This is the detailed PESTLE analysis of Chick-fil-A focuses on the evaluation of different aspects of the external environment that influence the company’s sales and profitability.
Introduction and Background
Chick-fil-A is a fast-food restaurant chain that specializes in chicken-based dishes, with its most popular menu item being the Chick-fil-A sandwich. The company was founded in 1946 in Hapeville, Georgia, by S. Truett Cathy, who started by selling boneless chicken sandwiches at a small diner called the Dwarf Grill.
After the success of the chicken sandwich, Cathy decided to focus on the fast-food market, and in 1967 he opened the first Chick-fil-A restaurant in Atlanta, Georgia. The chain quickly expanded across the United States, and as of 2021, it has more than 2,600 locations in 47 states and Washington, D.C.
Chick-fil-A is known for its commitment to customer service and its corporate values, which are rooted in the Christian faith. The company is closed on Sundays to allow employees to attend church and spend time with their families.
Despite its popularity, Chick-fil-A has also been the subject of controversy due to its donations to organizations that have been criticized for their anti-LGBTQ+ views. However, the company has taken steps in recent years to distance itself from these organizations and promote a more inclusive environment.
Political Factors
The political influences shape the way an organization is able to sustain and flourish in a region. Negative changes in the political climate can affect the way a business is able to operate in the industry. Sales volume declines as customers refrain from visiting the fast food outlets, while stable political climate, as evident in the case of US helps strengthen the businesses.
The company has been able to run its operations smoothly as the US has been able to provide the company with a stable political environment. Apart from the political strength of a country, there are other mechanisms that affect the business output and limit the progress of an organization.
Chick-fil-A faced criticism on the basis of its stance towards gay rights, which was deemed as a conservative point of view. Activists and even political figures became involved in responding to the controversy by limiting the business operations of the company in San Francisco (Condon, 2012).
Government policies about fast food industry, taxation and licensing requirements are some other components that constitute the political arena for the company. In order to open a restaurant, the company has to take the related licenses, and adhere to the government’s regulations for fast food industry. The franchising process is also governed by the policies.
Economic Factors
The income of people has a strong influence on their buying decisions as financial stability allows the consumers to spend their earnings beyond the basic necessities. The rate of inflation is another factor that people consider when spending in the domain of fast food. Chick-fil-A had to revise its menu price due to the higher prices of chicken, which caused a 20% increase (Geiger, 2023).
The cost of supply chain process of the company is also affected due to the price changes. The raw materials required for food preparation and fuel for transportation of those items leads to increased cost. In order to adjust the cost changes, the company has to make required changes to the menu pricing structure.
High employment rates boost company sales; however a downside of increased employment indicates a possibility of labor shortage. When employment rate is high people are not likely to compromise on wage and work environment, leading to labor shortage. Chick-fil-A had to revise its hourly wage in an effort to decrease turnover chances.
Social Factors
Social factors include the preferences of customers and the buying behavior that is guided by their demographics and taste. With the passage of time the consumers have become more health conscious which has created the need to offer them items that are different from the fried and high calorie menu.
Even though the company specializes in chicken based menu, the rising trend of healthy eating and plant based food has propelled the management to add non-meat options to its list. The fast food retailer has added cauliflower to its menu range as a reflection of bringing healthy alternatives to such customers (Chick-fil-A, 2023).
Another way social factors are effecting company’s supply chain decisions is the focus on anti-biotic free chicken. Consumers demand products that are not only hygienic but also carry no harmful substances. The shift to the chicken suppliers avoiding the use of anti-biotic suggests that the company is striving to respond to this social trend.
Technological Factors
Chick-fil-A has developed its business processes through integrating the various artificial intelligence tools. These technologies enable the company to handle the large batches of product manufacturing and maintain steady supply chain. Social media has also facilitated the company to reach the target market and keep track of the trends and issues in the domain of fast food.
Another way technology has benefited the fast food companies is robotics. Chick-fil-A has started using robots for the purpose of delivering food orders to the customers (Gardiner, 2022). The use of robots in restaurant operations is likely to support the company in lowering the cost and offering high quality service to the customers.
Legal Factors
The company has to the follow the US employment laws pertaining to the fair treatment, equal employment and salary. When companies deviate from these legalities, there is a risk of facing lawsuit. Chick-fil-A has been a target of legal proceedings due to the violation of employment laws.
The company was under scrutiny when it was found that the management was using chicken sandwiches as an alternative to the salary for the employees (Doughman, 2022). The management also had to deal with financial penalty due to the violation of child labor laws. Chick-fil-A also had to deal with a lawsuit pertaining to lack of consumer data privacy.
Besides the employment and privacy laws, the company has to adhere to the food safety standards upheld by FDA. Chick-fil-A has to form contracts with responsible suppliers who focus on animal welfare. In addition, under the guidance of the Food Allergy Safety law, the product ingredients have to be clearly listed and any allergens are mentioned for the consumers.
Environmental Factors
Chick-fil-A has embraced the notion of sustainability through environmental stewardship program. It is invested in reduction of food related waste, managing 25 million pounds of waste in an eco-friendly manner. ORCA system has been put in place to tackle the waste and reduce the harmful effect on the environment (Chick-fil-A, 2021).
Coordinating with food shelters and charitable organizations, the company has created an opportunity for handling surplus food. The management also encourages the employees to be environmentally responsible and adhere to the stewardship plan through engaging in recycling. It also offers them refurbished technology to lower the environmental impact.
Conclusion
Chick-fil-A is a fast food restaurant chain that has been able to navigate through various external factors affecting its operations. The PESTEL analysis shows that the company has been successful in dealing with political, economic, social, technological, legal, and environmental factors that have impacted its performance.
The company has been able to adapt to changing consumer preferences and trends, such as the shift towards healthy eating, through menu diversification and adding non-meat options. Additionally, It has embraced technology to improve its business processes and reach its target market through social media.
Chick-fil-A has also shown its commitment to sustainability and the environment through its stewardship program. Despite some legal issues that have arisen, the company has remained compliant with employment and food safety laws. Overall, Chick-fil-A’s ability to adapt and respond to external factors has enabled it to remain a successful player in the fast food industry.
References
Chick-fil-A (2021). Corporate Social Responsibility. Retrieved from: https://www.chick-fil-a.com/about/-/media/f29558b99d224a9e9e2f5b9aefc7b2d3.ashx
Chick-fil-A (2023). Chick-fil-A welcomes cauliflower to the menu. Retrieved from: https://www.chick-fil-a.com/stories/news/chick-fil-a-welcomes-cauliflower-to-the-menu
Condon, S. (2012). Chick-fil-A’s political grilling. CBS News. Retrieved from: https://www.cbsnews.com/news/chick-fil-as-political-grilling/
Doughman, E. (2022). Chick-fil-A fined for paying workers in chicken sandwiches. Watt Poultry. Retrieved from: https://www.wattagnet.com/articles/46425-chick-fil-a-fined-for-paying-workers-in-chicken-sandwiches
Gardiner, S. (2022). The future of delivery is here: Chick-fil-A is testing autonomous delivery robots as the next frontier to serving guests wherever they are. Chick-fil-A. Retrieved from: https://www.chick-fil-a.com/stories/inside-chick-fil-a/robots-innovate-chick-fil-a-delivery-experience
Geiger, F. (2023). These Are the Most Expensive Fast-Food Orders Due to Inflation. She Finds. Retrieved from: https://www.shefinds.com/collections/expensive-fast-food-orders-inflation/#slide-1