Chick-Fil-A Expands During Recession

Published on June 11, 2009 | Comments: 0
Fast food chicken retailer Chick-Fil-A plans to open 50 new stores in Southern California during the next five years. According to Reuters, Chick-Fil-A will open most of the new stores in the metro Los Angeles and San Diego areas. Most of Chick-Fil-A's current 35 California locations are in suburbs or small cities. The retailer is also testing its limited edition Spicy Chicken Sandwich in California as part of the expansion. In April 2009, California had the fifth-highest unemployment rate in the U.S. at 11%. The most recently reported overall U.S. unemployment figure is 9.4% for May 2009. It is not currently known how many of 64 new stores Chick-Fil-A plans to open this year despite the ongoing economic recession will be in California. As reported by the Denver Post, Chick-Fil-A opened a restaurant in the metro-Denver area in April and plans five more new Colorado restaurants this year. In April 2009, Colorado reported an unemployment rate of 7.4%, significantly better than May's national average. Chick-Fil-A, which operates more than 1,400 restaurants in the U.S. and reported more than a 12% increase in systemwide sales and an almost 4.6% increase in same-store sales during fiscal 2008, is not the only fast food and quick-service restaurant operator expanding its store footprint this year. Earlier this month, rival fast food chicken retailer Church’s Chicken launched a modular restaurant prototype designed to be built and opened within three days for 20-30% lower cost than a traditional restaurant. Church’s plans to use the modular units to ease the opening of franchised restaurants as it plans expansion from 1,200 to 2,500 restaurants within the next three years. While fast food chicken retailer Popeye’s opened a net of 20 new stores systemwide during fiscal 2008, it expects to close a net of 30-70 stores systemwide during fiscal 2009. Popeyes experienced a decrease in corporate-owned store sales during the fiscal year, but an increase in franchised store sales. Outside the fast food chicken niche, coffee retailer Dunkin’ Donuts is aggressively opening franchise locations in new markets this year and most recently announced plans to open up to 21 new franchised restaurants in the Chattanooga, TN market by 2010. Quick-service restaurant operator Red Robin Gourmet Burgers plans 15-16 new locations this year. According to the 2009 Restaurant Industry Forecast from the National Restaurant Association, the QSR (quick service restaurant) segment will outperform the full-service segment in the coming year. The report predicts the QSR segment will see a 4% sales gain compared to 2008, while full-service restaurants will only see a 1% sales gain.

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