signs for a new Chick fil
A at Planet Hollywood on the Strip. Can only imagine how profitable that
location would be.

------
Nextgrid
I always found franchise initial startup costs to be predatory, as they get
paid either way regardless of whether the franchisee actually succeeds. In my
opinion they should be abolished and franchisors should only rely on
royalties, so that they have an incentive to help the franchisee succeed if
they want to make money.

~~~
Forge36
I recall subway had "low" startup costs and it resulted in too many locations.

What incentivizes the new location to do due-diligence in picking a good
location? If this is placed into the chain owner: What's the difference
between a franchise vs single owner?

~~~
jrs235
Chick-fil-A corporate determines all new locations. Corporate cares about the
success of their locations because they own the lot, own the building, own the
equipment, own just about everything and lease it back to the operator. If an
operator violates the franchise agreement they get evicted and or lose their
equipment and can no longer operate. It's how Chick-fil-a is able to maintain
quality and control. Ever wonder why a Chick-fil-a location doesn't buck
corporate and open on Sundays? Because they'd lose everything they need to run
their business.

------
mrfusion
How do chains know where to open new locations? You’d think they’d get it
wrong a lot and you’d see a bunch opening and then closing down.

But as far as I know it doesn’t seem to happen? Can you really predict what
will be profitable that accurately?

------
neuro_image3
Are there any viable franchises that are hands off? Like you put in the
investment, hire manager(s) and earn revenue as the owner without having to
invest a lot of time on the day to day operation?

~~~
ficklepickle
Oh man. That's a loaded question. Short answer no, long answer noooooooo.

With years of work you might get close. Finding good people and aligning
incentives so you retain them is not easy.

Most franchisees that try and be hands-off from the start crash and burn.
Which makes sense, really. If it were a lucrative passive investment, the
franchisor would just throw some money at it and keep all the profits.

------
fortran77
With 50% of profits / 15% of gross, they really own the store, and they're
charging you $10,000 to apply for a job interview to manage it. It's a
"franchise" in name only.

~~~
privateSFacct
Except you get a cut of the profits - how many "managers" get that -
seriously?

------
djohnston
What's avg annual revenue for A chick fil a?

~~~
maxerickson
This article lists it as $4.2 million.

(vs $1.2 million for KFC and $2.8 million for McDonald's)

------
baron816
> With a 0.13% acceptance rate, it’s harder to become a Chick-fil-A franchisee
> than it is to...get a job at Google (0.23%)

I think I'd rather just get a job at Google.

~~~
virtuous_signal
I think either of these acceptance rates are computed by casting the widest
net possible. Nevertheless I have to believe Chick-Fil-A has a very rigorous
process for hiring managers, who in turn know how to hire good workers; I have
never once encountered the typical surly fast food worker at any of their
restaurants.

~~~
frogpelt
Same. I ate at a food court that had a Chick Fil A and the Chick Fil A
employee refilled everyone's drinks at our table even though they weren't all
bought at Chick Fil A. That's just not normal for fast food workers.

~~~
HeWhoLurksLate
I have had a similar experience as well, FWIW.

------
troytc
Misleading headline? It costs $10k _only_ compared to hundreds of thousands
with other franchises. CFA covers all initial costs and simply takes much more
in profit sharing than others.

------
all_blue_chucks
After getting kicked out of their first store in England the owners announced
they were ending ties with anti-gay groups.

~~~
forrestthewoods
> ending ties with anti-gay groups.

Salvation Army. The Fellowship of Christian Athletes.

Calling those groups "anti-gay" and protesting a fast food restaurant for
donating to them is absurd.

~~~
markovbot
Could you please elaborate on why those groups aren't "anti-gay"? I've never
heard of "Fellowship of Christian Athletes", but the Salvation Army is
absolute anti-gay.

~~~
_jasper
For me personally, the phrase "anti-gay group" muddies the waters because
although Salvation Army (1) does (or did) have some anti-gay policies, and (2)
is a "group", its main purpose is to be a food or shelter charity; not to
pursue the disenfranchisement of gays through say, political compaigning.

To illustrate, I might refer to an organization under religion X as an "anti-
women religious group" because perhaps religion X had some policy on women's
activites that I believed were sexist; then for me "anti-women religious
group" would be a technically correct phrase in that X is "anti-women" and "a
religious group", but the phrasing would probably be objectionable to
practitioners of the religion who don't see those particular policies as
fundamental to their religion, and perhaps didn't even consider the policies
sexist in the first place.

In general, I don't think I often see this loose use of terminology applied to
other cases; like I don't think people call Nike a pro-child-labor company,
although if that were the topic of discussion I might say Nike uses child
labor. To me it's about avoiding ambiguity.

