Behind Chick-fil-A’s Success

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Political controversy aside, Chick-fil-A’s success is undeniable. In 2015, they averaged $3.2 million in per-store sales, which is 25% higher than McDonald’s, and double Burger King or Wendy’s. In 2014 they overtook KFC as America’s biggest Chicken chain. Analysts now predict that they are on track to become the 4th largest chain in America in terms of revenue by 2020, calling them the largest and least appreciated threat to McDonald’s. And if you think that this is largely irrelevant in New York, where Bill De Blasio has come out officially against the company for the CEO’s homophobic remarks, you might want to think again. 8 blocks from their first NYC location in midtown they are currently construction a second, and there are additional plans in the works to open a dozen more around the outer boroughs – bringing them close to the number of Panera breads in the city.

Needless to say, controversy does not seem to be slowing them down too much. Analysts credit their tight operations, and perhaps a certain amount of exclusivity: apparently only 0.7% of the 20,000 applicants who applied for franchises last year were given a spot – an acceptance rate lower than Harvard.

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Joe’s Crab Shack Defects from Gratuity-Free

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Several months after going the no-tipping route, Joe’s Crab Shack has now rolled back the model from 18 restaurants to just 4. CEO Bob Merritt tells investors that customers simply don’t like it, and foot count is down 8 to 10% on average among the locations.

The chain was originally praised for their efforts, which followed on the heels of higher-end restaurateurs like Danny Meyer, Gabriel Stulman and Andrew Tarlow. Overall they raised server wages to $14 an hour and menu prices by 12 to 15%. “We tried it for quite a while, tried communicating it different ways,” Merritt explained, but a large portion of guests were unswayed. Research indicates that about 60% of guests disliked the model, either because they didn’t trust management to pay the higher wages or they preferred being able to incentivize good service.

Joe’s will revert 14 locations back to their former tipped model, but the remaining 4 have apparently been working much better. Merritt says they plan to treat those stores as a rich source of research, and figure out what distinguishes them from locations where it doesn’t work.

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