The Chick-Fil-A Effect: What Happens When A Small Town Snags This Big Name
Chick-fil-A may work in mysterious ways when it comes to selecting sites, but the impact it has on the communities it nabs is clear.
"Tickled," is how Anna’s director of economic development Joey Grisham described the reaction residents had when they found out an outlet of the Atlanta-based chain was coming to their town. City staffers were tickled, too, Grisham said.
That's because Chick-fil-A puts a small town on the map.
The positive impact of chains like Trader Joe's and Whole Foods on nearby home values and real estate returns on investment has been well-documented. But for small towns, it's Chick-fil-A that brings in diners, development and dollars.
“For smaller towns, like Anna, it’s a big deal,” Grisham said. “It’s a standard by which a lot of small towns now look to as like, ‘Hey, we’ve arrived.’” Show Full Story
The intangible benefit of elevating a small town’s profile within Dallas-Fort Worth’s competitive retail market can’t be understated. And bringing in a Chick-fil-A has dollars and cents implications for city coffers, too. In the months following the Anna location’s opening in April 2020, reports from the state comptroller’s office show sales tax revenue increased by between 30% and 40% year-over-year.
Not all of that can be tied to Chick-fil-A — Whataburger and Starbucks opened around the same time — though it was certainly a big contributor, Grisham said.
“It did really provide a huge boost for Anna just from an economic standpoint,” he said.
Anna is not alone in that view. Lexington, North Carolina, City Manager Alan Carson told the Lexington Dispatch that scoring a Chick-fil-A in his city of fewer than 20,000 was "a stamp of approval" and a signal for other businesses to move in. That was echoed last month by Glen Carbon, Illinois, Mayor Bob Marcus, who touted to Riverbender.com the "big benefit for the community" of a franchise in his village of just over 12,000 people. Allen Barnes, Stephensville, Texas' city manager, told Beneath the Surface News that the chain's arrival heralded the beginning of "a new era."
Adding a Chick-fil-A to a small town’s burgeoning restaurant lineup is a huge win, but it’s also outside of any particular staffer’s control. The company targets emerging markets, and then opens stores within those areas to potential franchisees, or, in Chick-fil-A terms, “operators.” Texas is identified as one of Chick-fil-A’s most rapidly growing markets over the next 12-24 months, according to its website.
"Chick-fil-A is constantly evaluating potential new locations for expansion, including towns in North Texas," the company told Bisnow in an email. "Those communities represent a tremendous opportunity for us to serve our customers great food with exceptional care."
Before the opening of the first Prosper location in August 2018, Chick-fil-A was among Starbucks and a grocery store as the top three wish-list items for residents, Town Manager Harlan Jefferson said. Resident satisfaction is key to any growing community’s success, Jefferson said, which meant the town had a vested interest in delivering on those desires.
“As long as we didn’t have [Chick-fil-A], there was always going to be something missing,” he said. “Our residents were going to be unhappy to a certain point.”
Prosper now has two Chick-fil-A locations, and although the town was not involved in recruiting the business, Jefferson said it did intervene to manage its high volume of traffic.
“They were open six to 12 months, and we realized we didn’t plan well enough because [cars] were starting to back up — it just became so popular,” he said.
The city of Anna has reaped the benefits of Chick-fil-A despite being totally uninvolved in its inception. The chain not only attracts out-of-towners — some of whom may stay for an extra hour or two and spend money elsewhere — but also legitimizes the market for other businesses toying with the idea of setting up shop.
“It kind of spurs other concepts,” Grisham said. “If Chick-fil-A is doing well, another retailer might say, ‘OK, it makes sense for us to go ahead and move up Anna’ [on a list of potential locations].”
Mum's the word when it comes to Chick-fil-A’s real estate strategy. The company declined to speak on the matter for this story. But according to Andy Anderson, principal of Addison-based Restaurant Properties Group, the company taps local brokers to covertly sniff out new locations under the generic guise of a large chicken franchise looking for space.
“They won’t tell you it’s Chick-fil-A right off the bat so they don’t get inundated with every site in the world — they want to pick and choose,” Anderson said.
The competition among brokers to snag the deal is extremely competitive, Anderson said.
“Over the years I have presented several deals to Chick-fil-A and never gotten an answer back,” he said. “Everybody that does a development or has a piece of land that they’re trying to develop or split off pad sides — everybody wants a Chick-fil-A or a Starbucks. Those are considered home runs.”
Demographic models that include population growth projections and traffic patterns help determine upcoming locations, Anderson said, but successful chains like Chick-fil-A also aren’t afraid to take a chance on a small town.
“Chick-fil-A is probably on par with Starbucks as far as picking locations that are sometimes a little further out than other restaurateurs are willing to risk,” he said. “They can afford to run the risk of going into those tertiary markets and waiting for the volume to be in place, because it’s not always going to be in place right off the bat.”
This wasn’t the case for Prosper. Its stores were immediately successful, attracting wraparound lines of traffic for weeks on end, Jefferson said.
“I think [residents] saw it as a sense of accomplishment,” he said. “You can tell by the overwhelming success they had.” The same was true in Anna, where lines stretched all the way to the entrance of Walmart, about a quarter-mile away. Almost two years later, Grisham said not much has changed.
“You go out there any time around lunch or breakfast or even dinner time, and you’re going to have a pretty good line,” he said.
Chick-fil-A has been incredibly successful in convincing people to "Eat mor chikin." According to a 2019 ranking by QSR Magazine, the chain had the third-highest revenue of all fast-food restaurants in the nation, behind only McDonald’s and Starbucks. The privately held company's sales have tripled since 2010, according to Technomic estimates, and even the pandemic didn't slow down its growth. Chick-fil-A reported annual revenue of $4.3B in 2020, a 13% increase over the $3.6B it reported the year before.
Famous for closing on Sundays, the company counts more than 2,600 restaurants in 47 states, Washington, D.C., and Canada, according to its website.
Contact Olivia Lueckemeyer at olivia.lueckemeyer@bisnow.com
