CHICKEN TEAM
Kristina M. Kasic
Patrick Johnson
Bernard Kanjoma
Erik Larson
Rob Killius
Raghad Khamou
Dragan Kosanovic
Agenda
Overview – Kristina Kasic
Situation Analysis – Raghad Khamou / Dragan
Kosanovic
Marketing Strategy – Rob Killius
Marketing Mix – Bernard Kanjoma
Financials – Erik Larson
Controls – Patrick Johnson
Overview
Company Overview
Founded in 1946 by S. Cathy Truett
Privately held company
Expands through franchising
Currently operates:
1700 + locations
39 states, including 1 in Michigan
Product Mix
Breakfast
Chicken biscuits
Chicken, egg and cheese bagel
Chicken breakfast burrito
Lunch / Dinner
Chicken sandwich
Chargrilled chicken sandwich
Chicken strips
Product Mix (cont.)
Sides
Waffle potato fries
Fruit cup
Breast of chicken soup
Salads and Wraps
Grilled chicken wrap
Asian salad
Grilled market salad
Healthy Alternative
Most entrees under 500 calories
Lean frying oils
Wheat buns grilled sandwiches
Light dressings
Franchise Layout Options
Company offers various options
Express
Stand-alone
Drive through only
Available in unique locations:
High traffic business buildings
College campuses
Hospitals
Proposal
 Open 10 Chick-fil-A locations in Southeast
Michigan over 5 years
Year 1 – University of Michigan and Birch Run
Year 2 – Michigan State and Genesys Hospital (Grand
Blanc)
Year 3 – Detroit Metro Airport and Detroit Medical
Center
Year 4 – Ikea (Canton) and Lakeside Mall (Sterling
Heights)
Year 5 – Cabela’s (Dundee) and Great Lakes Crossing
(Auburn Hills)
Situational Analysis
Chick Competitors
Indirect Competition
National Coney Island
Direct Competition
McDonald’s
Possible Threats
Local restaurants
Subway
Burger King
Pizza Specialties
Jimmy John’s
Wendy’s
Local Grocery Stores
Sonic
Chipotle
Denny’s
Qdoba
White Castle
Baja Fresh
Tim Horton’s
Kentucky Fried Chicken
(KFC)
Taco-Bell
Popeye’s
Competitor Graph
Market Growth
Market Growth
Macro Environment
Trends and situations impact the success
 Christian beliefs integrated in business
 Competitive fast food environment
 Changes in demographics
SWOT
 Strengths
 Industry recognition
 Steady revenue growth
 Over 1700 locations in
39 states
 Healthy alternative to
beef and other meats
 Established online
presence
 Strong brand
 Weaknesses
 Fewer locations in
Michigan than
competitors
 Weak presence in
Michigan
 Closed on Sundays
SWOT (cont.)
 Opportunities
 Expansion of menu
offerings
 Further expansion of
locations throughout
Michigan
 Leadership Scholarship
Programs
 Threats
 Competitors with similar
menu offerings
 Bird related diseases
 Rising costs of raw
materials
Marketing Strategy
Value Proposition
Healthy alternative to beef and other meats
Treat every customer with utmost respect
Offer a good value
Financial Objectives
Financial Objectives
First year sales
In-line / mall – $1.1M
Stand-alone – $2.1M
Gross margin of 35%
Marketing Objectives
Maintain a gross margin of at least 35%
Generate a sales average of $4,500 each
business day
Realize an annual growth of approximately
10% for each year after the opening year of
each store
Target Market
Teens – 14 to 18 years of age
Have part-time jobs
Looking for good value
Young Adults – 19 to 25 years of age
Usually in college
Have full or part time jobs
Choose to not cook for themselves
Looking for good value
Target Market (cont.)
 Adults – 25 to 55 years of age
In careers
Working long hours
Choose not to cook for themselves due to time
challenges
Looking for healthy alternatives to beef and other
meats
 Seniors – 55 + years of age
Fixed incomes
Looking for healthy alternatives to beef and other
meats
Target Market (cont.)
Travelers – all ages
Families with children
Traveling through Michigan
Looking for good value
Critical Issues
Closed on Sundays
Competitive chicken products
Strong display of Christian values and beliefs
Marketing Mix
Marketing the Chick Overview
4 P’s: (product, price, place, and
promotion)
3 P’s: (people, physical evidence, and
process)
4 C’s: (customer value, cost,
convenience, and communication)
Chick Menu
 Product Marketing: The restaurant only serves
chicken no beef or steak
Special Menus:
Build Your Own Meal
Being a Chicken
Satellite/Lunch-Counter
Getting the Chick-fil-A Word Out
Pricing
Promotion
Advertising channels (various counties)
Public relations
Direct marketing
More Chicken Marketing
Web planning
Website goals
Service
Marketing Strategy
Introduce healthy menu offerings through:
Social media
Coupons
Loyalty programs
Basic cable advertising
Financials
Income Statement
CHICK-FIL-A MICHIGAN
PROJECTED INCOME STATEMENTS
FOR FISCAL YEARS ENDED SEPTEMBER 30TH
NET SALES
$
2014
2015
2016
2017
2018
$
$
$
$
$
2014
2015
2016
2017
2018
3,257,800
6,841,380
9,741,118
13,973,030
18,628,133
925,000
1,850,000
2,500,000
3,425,000
4,350,000
28.39%
27.04%
25.66%
24.51%
23.35%
2,332,800
4,991,380
7,241,118
10,548,030
14,278,133
71.61%
72.96%
74.34%
75.49%
76.65%
1,640,000
2,300,000
3,440,000
4,440,000
4,800,000
50.34%
33.62%
35.31%
31.78%
25.77%
692,800
2,691,380
3,801,118
6,108,030
9,478,133
21.27%
39.34%
39.02%
43.71%
50.88%
57,600
71,100
99,900
128,700
130,500
1.77%
1.04%
1.03%
0.92%
0.70%
EARNINGS BEFORE TAXES
635,200
2,620,280
3,701,218
5,979,330
9,347,633
19.50%
38.30%
38.00%
42.79%
50.18%
LESS: TAXES (30%)
190,560
786,084
1,110,365
1,793,799
2,804,290
5.85%
11.49%
11.40%
12.84%
15.05%
2,590,853 $
4,185,531 $
6,543,343
13.65%
26.81%
26.60%
29.95%
35.13%
LESS: COST OF GOODS SOLD
GROSS INCOME
LESS: SELLING & ADMINISTATIVE EXPENSES
OPERATING INCOME
LESS: INTEREST EXPENSES
NET INCOME
$
444,640 $ 1,834,196 $
100.00% 100.00% 100.00% 100.00% 100.00%
CHICK-FIL-A MICHIGAN
PROJECTED BALANCE SHEET
FOR FISCAL YEARS ENDED SEPTEMBER 30TH
Balance Sheet
Assets
2014
2015
2016
2017
2018
$
$
$
$
$
2014
2015
2
7
Current Assets
Cash and Cash Equivalent
Accounts Receivable
Inventory
Total Current Assets
Property, Stores, and Equipment (net)
1,759,520
3,581,956
5,268,213
7,601,771
10,122,463
67.76%
68.15%
32,000
64,000
88,000
120,000
152,000
1.23%
1.22%
160,000
320,000
440,000
600,000
760,000
6.16%
6.09%
1,951,520
3,965,956
5,796,213
8,321,771
11,034,463
75.16%
75.45%
0.00%
0.00%
7
576,000
1,152,000
1,422,000
1,998,000
2,574,000
22.18%
21.92%
69,120
138,240
170,640
239,760
308,880
2.66%
2.63%
2,596,640
5,256,196
7,388,853
10,559,531
13,917,343
Accounts Payable
400,000
800,000
1,120,000
1,520,000
1,920,000
15.40%
15.22%
1
Salary's Payable
600,000
1,200,000
1,680,000
2,280,000
2,880,000
23.11%
22.83%
2
1,000,000
2,000,000
2,800,000
3,800,000
4,800,000
38.51%
38.05%
3
1,152,000
1,422,000
1,998,000
2,574,000
2,574,000
44.37%
27.05%
2
2,152,000
3,422,000
4,798,000
6,374,000
7,374,000
82.88%
65.10%
6
0.00%
0.00%
Other Non-Current Assets
Total Assets
1
100.00% 100.00% 10
Liabilities and Owner's Equity
Current Liabilities
Total Current Liabilities
Long Term Debt
Total Liabilities
Owner's Equity
Retained Earnings
Total Owners Equity
Total Liabilities and Owners Equity
$
444,640
1,834,196
2,590,853
4,185,531
6,543,343
17.12%
34.90%
3
444,640
1,834,196
2,590,853
4,185,531
6,543,343
17.12%
34.90%
3
7,388,853
$ 10,559,531
$ 13,917,343
2,596,640
$
5,256,196
$
100.00% 100.00% 10
Sales Forecast
CHICK-FIL-A MICHIGAN
SALES FORECAST
FOR FISCAL YEARS ENDED
2014
2015
2016
2017
2018
In Store
$ 3,225,222
$ 6,772,966
$ 9,643,707
$ 13,833,300
$ 18,441,851
On-line
$
$
$
$
$
SALES
Direct Sales ($)
Estimated Total Sales
32,578
68,414
97,411
139,730
186,281
$ 3,257,800
$ 6,841,380
$ 9,741,118
$ 13,973,030
$ 18,628,133
In-Store
$ 1,012,875
$ 2,025,750
$ 2,737,500
$ 3,750,375
$ 4,763,250
On-Line
$
$
$
$
$
COST OF SALES
Cost of Direct Sales
Estimated Total Cost of Sales
Cost as a % of Sales
50,875
101,750
137,500
188,375
239,250
$ 1,063,750
$ 2,127,500
$ 2,875,000
$ 3,938,750
$ 5,002,500
33%
31%
30%
28%
27%
Break-Even Analysis
CHICK-FIL-A MICHIGAN
BREAK-EVEN ANALYSIS
FOR STAND ALONE STORE
Cost
Annual Cost
Monthly Cost
35%
35%
Stand Alone Store
Variable Costs Assumption
Loan Payments
$
490,000
$
40,833
Payroll
$
360,000
$
30,000
Utilities
$
10,800
$
900
Recuring Marketing Expense
$
250,000
$
20,833
$
1,110,800
$
92,567
Revenue Break Even
$
1,708,923
$
142,410
Actual Revenue
$
2,150,000
$
179,167
Total Fixed
Mall/In-Line Store
35%
Variable Costs Assumption
35%
Lease Payments
$
96,000
$
8,000
Payroll
$
240,000
$
20,000
Utilities
$
8,000
$
667
Recuring Marketing Expense
$
100,000
$
8,333
$
444,000
$
37,000
Revenue Break Even
$
683,077
$
56,923
Actual Revenue
$
1,107,800
$
92,317
Total Fixed
Controls
Keys to Success







Create repeat customers
Generate new customers
Annual sales of $1.1 million at public locations
Uphold the values and traditions
Philanthropic contributor in the community
Host and sponsor community events
Increase profits at each location by 8% annually
Controls







Sell each item at a profit margin of at least 5.1%
Annual income for stand alone restaurants of $2.1 million
Annual income for mall/in line restaurants of $1.1 million
Continue to pay down the lines of credit by $40,000 per
year
Provide at least 3 $1,000 scholarships per year per location
for employees to further education
Employees participation in profit sharing at each location
Locations will be closed on Sundays to allow staff to spend
time with their families and observe Christian Sabbath
Implementation
Meet daily goals
Monthly meetings with managers and
assistant managers
Quarterly ownership and management
business plan reviews
Risks




Negative feedback from customers
Nontraditional franchise locations too
exclusive for general public
Scholarships and donations are given at a rate
that significantly reduce profits
Management does not comply with corporate
values
Risk Mitigation
Change management leadership
Lessen donations and scholarships for eligible
individuals/organizations.
Close non-revenue generating locations
Marketing Research/CRM
 How did you hear about Chick-fil-A?
 How frequently do you/your family eat out in a
month?
 On a scale of 1-10 (1 lowest, 10 highest):




How was your overall experience at Chick-fil-A?
How would you rate the cleanliness of the
restaurant?
How was the service provided at Chick-fil-A?
Do you have any suggestions for improvements
that can be made to Chick-fil-A?
Summary
Chick-fil-A:
Healthy option
Good value
Profitable company
Invest in their people and the
community
References

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

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Crashers Web site: http://www.moneycrashers.com/eating-healthy-for-cheap-at-chick-fil-a/
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