Chick-fil-A takes a bold move with its licensed locations

Chick-fil-A is shifting its strategy for nontraditional locations at college campuses. | Photo:

Chick-fil-A earlier this week announced that it would shift ownership of non-traditional locations such as college campuses toward its more traditional owner-operator model. 

“Over the next several years,” the company said in a statement on its website, “we will work towards converting many of our licensed locations to owner-operator led restaurants to extend our proven model of local ownership and community engagement.” 

For Chick-fil-A, the strategy makes sense. That owner-operator model has worked well for the chain over several decades, taking it from a mostly mall-based concept into the third-largest restaurant brand in the U.S., one that operates high-volume, drive-thru locations. 

Maybe more importantly, the locations will interact with consumers in the same way as its traditional restaurants. They’ll be able to use the company’s gift cards, its mobile app and its loyalty program. Employees at those locations will be able to qualify for Chick-fil-A’s “Remarkable Futures Scholarships.” 

“We are excited about this next chapter, and believe our local ownership business model will serve and care for guests and extend the great food and hospitality of Chick-fil-A in more places, for many years to come,” the company said. 

Chick-fil-A’s move will not affect the chain’s airport locations, which are typically governed by large contracts that are difficult to move. The company will also evaluate sites individually with campus administrators while working with licensees.

Many restaurant chains will license their brands and menus for non-traditional locations. Licensing is like franchising lite. The strategy can more easily expand a brand into more places, giving it access to the captive customer bases at places such as college campuses. 

But such locations do not often come with some of the technology and other amenities that have become commonplace in recent years. That can create a gap in service between the licensed locations and more traditional restaurants. Executives are eager to narrow that gap. 

Starbucks, for instance, operates about 6,800 licensed locations throughout the U.S., in places as diverse as Target stores or college campuses or stadiums. Yet those locations were slower to adopt the chain’s popular mobile app or loyalty program, something Starbucks has remedied only in the past two years.

The coffee shop giant believes there is growth to be had in the licensed business and recently held a summit at its Seattle headquarters with its North America licensees as it takes a hard look at its strategy for the business. 

Starbucks wants those locations to operate with the same standard of service that the chain is bringing to its traditional locations. So the company has restructured the way it supports that business. 

“What we’ve realized is there’s a real opportunity for continued growth in our licensed business,” CEO Brian Niccol said in October. “We’ve got some terrific partners, some that are small scale and others that are big scale, and we’re focused on making sure that we build the right kind of units and they get operated up to the Green Apron service standard going forward.”

For chains like Starbucks and Chick-fil-A, shifting strategies can bridge the service and technology gap without abandoning the locations altogether. Some brands have stepped away from certain types of non-traditional locations for that very reason. 

McDonald’s in recent years has shuttered its Walmart locations in part because it wants locations with drive-thrus. Dunkin’ in the past has walked away from some of its convenience-store locations so it more of its locations could operate with a full menu.

Chick-fil-A has built its business in part on the back of service. Employees are typically polite and even in the chain’s double drive-thrus they take orders in person. A more traditional franchising model can better enable that service, effectively meaning that customers will get the same level of service on campus as they get off.

“We remain committed to growing on college campuses and other non-traditional locations to bring the Chick-fil-A brand to our guests,” the company said. 

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Restaurant Business Editor-in-Chief Jonathan Maze is a longtime industry journalist who writes about restaurant finance, mergers and acquisitions and the economy, with a particular focus on quick-service restaurants.

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