Chick-fil-A keeps it in the family

mcornatzer@newsobserver.com June 24, 2012 

  • How it works There are 225 licensee Chick-fil-A restaurants, usually on college campuses, hospitals, airports and corporate office parks. These are run by food service vendors such as Sodexo and ARAMARK. They have a limited menu and service but are still closed on Sundays. Some are not open to the general public. There are 1,387 locations run by franchise operators, selected by corporate, who in essence rent the restaurant from the company to run their own business. The franchise deal is the same as it was when founder S. Truett Cathy started franchising the restaurants: operators pay a $5,000 franchise fee, plus 15 percent of gross sales and 50 percent of net profits each month. The average operator’s yearly income exceeds $200,000, according to the company.

When Amy, Ashlee and Michael Lawson were young, they hung around the mall at Christmas like most kids. But while others were sitting on Santa’s lap, they were working at dad’s Chick-fil-A restaurant.

“As soon as we could reach the counter, we were filling drink orders,” remembers Ashlee Lawson, the middle sibling, now 34 . “I would have syrup in my hair because I was short.”

“We thought it was the coolest thing,” said Amy Howard, the oldest at 37.

The three went off to college – each to Appalachian State University – and embarked on completely different careers. Michael went into computer programming, working for IBM. Amy worked in sales for UNC-TV and Fox 50 and then as an independent consultant working with furniture manufacturers and designers in Atlanta. Ashlee ended up volunteering with the Christian ministry Young Life for three years, leading mountaineering groups into British Columbia.

Now they’re back home, each an owner-operator of his or her own Chick-fil-A. The draw?

“I always knew how impressive it was as a company ... but also I watched my younger brother and sister decide to do it and really enjoy it,” said Amy.

Beyond the lure of family, the chain is attractive to entrepreneurs who prefer less risk and have less upfront cash to invest.

Unlike most companies that franchise, Chick-fil-A pays for the real estate and the building – a huge chunk of the cost of most franchisees. Owner-operators like the Lawsons basically lease the restaurant, paying the company a $5,000 franchise fee and a share of profits and sales.

In return, the average operator’s yearly income exceeds $200,000, said Jerry Johnston, head of Chick-fil-A’s public relations.

That’s a lot less than a McDonald’s franchisee typically brings home, but then opening up a McDonald’s can cost more than a million dollars. In a McDonald’s, the franchisee is investing in the real estate, erecting the building, buying all the equipment, said Alisa Harrison, a spokeswoman for the International Franchise Association. “You are the owner of everything A to Z in the store,” she said.

Chick-fil-A’s deal with its operators hasn’t changed since Mike Lawson signed on 37 years ago with company founder S. Truett Cathy.

“When I finished college, I went to work with J.C. Penney because I wanted to learn the retail business,” he said. “My goal was to open a men’s clothing store. ... The problem is that to get into any business takes a lot of money. Truett Cathy offered lots of people an opportunity to get into business for themselves.

“All he wanted is someone who’s wired to succeed.”

The entire Cathy family helped him open his first Chick-fil-A at Durham’s old South Square Mall.

“Truett was out there sampling chicken,” recalled Lawson, who now owns the Chick-fil-A at Brier Creek.

A family with perks

Michael Lawson, 33, has always been an entrepreneur, says his father.

As a teenager he started a lawn care business after realizing he could make more doing that than working for his dad. As a college student, he came home on weekends and power washed all the Durham Chick-fil-As.

So it wasn’t all that surprising when he put aside his computer training and left his job at IBM after just a year to take over the Chick-fil-A at Cary Towne Center. He then jumped at the chance to take the chain into Fuquay-Varina.

“It wasn’t my personality,” he says of IBM. “I love the business. I love getting out there at lunchtime, spending time with guests. I probably wouldn’t appreciate it if I hadn’t done something else.”

Ashlee was next to return. She had funded her volunteer work with stints at different Chick-fil-As. When she decided she wanted to have her own restaurant, she came home and worked for her brother – a job that included getting in the chain’s famous Holstein costume. It took her 2 1/2 years to get her own store. Now she’s operator of the newest Chick-fil-A in the Triangle, the two-story store at Cameron Village.

Amy was the last to succumb. “I had to join so I could break the code of all the acronyms,” she said, with a laugh. About the time she decided to give it a try, Michael heard that the downtown Raleigh store was available. She marks her third year there in October and is planning a remodel in August.

It’s not unusual for a franchisee to keep the business in the family. Husband-and-wife teams that own multiple restaurants in a market abound. And like any family business, children are often groomed to take over the operations. But while there’s no hard data on it, it’s safe to say that the Lawsons are a bit unusual even within Chick-fil-A.

“There are a few other families, but they’re spread all over,” said Amy. “We’re fortunate to all be in the same market.”

“But we don’t spend that much time in each other’s stores,” Michael said.

“We don’t compare our numbers against each other,” said Ashlee.

The three do turn to each other and their father for advice and support, talking multiple times during the day. And their mother, a third-grade teacher in Durham for 20 years, has long helped out with marketing and events.

Being part of Chick-fil-A has its perks, they admit. Doodles, an early mascot before the cows, came to their birthday parties when they were young. And, of course, they can eat chicken sandwiches every day if they want.

But having a family member in the business doesn’t give you an “in” with the corporate office in Atlanta, the Lawsons say.

“We were considered outside candidates,” Ashlee said. “One percent of the people who put in an application actually get selected to be an operator. As the economy has changed, more and more people have become interested in being Chick-fil-A operators. (But) we only open a certain number of stores each year so trying to get your foot in the door is really difficult.”

Consistent growth

Chick-fil-A has about 1,600 restaurants in 39 states and Washington, D.C. That’s a far cry from, say, McDonalds, which has more than 33,000 in 119 countries.

But while some fast-food chains have seen sales slump over the past few years as the young males who made up their customer base suffered from high unemployment, Chick-fil-A continued to see sales growth. As a private company it does not release profits, but last year it had $4 billion in sales.

“I’ve been through three recessions, mild ones, nothing like what we’ve just been through,” said Mike Lawson. “But Chick-fil-A has always seemed to fare better than others – not that we aren’t affected. And then for some reason, we lead the way out of a recession. We see sales increases before the rest of the market. That’s what we’re seeing now.”

His son credits the business model. “You don’t see a franchise owner at Chick-fil-A that has five or 10 stores. I’m able to be in my store every day.”

Amy picks up the conversation: “It’s not ‘I’m the owner of this and I’m in Greece.’ We’re there in our restaurant.”

They all agree that the chain’s focus on family and community is important. Various stores in the area host storytelling hours for children, bingo nights and craft nights.

The business from families didn’t melt away during the recession, Amy said.

“With the shift in the economy, some of the people who were going to sit-down restaurants with their families came into our restaurants for that sit-down experience without the added expense of tipping,” she said. “But they get the experience of a family environment.”

Cornatzer: 919-829-4755.

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