In a sea of limited-service quick service restaurants that specialize in chicken, KFC has been at the top of the heap since time immemorial. But there’s a new sheriff in town. According to a new report, Chick-Fil-A has officially surpassed Yum! Brands cornerstone KFC as the fastest growing fast-casual chicken chain and is gunning for McDonald’s on a quest for overall franchise growth domination.
The report, written and published by investment firm Janney Capital Markets to advise potential investors on McDonald’s future value over the next decade, specifically identifies Chick-Fil-A as a serious and growing competitive threat to the franchise.
“As a privately-held company, Chick-Fil-A doesn’t get a ton of attention from Wall Street. But Chick-fil-A should get more attention from the Street in coming years, in part because it represents a growing competitive threat to other sizable quick-service chains, perhaps most notably McDonald’s,” reads the report. “If Chick-fil-A can add $6.3-$9.0 billion to its systemwide sales over the next ten years, it is entirely possible that this will be similar to – or worst-case, from McDonald’s perspective – greater than the systemwide sales that McDonald’s can add to its domestic business over that same time.”
That’s a serious prediction, but then again Chick-Fil-A has shown some serious growth potential of its own. As the report points out, the chicken franchise grew from $1.5 billion in domestic sales in 2003 to more than $5 billion in 2013. Today, Chick-Fil-A holds 26.3 percent of the market share in what the report labels as the “U.S. limited-service chicken category,” seizing (for the first time ever) an impressive lead over KFC’s 21.9 percent in the same field. What’s more – Chick-Fil-A still has relatively few locations compared to its competitors, meaning that it has a lot more room for physical expansion without overextending itself or risking market saturation.
Chick-Fil-A still has a long way to go ahead of it, in terms of both that physical growth and social goodwill, if it wants to make it all the way to the top of the fast food business. But the chain already has plans to open at least a hundred new locations within the next year, and CEO Dan Cathy has attempted to make headway on the latter point by publicly announcing that he hopes to put his controversial anti-equality political statements behind him and make the brand a more welcoming and inclusive one. If the brand's growth trajectory and less political stance take hold, other fast food franchises will need to step up their game over the next decade if they want to stay ahead of Chick-Fil-A.