Instead of answering to Wall Street, the folks at Chick-fil-A, all 40,000 of them, answer to the customer. It’s no surprise then that Chick-fil-A has developed a winning recipe—it receives 10,000 inquiries for franchise opportunities each year and is second only to KFC in the quick-service chicken restaurant category based on annual sales.

At first glance, you know you’re not dealing with a typical franchise company. For starters, unlike most franchise restaurant companies that seek rapid-rate growth, Chick-fil-A prefers to maintain a steady growth rate. “The business grows consistently on a year to year basis,” said Tim Tassopoulos, senior VP of operations. “We are not trying to please Wall Street on a quarterly basis because we are privately owned.” Chick-fil-A currently operates 1,200 restaurants in 38 states and Washington D.C.

Good business sense
Of the 10,000 inquiries for franchise opportunities it receives each year, Tassopoulos said the company commits to approximately 100 new franchise arrangements. Most franchise companies require potential franchisees to put a large sum of money up front so the business can grow quickly. Chick-fil-A’s approach, however, is somewhat different.

“In Chick-fil-A’s arrangement, it is a limited capital investment on the part of the franchisee because we actually build and equip the restaurant and then in effect sublease that to the franchisee,” he said. “We go into business with people who want to own their own businesses but may not already have a million dollars in the bank.”

Tassopoulos said that offering financial, operational, marketing, and structural support to new franchisees is a smart business move because not only does it increase the pool of available candidates, it also produces a caliber of franchisee who is motivated to make it a success. In addition, the operators are better able to gauge their stores’ strengths and weaknesses.

“If someone is a doctor or a dentist and they are looking for an opportunity to invest their capital, they are the owner of the business but have someone else running it,” he said. “In our model, the franchisee is the person in the restaurant. It is a very powerful concept because the owner is close to the customer.”

Giving thanks
Once up and running, Chick-fil-A motivates and encourages operators with several recognition programs. Symbol of Success, the company’s premier program, rewards operators who achieve a higher-than-normal sales growth with a Ford automobile of their choice for a year, be it a Mustang or even an Explorer. If they are able to match their levels of sales growth the following year, they receive the title to the vehicle. “Either way, it is a tremendous incentive,” he said.

Another program, Teaming for Success, allows operators in local markets to work together and, based on sales and profit changes, have the opportunity to win trips to hot-spot destinations such as Hawaii and the Caribbean. “Ours is an encouragement-oriented culture,” said Tassopoulos. In addition, operators often have in-store recognition incentives for their team members such as Blockbuster or Target gift certificates.

Founded on family values
Atlanta-based Chick-fil-A remains true to its original ideals of providing good food and friendly service. For instance, Chick-fil-A is not open on Sundays. Truett Cathy, who began in the restaurant business in 1946, believed each employee should have the opportunity to worship, spend time with family, or just relax from the rest of the week; that tradition continues to this day.

Chick-fil-A provides for up to 1,000 team members annually to receive a $1,000 college scholarship. Between this program and its affiliation with Berry College, the company has awarded nearly $20 million in scholarship money since 1973.

Tassopoulos said the company’s strong work and ethic principles help to create a sense of loyalty among staff. “People become part of Chick-fil-A because of the positive work environment, positive relationships, and long-term orientation,” he said. “As a result, people want to stay as part of the organization.”

Currently, the company enjoys impressively low turnover among the operators’ front-line team members—a third of the industry average. “You have to think about that as a customer,” said Tassopoulos. “This means they are getting better service. The person behind the counter at Chick-fil-A is three times more likely to be there the next time you go than at any of the competitors—that is a huge advantage.”

Refreshing selections
Another way Chick-fil-A distinguishes itself from the competition is through its award-winning menu. The company doesn’t rely solely on its hero item, the Chick-fil-A Chicken Sandwich, which was the first original boneless breast of chicken sandwich. It also offers items like fresh fruit cups, wraps, salads, breakfast items, and char-grilled sandwiches.

Although the company has long offered breakfast items on its menu, it has just introduced three new breakfast items, which Tassopoulos thinks has taken the company to the next level. “We introduced a new breakfast bagel; breakfast burrito; and Chick-n-Minis, which are the chain’s popular Chick-fil-A Nuggets in a warm mini yeast roll lightly brushed with a honey butter spread,” he said.

The additions to the menu help the company to build customer awareness and expand its brand identity. “The thing about breakfast is people are very loyal,” he said. “If they make a switch, then they are very loyal to the new breakfast place.”

In addition to the tangible results, Tassopoulos said Chick-fil-A realizes an intangible return on its investment in training, marketing, and expansion—one that is both central to its core philosophy and crucial to its survival.

“The bottom line is we invest in people, and that return is going to come,” he explained. “When you plant good seeds, that fruit is going to have a positive outcome.”