Are you wondering how to invest in Chick-fil-A Stock? Chick-fil-A is one of the largest American fast-food chains with chicken sandwiches as its speciality. Their delicious food and excellent customer service make it one of the nation’s favorites.
Chick-Fil-A was named America’s favorite restaurant chain for the sixth straight year by the latest American Customer Satisfaction Index. It scored 84 (out of 100) in a ranking determined by about half a million consumers evaluating it on factors such as order accuracy, food quality, speed of service and mobile app reliability. It scored four points more than No. 2 Chipotle and three points more than the top full-service restaurant, LongHorn Steakhouse, despite being closed on Sundays.
Let’s look at whether investing in Chick-fil-A stock is a good option.
How was Chick-fil-A started?
In 1946, Truett Cathy, a devout Southern Baptist, started Dwarf Grill, a restaurant in Hapeville, Georgia, a suburb of Atlanta. It was later rebranded to Chick-fil-A in 1967 after the founder discovered a method to create a boneless chicken sandwich quickly. The restaurant chain’s name is derived from “chicken fillet,” with the “A” signifying top-quality meat, according to the restaurant.
The company is heavily influenced by the late founder Truett Cathy’s Christian values. All Chick-fil-A restaurants are closed for business on Sundays as a commitment to Sunday Sabbatarianism. It was also to make time for Chick-fil-A Operators and their Restaurant employees to rest, spend time with family and friends, and worship.
Chick-fil-A’s success can be attributed to the company policy of politeness towards guests as well as a simple menu, which is rarely changed. It added drive-thru lanes, dispatched outdoor order-takers with tablets, and expanded both curbside pickup and third-party delivery. Today, the company operates more than 2,605 restaurants, primarily in the United States, and is also present in Canada and the U.K. Chick-fil-A is the third-largest restaurant chain in the U.S. In 2020, Chick-fil-A accounted for total system-wide sales of $13.7 billion in the U.S. from franchised and company-operated restaurants, up from the previous year’s total of $12.2 billion.
How much does it cost to start a Chick-fil-A franchise?
Chick-fil-A calls the people who run its restaurant “operators”. Operators don’t own or receive any equity in their businesses. Chick-fil-A picks the restaurant’s location and then owns the restaurant.
Operators cannot open multiple locations, sell their locations or pass them on to the next generation, limiting franchisees’ potential profits. If you want to buy a franchise with the intention of later selling it, forget about Chick-fil-A.
Chick-fil-A has no minimum net worth requirement, and all you have to do is pay a franchise fee of $10K, which is the lowest franchise fee of any chain and is the lowest total investment. Compare this with McDonald’s, which costs above $2 million to open.
Chick-fil-A charges a low franchise fee because it covers nearly the entire cost of opening a new restaurant, which is anywhere between $343k to $2m. However, the catch is that it charges a high royalty fee of 15% of sales + 50% of any profit.
The low price tag to start a franchise makes Chick-fil-A accessible, while the low acceptance rates make it successful. Chick-fil-A requires the franchise owner to be free of any other active business ventures and operate the restaurant on a full-time, hands-on basis. It cannot be a passive income stream, and you would need to give the franchise full attention.
Each year, Chick-fil-A accepts about 75 to 80 new franchises each year, despite receiving around 20,000 applications annually. Less than .5% of applications are approved.
How much does a Chick-fil-A franchise make?
The average Chick-fil-A makes about $4.4 million in sales per year. This is $1.7 million more than Whataburger. It makes more per restaurant than McDonald’s, Subway and Starbucks combined, all while being closed every Sunday.
How to buy Chick-fil-A’s stock?
With such incredible sales figures, buying Chick-fil-A stock would definitely be profitable. However, you can’t buy Chick-fil-A stock since Chick-fil-A is a privately held company.
Private vs Public Companies: People usually think if a company is private, the company would be small and unknown. However, big-name companies such as Subway and IKEA are privately held. Let’s look at what it means to be privately and publicly owned.
Privately held companies: When a company is privately held, it means that the company is owned by its founders, management, or a group of private investors. The main advantage of private companies is that the company management is not obligated to answer to shareholders and doesn’t have to disclose financial information to anyone. The main disadvantage of private companies is that private companies cannot rely on funding from the public capital markets and must rely on private financing. Privately held companies can borrow money from banks or venture capitalists or rely on profits to fund growth, but they cannot tap into the public capital markets.
Publicly held companies: On the other hand, a public company means that the company has sold all or a portion of itself to the public through an initial public offering (IPO), which means shareholders can have a part of its assets and profits. The main advantage public companies have is their ability to raise funding by selling stock (equity) or bonds (debt) for expansion or other projects.
Chick-fil-A stock price
Since Chick-fil-A is not a public company, it is not listed on the stock exchange, and it’s not possible to estimate Chick-fil-A’s stock price.
Chick-fil-A stock symbol
We don’t have a Chick-fil-A stock ticker because Chick-fil-A is a private company and is not listed on the stock exchange.
If you want to invest in Chick-fil-A stock, you would need to wait until Chick-fil-A issues an IPO and goes public.
Will Chick-fil-A ever go public?
Going public seems out of the question for Chick-fil-A, since its founder, Before he died in 2014, the founder Truett Cathy, made his children sign a contract before he died in 2014 promising to keep Chick-fil-A a privately held company, although he did say that they could sell it. Chick-fil-A would do very well and would increase its profitability if it goes public, but it is against the founder’s wishes, and his family is following his wishes. Changing the way the company is run may bring in additional profits, but then it would change the fabric of the company, and Chick-fil-A would no longer be unique.
Alternatives to Investing in Chick-fil-A stock
The top competitors for Chick-fil-A include McDonald’s, Yum! Brands, Restaurant Brands International, Wendy’s, Starbucks, Domino’s Pizza, Dunkin Donuts, and Chipotle.
McDonald’s (NYSE: MCD), the king of fast food with its golden arches, is one of the most recognizable and loved brands. The fast-food chain has more than 39,000 restaurants in over 100 countries. 93% of the restaurants are franchised.
It has had universal appeal, although it has evolved over the years. It had a terrible menu and reputation in the ’90s, and it has reinvented itself and has run a successful business globally.
McDonald’s reported $19.2 billion in revenue for 2020 and employed roughly 200,000 people at the end of 2020. Revenue declined in 2020 partially because of the pandemic and the company’s refranchising effort.
The goal of the refranchising effort is to unload most of its company-owned stores. Due to its McDonald’s global presence, it competes against other national chains and regional and local restaurants.
We should see McDonald’s recover from its sales decline of nearly 8% in 2020 as the situation and restrictions caused due to the pandemic get rectified. In 2021, McDonald’s is expected to see normalized earnings.
2. Yum! Brands
Yum! Brands, Inc. (NYSE: YUM) is an American fast-food corporation that operates KFC, Pizza Hut, Taco Bell, The Habit Burger Grill, and WingStreet worldwide. In China, these brands are operated by a separate company, Yum! China. YUM has over 50,000 restaurants in more than 150 countries, and independent franchisees operate 98% of their restaurants.
The company has relied on drive-thru service for its stores and has managed to weather the storms during the pandemic.
According to its 2020 annual report, the KFC franchise was the most significant contributor to sales with $26,289 million in 2020, followed by Pizza Hut with $11,955 million and Taco Bell with $11,745 million in annual sales. The Habit Burger Grill Division had annual sales of $370 million.
However, Pizza Hut sees a significant decline in sales and stores, signaling that Yum! Brands is under pressure.
Looking at shareholder returns for the past five years, Yum Brands outperforms Restaurant Brands International but lags behind McDonald’s. Yum! Brands is a good company with a strong balance sheet. As the pandemic restrictions ease, we can expect sales to increase.
3. Restaurant Brands International
Restaurant Brands International (NYSE: QSR) is an attractive alternative to buying Chick-fil-A stock. It is a holding company formed in 2014 by the merger between the American fast-food chain Burger King and the Canadian coffee shop and restaurant chain Tim Hortons.
In 2017, the purchase of American fast-food chain Popeyes Louisiana Kitchen made it the fifth-largest operator of fast-food restaurants in the world.
Restaurant Brands International is based in Toronto, Canada, and both Burger King and Popeyes are headquartered in Miami for tax purposes. These companies have stood the test of time and are hugely popular.
Burger King has just under 18,700 restaurants, while Tim Hortons has 4900 coffeehouses and 3400 chicken chains, and this brings Restaurant Brands International’s total to 27000 worldwide.
This has narrowed the lead between McDonald’s and Restaurant Brands International.
The United States is an important market for Burger King. The pandemic restrictions have severely hit the fast-food industry, and Burger King has lost some of its retail sales in the past year.
Additionally, Burger King has a poor value proposition when it comes to its restaurant and menus, which it is looking to address.
Plans to remodel restaurants and install digital outdoor menu boards at its drive-through locations are underway.
The decline in customer demand is also partly because of the poor value proposition of the company, which it is looking to turn around rapidly. As a global relaxation of restrictions on restaurants happens, the company will recoup its lost sales.
The challenges of Tim Horton are primarily because of the lockdowns in Canada, which accounts for nearly 80% of its restaurant footprint.
The coffee chain had faced some sluggishness in sales before the pandemic and had taken some initiatives to strengthen its business and modernize its restaurants.
However, the branded coffee industry underwent a 22% contraction during 2020, and Tim Hortons’ retail sales in Canada declined by 17.5%. As vaccinations increase, Tim Horton’s business will rebound.
Popeyes Louisiana Kitchen had a solid performance in FY2020. The shortfall in sales in the fourth quarter of 2020 was because of the brand’s substantial growth since the launch of its iconic chicken sandwich.
New store launches, menu innovation, delivery orders, and the loyalty program will contribute to the development of the business in the coming years.
Shareholder returns of Chick-fil-A’s competitors
McDonald’s has the highest shareholder return at 53.78%. Yum! Brands has a shareholder return of 43.18%, and Restaurant Brands has a return of 31.83%.
Any of these competitor stocks of Chick-fil-A stock will be a good investment, and you can buy these stocks online.
Investing in Chick-fil-A’s competitor stocks
To make sure that you don’t lose money investing, you need to do your due diligence before you invest in Chick-fil-A competitor stocks. Here are the steps to follow.
1. Understand how the stock market works
If you want to invest in Chick-fil-A’s competitor stocks, you should understand how the stock market works. You should not panic when stocks go down or buy in a frenzy when stocks trade high.
2. Research Chick-fil-A’s competitor stocks
As an investor, it is a good idea to buy stocks in companies that you’re already familiar with and know well. If you are already using Chick-fil-A’s competitor products and trust the brand, you can buy Chick-fil-A’s competitor shares. Before you buy Chick-fil-A’s competitor shares, you should take steps to research the stock and its fundamentals.
You should look at where the company gets its revenue from, how its growth looks like, and what its plans are. Most of this information will be available in the company’s annual report in the annual letter to shareholders.
This letter will share the essential updates in the business. The company’s SEC filings, conference call transcripts, quarterly earnings updates, and recent news about the company are good sources of information to analyze the company.
The more analysis you do and the more information you have, you will make more intelligent decisions about investing in Chick-fil-A’s competitor stock.
3. Examine broader market conditions
You should also look at broader market conditions before you buy Chick-fil-A’s competitor stock. If it is a bull market, the price will go up, and it would make sense to buy the stock immediately. If it is a bear market, the price will go down, and it might be better to wait to buy at a lower price.
How to buy Chick-fil-A’s competitor stock?
Buying shares online is a simple process, even for new investors. If you’re thinking of buying Chick-fil-A’s competitor stocks, you must decide whether you want to buy the stocks for the short term or the long term. If you’re going to invest in the short term, you should perform a technical analysis of the stocks.
If you want to hold Chick-fil-A’s competitor stock for the longer term, you should perform a fundamental analysis of the company. You should also keep yourself updated with news and with developments of Chick-fil-A’s competitors. Here are the steps you need to follow.
1. Select a broker
To buy Chick-fil-A’s competitor stocks online, you will need to use an online brokerage platform. Our broker reviews can help you select from the best brokers for trading Chick-fil-A’s competitor stocks. In general, you should look at the following parameters before selecting a stockbroker.
Stocks available for trading: The first criteria for selecting the broker is that you should be able to use the broker to trade Chick-fil-A’s competitor stock.
Commissions charged: Some brokers charge a higher commission, so if you want to maximize your profits, you would want to choose a broker with lower commissions.
Account fees: You should also watch out for other fees such as annual fees, inactivity fees, trading platform subscription fees, and fees for research or data. Brokers will also charge a fee for transferring cash or investments or for closing your account. You can avoid many of the fees by choosing a broker that doesn’t charge fees or by opting out of services that cost extra.
Payment methods: Some brokers are more flexible in their payment methods than others. If you want flexibility in payments, this should be one of your criteria.
Track record: You should choose a broker based on their track record. The broker that you choose should have a track record of reliability, and they should have been around for a while and have good reviews online.
Our broker reviews can help you select from the best brokers for stock trading. Here are the best stock brokers of 2021.
2. Open a brokerage account
This is the account in which your shares will be stored. Opening a brokerage account has become very simple. The steps vary from platform to platform, but you should be good to create your account once you provide your details and some form of identification. Again, the time taken to open an account varies between platforms.
3. Fund your brokerage account
The next step is to log in to your account and deposit money in your brokerage account. Most brokers accept bank and debit card transfers, and some accept transfers through other methods such as PayPal.
4. Decide how many shares to buy
If you’re a new investor, you could start small with a small amount and gradually increase your investment as you get more experienced in the stock market. You can also think about investing in fractional shares, which certain brokers offer. Buying a fractional share means you are purchasing a portion of Chick-fil-A’s competitor stock instead of the whole stock. If Chick-fil-A’s competitor stocks are too pricey, you can opt to buy a fractional share in Chick-fil-A’s competitors.
5. Choose your stock order type
All you have to do now is search for the Chick-fil-A’s competitor stock’s ticker, specify the number of shares, choose your order type and click on buy. Once you place your order for Chick-fil-A’s competitor shares, your broker will execute the order, and Chick-fil-A’s competitor shares will be listed in your account.
There are different order types you can place. Let’s look at the most commonly used ones, the market order and the limit order.
The market order instructs your broker to place an order at the prevailing market price for Chick-fil-A’s competitor. There are no price parameter restrictions on this order. You should use this order type for stocks that don’t experience wide price swings, generally larger company stocks. Stock prices can vary between seconds.
If a small price fluctuation does not matter to you, you should place a market order. If you place a market order trade “after hours”, when the markets have closed for the day, your trade will get executed the next day at the prevailing market price.
The limit order instructs your broker to place an order when the Chick-fil-A’s competitor stock reaches a specific price point. It gives you control over the price at which your trade is executed.
For example, if Chick-fil-A’s competitor stock is trading at $200, but you value Chick-fil-A’s competitor at $180, the limit order tells your broker to wait till Chick-fil-A’s competitor stock price reaches $180. Limit orders are suitable for smaller company stocks that experience wide price swings.
6. Review your position in Chick-fil-A’s competitor stocks
Once you have purchased Chick-fil-A’s competitor stock, you should monitor Chick-fil-A’s competitor stock periodically according to your investment strategy. You should follow the company’s quarterly and annual results and the news and developments in Chick-fil-A’s competitor.
Investing always comes with certain risks, and Chick-fil-A’s competitor stocks are no different. You can reduce risks by diversifying your portfolio and by avoiding scams by choosing a reliable broker.
To recap, you can invest in Chick-fil-A’s competitor stocks by selecting a broker, opening a brokerage account, depositing money in your brokerage account, placing an order, and reviewing your position periodically.