For years, restaurant observers have rushed to find Chick-fil-A’s annual franchise disclosure document (FDD) when it is renewed every April, just to see how ridiculous last year’s numbers were.
And the Atlanta-based chicken chain rarely failed to disappoint. Its average-unit volumes kept climbing into a stratosphere typically reserved for high-end steak chains. That, plus unit growth, vaulted the company from regional mall-based concept into one of the three largest restaurant chains in the country.
Over the past 20 years, Chick-fil-A’s system sales grew 13.2% a year, on average, a rate of growth equal to that of the Mexican fast-casual chain Chipotle.
The past two years, however, have been more moderate. System sales in 2024 grew just 5.4%, the first time since 2013 that Chick-fil-A recorded growth in the single digits, and the lowest rate of growth that we could find. And then it did that again last year, growing 5.2%.
The company’s restaurant count keeps growing. But its unit-volumes have not. They fell in both years, albeit slightly. But a crucial source of Chick-fil-A’s world-beating growth has largely vanished.
It’s worth putting some of this into context: The vast, vast majority of restaurant chains would kill for most of the numbers Chick-fil-A reports every year. Growth of 5% or more every year for the nation’s third-largest restaurant chain is perfectly fine. Among the five largest chains from the 2024 Technomic Top 500 ranking, only Taco Bell outperformed that growth rate last year.
Oh, and its stand-alone locations still do a completely ridiculous $9 million in annual sales on average. Its mall locations average more than $4 million and it somehow has one that does $14 million. Insane.
In many respects, the uninterrupted run of double-digit growth that Chick-fil-A enjoyed for more than two decades was underappreciated. It’s hard for brands to get that large that fast and then keep going. It was bound to slow down sooner or later.
And indeed, the first reason for the slowdown is simple size. Chick-fil-A is one of just three restaurant chains that last year generated more than $20 billion in total sales. At that size it is simply much more difficult to generate the sales required to achieve double-digit growth.
This is also a difficult period for restaurant companies, and particularly fast-food brands.
Consumers have been cutting back on the frequency of dining out, which has hurt industry traffic and ignited the value war the industry has been on for the past two years.
That dynamic has likely kept Chick-fil-A’s traffic at bay, ultimately hurting those unit volumes. Customers are cutting back, which might have hurt the brand’s traffic. And growing discounts from other chains might have siphoned some of those customers from the chicken chain.
Oh, and there are a lot more chicken options.
When Chick-fil-A’s run started that run whenever ago, consumers’ chicken options were limited to bone-in chicken sold at places like KFC and Popeyes while their handheld options were mainly found at burger brands.
Yet consumers were gravitating toward chicken products. Chicken became the most popular protein in the U.S., and with its handheld options Chick-fil-A was more or less shooting fish in a barrel.
Yes it had great operations, a great product, a great culture and the natural supply limitation that comes with being closed on Sundays. All that has certainly fueled its success.
But it was also selling boneless chicken from a specialist concept at a time when consumers were shying away from the bone-in variety while they gravitated toward specialist brands. That certainly worked in its favor.
Today? Fast-casual brands in 2024 grew sales a ridiculous 24%, according to Technomic. There’s Raising Cane’s, Wingstop, Zaxby’s, Dave’s Hot Chicken, Chicken Salad Chick, Huey Magoo’s, Starbird, Jollibee, bb.q chicken, etc. There are just a lot more great competitors out there.
And of course chains like Popeyes, KFC, McDonald’s and like 5,000 others introduced higher-grade chicken sandwiches.
All of which is to say that Chick-fil-A’s run was not going to last forever. All brands go through speed bumps. Growth attracts competitors. And Chick-fil-A is now a mature brand with expectations for slower growth. This is just a different era for the chicken chain.