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Finance

Why Does It Only Cost $10K to Own a Chick-fil-A Location?

You don’t own a Chick-fil-A location.

The biggest reason it only costs $10,000 for a Chick-fil-A location is that you don’t actually own it. Just because you paid Chick-fil-A corporate $10,000, got accepted, and went through the extensive training program doesn’t mean you own the location. Chick-fil-A corporate considers you an “operator” and not a franchisee. You don’t have any control over where the chain is located. Also, you can’t sell the location or pass it down to your heirs. You also can’t own multiple locations. 

“[Chick-fil-A] wants 100% control — and they have it. It’s a very, very unique individual who is going to apply and be accepted,” franchise business expert Joel Libava told Business Insider in a 2016 article. 

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Usually, when someone wants to own a fast-food restaurant, they do it through a franchise program. As a franchisee, you have the right to use the company’s brand name to open your own restaurant. Also, you can own multiple locations. The corporation usually takes a percentage of your sales in exchange for building the property for you. 

Opening a franchise can be an expensive venture. According to the McDonald’s website, the total investment to open a franchise is between $1 million and $2.2 million. The initial franchise fee alone is $45,000. 

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The cost to open a Subway can be anywhere from $143,400 to $314,900. The cost includes the initial franchise fee of $15,000.

Cost to open a Chick-fil-A

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Each Chick-fil-A makes an estimated $4.4 million in annual sales, which is more than the combined revenue of Subway, McDonald’s, and Starbucks. However, the fast-food chicken chain’s operators also pay more in royalty fees and percentage of profits. 

Source: Getty Images

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Chick-fil-A corporate takes 15 percent of sales and 50 percent of the profit annually from its locations in exchange for all the company’s upfront costs to open the location. Compare that to the royalty fees at McDonald’s (4 percent) and KFC (5 percent).

Opening a Chick-fil-A isn’t easy.

People say that it’s easier to get into Harvard Business School or get hired by Google than it is to be accepted as a Chick-fil-A operator. Of the over 20,000 applications the restaurant chain receives each year, only about 80 are accepted. 

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After submitting an application of interest on the company website, you are interviewed by Chick-fil-A corporate. The company also interviews your family, friends, and business references. 

If you are one of the few people picked, you will have to attend an extensive training program before opening a location.

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chick fil a salad

Source: Chick-fil-A Facebook

Also, operating a Chick-fil-A isn’t an easy ride. You can’t open the location, hire employees, and then sit back while the location earns you a passive income. If you are going to have a Chick-fil-A, you have to work it.

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“Chick-fil-A operators must be as comfortable rolling up their sleeves in the kitchen as they are shaking hands in the dining room,” Chick-fil-A spokesperson Amanda Hannah told Business Insider.

View more information: https://marketrealist.com/p/why-does-it-only-cost-10k-to-own-a-chick-fil-a/

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