Chik-Fil-A: From Food Court to Franchise

By Samuel Phineas Upham

S.Truett Cathy began his career in the restaurant industry with the opening of the Dwarf Grill, today called Dwarf House. Started in 1946, the restaurant offered decent food at affordable rates to workers at the Ford Motor Company Atlanta Assembly Plant and others in town.

Cathy operated the restaurant largely the way most other restaurants would do business until he found a fryer able to flash fry a chicken sandwich in the time it took to cook a burger. No sooner had he discovered this cooking implement than he changed the name of his company to Chick-Fil-A.

His first sandwich was called “The Chicken Steak Sandwich,” but the name never did have much luster to it. Instead, he opted for the “fillet.” He adopted the “A” in Chick-Fil-A to denote the quality of his food.

He opened his first restaurant in 1967, occupying a space at the food court of the Greenbriar Mall. This was the main method of expansion for the growing chain throughout the 1980s until 1986, when the company opened its first freestanding restaurant.

Today, most Chick-Fil-A’s are still located in the Southern United States. Although things have changed somewhat and the restaurant has expanded outside of that territory. Over 1000 locations are currently in operation as of 2012, with 32 being drive-thru only locations.

Chick-Fil-A has a different way of doing business. It doesn’t franchise out, it owns every location it operates. It chooses these locations strategically, and it doesn’t require much of an investment from its franchisees (a mere $5,000 to retain ownership).

About the Author: Samuel Phineas Upham is an investor at a family office/ hedgefund, where he focuses on special situation illiquid investing. Before this position, Phin Upham was working at Morgan Stanley in the Media and Telecom group. You may contact Phin on his Samuel Phineas Upham website or Twitter.

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