Chick-fil-A, Inc. reported record revenue and earnings in 2020, despite the Covid-19 pandemic. The Atlanta-based quick-serve operator, ranked by Franchise Times Magazine as the 9th largest franchise company in the United States, reported record free-standing franchised restaurant sales as it added drive-thru lanes, dispatched outdoor order-takers with tablets, and expanded both curbside pickup and third-party delivery.
Financial statement and store operating highlights for 2020 from Chick-fil-A’s annual Franchise Disclosure Document filed by the company on April 8 included:
Revenue was $4.3 billion in 2020 compared to $3.8 billion in 2019, an increase of 13%. Base operating and business service fees increased to $1.9 billion versus $1.7 billion in 2019. Rental income from franchisees reached $1 billion in 2020 versus $897 million in 2019.
The company reported comprehensive earnings of $715.9 million in 2020 versus $647.2 million in 2019, an increase of 10.6%;
As of December 31, 2020, the Company operated 2,598 franchised and company-operated Chick-fil-A restaurants compared to 2,493 locations in 2019, an increase of 104 locations;
Total system-wide sales generated from franchised and company-operated restaurants were $13.7 billion in 2020 compared to $12.2 billion in 2019, an increase of 12.7%.
Of the approximately 1,735 domestic franchised restaurants not located in malls that were open for at least one full calendar year, the average annual sales volume in 2020 was $7,096,393. That compares to 1,633 domestic franchised restaurants not located in malls that were open for at least one full calendar year in 2019 with a per store average of $6,565,233, an increase of 8.0%.
Of the approximately 241 domestic franchised restaurants located in malls that were open for at least one full calendar year in 2020, the average annual sales volume in 2020 was $2,082,935. That compares to 230 mall-based stores open for a full-year in 2019 and a per store average of $2,579,472, a decrease of 19.2%.
Other financial statement observations from reviewing the Franchise Disclosure Document:
Total advertising expense for the Chick-fil-A system was approximately $130.9 million in 2020, compared to $148.9 million in 2019.
The company purchased $934.7 billion in property and equipment in 2020, compared to $1.1 billion in 2019.
Due to the impact of the Covid 19 pandemic and various state and municipal capacity restrictions and shutdowns, the company provided franchisees with incentives totaling $162.1 million in 2020, versus $53.9 million in 2019. According to the company’s financial statements, franchisee incentives include amounts awarded to certain qualifying franchisees through varying relief programs established in response to the negative impacts of COVID-19 on restaurant operations.
In March 2020, the company drew down $400 million on its outstanding loan facility with Wells Fargo Bank N.A. and a syndicate of lenders in response to the COVID-19 outbreak. The Company repaid the amount in full in May 2020.
Chick-fil-A charges franchisees an operating service fee equal to 15% of restaurant sales, less amounts charged to franchisees for equipment rentals and business services fees. The company also receives from franchisees an additional operating service fee equal to 50% of the net profit of franchised restaurants, as defined by he franchise agreement. The base operating service fee and additional operating service fees are charged to franchisees monthly and are recognized as revenue in the period earned.
To review of copy of Chick-fil-A’s 2021 Franchise Disclosure Document click here.