Chick-fil-A leverages location technology to sustain fast growth

0

The accolades seem never ending for Chick-fil-A amid its rise in the rough-and-tumble fast-food retail segment.

The Atlanta-based chain ranks highest in average sales per restaurant when compared with some legendary competitors: With 2,000 restaurants across the United States, Chick-fil-A is dwarfed by rivals such as McDonald’s (more than 14,000 restaurants in North America in 2015), Subway (more than 27,000 locations) and Starbucks (12,000).

What is remarkable to many is that the privately held and family-owned company is able to flex its muscles and prosper without even opening for business on Sundays because of religious convictions.

Indicative of its success, Chick-fil-A leaves little to chance when promoting its signature menus. The company takes a similar approach when it comes to market growth and locating stores, leaving little to chance by testing the upper limits in the use of geographic location technology and predictive analytics.

‘Care and confidence’

The chain, which opened its first restaurant in 1967, relishes its position in the market. That leads to a greater focus on and intensity in how it locates stores in communities around the country.

“It’s nice to be wanted in the marketplace,” says Rob Payne, Chick-fil-A’s director of strategy and analytics. “We operate under the family motto of climbing with care and confidence. We only open a limited number of stores per year. That’s based on budget and that’s based on resources.”

Chick-fil-A can pinpoint a potential store site, create a trade area surrounding the site and immediately aggregate data within that market area to learn more about potential customers.

Four years ago, Chick-fil-A implemented a mobile-based geographic information system platform from spatial analytics company Esri called ArcGIS, overlaying ArcGIS over its own infrastructure as a means for gaining greater visibility into market data for better understanding patterns and trends involving its stores and market territories.

Payne says the objective was to have geographic technology fully deployed throughout the chain for use by various departments such as operations, real estate, design and construction.

He says the technology gives Chick-fil-A an opportunity as a chain to be more data-centric in how it plans and operates. In many respects, he says, it is helping to drive technology adoption throughout Chick-fil-A, allowing users to visualize data that is generated and analyze that information in the field for better decision making.

In location planning, for instance, a Chick-fil-A user can pinpoint a potential store site, create a trade area surrounding the site and immediately aggregate data within that market area to learn more about potential customers.

While Chick-fil-A has traditionally been concentrated in the southeast United States, its growth strategy in recent years has encompassed a wide array of market possibilities, including urban locations, suburban markets and college towns. The company recently opened its first two stores in New York City, including one near Rockefeller Center, and in February it opened or planned new stores in as locales as diverse as McKinney, Texas, Las Cruces, N.M., Salisbury, Md., Puyallup, Wash., and Englewood, Colo.

“Each market is different and each market is unique,” Payne says. “Each market has different kinds of drivers. We try to be flexible with the marketplace. What the marketplace kind of dictates, we try to build that way.”

Real-time data

Fundamentally, GIS is a mapping technology that digitizes and processes segmented geospatial data. In addition to use in retail for location planning, the technology is widely used in sectors such as government, transportation, natural resources, the military/law enforcement, utilities and communication.

In getting the system entrenched throughout Chick-fil-A, the chain created a new division headed by Chan Lee, enterprise GIS manager. For Lee, the goal has been to make the information integral to the company’s daily decision making as it grows.

Lee says while Chick-fil-A was experienced with market planning in using its own proprietary location-analysis system, it was a closed, paper-based system that inhibited users from analyzing new market data as quickly as it needed to be competitive.

In addition, much of the data was in divergent formats of demographic and psychographic data that inhibited users in making analyses that were timely and meaningful.

“If you are a retailer, everyone understands the importance of place and the importance of location when you talk about real estate,” Lee says. “You talk about where your customers are, you talk about where you put your stores. That is geospatial. That is GIS.”

He says that ArcGIS’s use of mobile applications in real-time to transmit data means that Chick-fil-A planners no longer have to rely on printing maps, creating PDF files or relying on email for communication.

“You can put people on a single application where they can see all the data in the field. That’s how you grow traction,” Lee says. “The application of GIS is really just limited to how you apply it to the business.”

A key benefit of the technology is that users can compare locations on maps to analyze how those locations interrelate, says Esri’s Gary Sankary, who heads the company’s retail division for ArcGIS working with Chick-fil-A.

“If you have a real estate team that is doing a market visit, they can visit a dozen sites in an afternoon. They can take pictures of the sites and intersections and all of that information is instantly available to the enterprise,” Sankary says. “So when they go back to the retail selection committee, they can pull all of that up and see everything they need to know about a site and make a decision.”

Sankary says the bottom line to market planning is for decision makers to be able to determine whether locations they are considering have the best chance to succeed.

“The most important thing for a retailer is, the better they know who their target customer is, the more successful they are going to be to leverage our tool to find those customers wherever they may be,” he says.

Commitment to community

Data that outlines how Chick-fil-A stores relate to one another in the marketplace is central to the Chick-fil-A way. That is especially important for a chain that seeks to maintain its founding standards of operating within a family-oriented posture, such as keeping stores closed in Sundays. In addition, Chick-fil-A franchise owners typically are allowed to own only one restaurant.

Payne says Chick-fil-A’s approach also demonstrates the chain’s commitment to the communities in which it operates. That approach means strategically placing stores in markets where Chick-fil-A store owners are not competing with one another for business.

“We’re entrusted with kind of defining the new Chick-fil-A where we are building out next locations,” Payne says.

“GIS helps us to determine what the overall sales impact would be if we added a store closer to another location. It helps us identify where there are voids within a market without pulling strongly from another location.”

M.V. Greene is an independent writer and editor based in Owings Mills, Md., who covers business, technology
and retail.

Share.

Comments are closed.