Last Updated on September 22, 2023
How much does a Chick A Fil A franchise owner make? When you think about how much people love Chick-Fil-A, it’s no surprise that running one of their franchises could be a fantastic business opportunity. With a whopping 2,945 franchise restaurants across the US and Canada, yet one of the most difficult application processes, you may wonder whether opening a Chick-Fil-A franchise is a good investment.
In this article, I’ll dive into the financial side of Chick-Fil-A franchises and explore important questions like how much money you can make from sales and, most importantly, whether this franchise can truly bring in good profits.
How Much Does a Chick A Fil A Franchise Owner Make?
Ever wondered how much a Chick-Fil-A franchise owner can make? Well, the answer isn’t so straightforward because it depends on the specific store. They prefer to call their franchise owners “operators,” by the way.
Back in 2007, a single-store operator earned an average salary of $100,000, which is pretty decent – Mashed. But remember, that was quite a while ago, and Chick-Fil-A has only become more popular since then.
Now, fast food companies generally don’t openly share how much their franchise owners earn annually, but we can still get a good idea. The chicken business can be quite lucrative, but the real challenge lies in actually getting the business up and running. It takes effort and dedication to make it a success.
Chick-Fil-A: a brief introduction
Let’s give you a quick introduction to Chick-Fil-A, a popular American fast-food restaurant chain known for its delicious chicken sandwiches. They have a whopping 2,945 restaurants, mostly in the United States and some in Canada.
Before Chick-Fil-A came into existence, the founder, S. Truett Cathy, started Dwarf House, which focused on steaks and hamburgers. Today, there are 12 Dwarf House restaurants still running in the US. Chick-Fil-A was born in 1967 after Dwarf House became successful, and the first restaurant was opened in Atlanta.
Apart from their famous chicken sandwiches, people love their grilled nuggets too. It’s essential to know that Chick-Fil-A is a privately owned company. The founder’s last wish was to keep it that way, and even though they won’t go public, his children can choose to sell it if they wish.
According to Zippia, Chick-Fil-A had 35,574 employees and made a revenue of $11.3 billion in 2021. Impressive, right?
How Much Does it Cost to Open a Chick-Fil-A Franchise?
Now, if you’re interested in opening a Chick-Fil-A franchise and wondering how much money you can make, there are some important factors to consider. The initial franchise fee is relatively low compared to other quick-service restaurants. It’s just $10,000, which is quite a bargain. Other fast food franchises usually charge around $30,000 on average.
However, there’s a catch. While the startup fee is low, Chick-Fil-A takes a higher royalty fee of 15 percent from monthly sales. Most other fast food franchises take around 4 to 8 percent, so it’s a bit of a bummer in that regard.
But, with their popularity and delicious food, it could still be a profitable venture for the right person.
- Franchise fee: $10,000
- Royalty fee: 15.0%
- Marketing fee: 3.25%
- Investment (mid-point): $1,661,000
- Average sales: $8,072,000
- Sales to investment ratio: 4.9x
- Payback period: 2-3 years
Why Does Chick-Fil-A Take 15% of Monthly Sales?
The reason is quite simple, actually. Unlike other fast food franchises like McDonald’s or Taco Bell, Chick-fil-A covers a significant portion of the costs to get a new restaurant up and running. They take care of things like real estate and building materials, which can be quite expensive, sometimes reaching up to $2 million depending on the location.
In return for this support, Chick-fil-A charges a higher royalty fee to help recoup their investment. So, on top of the 15% from monthly sales, they also take 50% of any profit the restaurant makes. It’s a way for them to ensure they get their money back since they put so much upfront.
How Much Do You Need to Invest?
Now, let’s talk about how much you need to invest if you want to become a franchisee. On average, it’s around $1,661,000, which includes the initial franchise fee of $10,000.
However, this amount can vary based on factors like the restaurant’s location, size, and type. According to the latest FDD, the investment can range from a minimum of $585,500 to a maximum of $2,804,000.
This investment covers all the essential expenses to start the business, including opening inventory, rental equipment for the first month, lease, insurance, and additional funds to support operations, especially during the initial months when losses might be expected.
|Initial Franchise Fee||$10,000|
|Formation costs||$3,300 – $90,500|
|Operational costs||$572,200 – $2,702,935|
Why Does it Only Cost $10,000 to Open a Chick-Fil-A?
One thing that surprises many people is that opening a Chick-Fil-A location costs only $10,000. But here’s the catch: you don’t actually own it.
When you pay Chick-Fil-A corporate the $10,000 and go through their rigorous training program, you become an “operator” rather than a franchisee. This means you don’t have any say in where the restaurant will be located.
Furthermore, you can’t sell the location or pass it down to your family. And, unfortunately, you can’t own more than one Chick-Fil-A location.
Chick-Fil-A wants complete control over their establishments, and they have it. It’s a very, very unique individual who is going to apply and be accepted
Chick-fil-A Only Approves a Small Percentage of Franchise Applications
The money’s only half the picture, getting approved is the difficult part. You may ask “why?”
You see, Chick-Fil-A is very particular about who they choose to run their restaurants. They want people who are deeply involved in their communities, and they scrutinize applicants carefully. That’s why out of around 20,000 inquiries they receive each year, they only select between 75 and 80 people to become franchisees.
If you are lucky enough to be one of the few people picked, you will have to attend an extensive training program before opening a location.
Those are some tough odds, but hey, I already mentioned that getting a Chick-Fil-A franchise is cheaper than most other fast food joints, right? Still, it’s not going to be a walk in the park.
What is the Turnover of a Chick-Fil-A Franchise?
On average, they make around $8,072,000 in sales per year. But here’s an interesting thing: the number can vary depending on whether the restaurant is located within a mall or not.
If it’s in a mall, the turnover is around $2,694,000, while for those not in a mall, it’s a much higher $8,581,000.
In simple terms, restaurants outside of malls tend to make about four times more sales compared to those inside malls. That’s quite a difference, isn’t it?
How Profitable is a Chick-Fil-A Franchise?
Based on the average annual sales of $8,580,978 for non-mall units, we estimate that the average Chick-Fil-A makes a profit of about $1,277,000 per year (EBITDA). This means they have a 15% profit margin, which is pretty good.
However, it’s essential to note that this profit only includes the costs of goods sold, labor, rent, royalties, and marketing fees paid to the franchisor. We didn’t have access to specific information on the costs of goods sold and labor, so we made some assumptions based on the data provided in the FDD.
|Profit & Loss||Amount||%Revenue|
|Other Operating Expenses||$858,098||10%|
Is a Chick-Fil-A Franchise a Good Investment?
Profitability alone doesn’t necessarily determine if a Chick-Fil-A franchise is a good investment. To figure that out, we need to look at the payback period vs. the time it takes to recoup your initial investment.
Mathematically this means: Payback period = Investment / Average annual net profit.
The average investment to open a Chick-Fil-A franchise is around $1,661,000. Based on our calculations, the payback period for a Chick-Fil-A franchise is estimated to be about 2-3 years, which is exceptional in the world of restaurant franchises.
It means it would take a franchisee 2 to 3 years to earn back their original investment.
From this perspective, we can confidently say that Chick-Fil-A franchises are very good investments. Anything below 5 years for payback is considered excellent.
However, keep in mind that these numbers are averages, and your actual payback period may vary based on different factors.
Chick-Fil-A franchise: Pros and Cons
Here’s a quick look at the pros and cons to consider when deciding whether a Chick-Fil-A franchise is the right fit for you:
- Low Start-Up Costs. The franchisor covers most of the opening costs, making it more affordable for franchisees with a competitive advantage.
- Good Life-Work Balance. The franchise operates six days a week, allowing operators to have Sundays off and find a good balance between work and personal life.
- No Minimum Net Worth Requirement. Unlike some competitors, Chick-Fil-A doesn’t have strict minimum net worth or liquid asset requirements.
- Site Selection and Real Estate Support. Chick-Fil-A assists franchisees with site selection and restaurant construction, making the process smoother for them.
- Quality Training. Chick-Fil-A offers comprehensive training programs to help franchisees understand the business concept better.
- Growth Potential. Chick-Fil-A is a well-established brand with growth potential, offering an attractive franchise opportunity.
- Arduous Selection Process. The franchisor is very selective in approving operators, with an extremely low acceptance rate.
- Not a Passive Investment. Franchisees are required to actively manage their restaurants and can’t be absentee owners.
- Restricted Control. Chick-Fil-A owns most aspects of the franchise, including the building and equipment, limiting the control of franchisees.
- No Multiple Unit Opportunities. Chick-Fil-A prefers franchisees to focus on one restaurant, rarely approving multiple unit operations.
Frequently Asked Questions on How Much Does a Chick A Fil A Franchise Owner Make
What does FDD stand for in franchising?
In franchising, FDD stands for Franchise Disclosure Document. It’s a legal document that the Federal Trade Commission (FTC) requires franchisors must give to potential franchisees before selling them a franchise.
What is the EBITDA for a franchise?
EBITDA stands for earnings before interest, taxes, depreciation, and amortization. In the franchise industry, it’s a crucial term for assessing the success of your business in terms of cash flow. It also plays a significant role when you’re trying to secure a loan for your franchise.
How many Chick-Fil-A are there in the US?
As of June 27, 2023, there are 2,945 Chick-Fil-A restaurants in the United States. Texas has the highest number of locations with 473 restaurants, making up about 16% of all Chick-Fil-A restaurants in the country.
Does Chick-Fil-A make the most money?
No, other restaurant chains in the U.S. make much more money than Chick-Fil-A annually.