Chick-fil-A makes more money than McDonald's Starbucks and Subway Combined and their first day in business They made fifty dollars and today they Make over five people I love Chick-fil-A I love their sandwiches I love their Desserts I love their milkshakes I love Their waffle fries I love their sauces I Love their tenders but what I love even More than that is their business because There are lessons that all of us can Take in terms of how they do business Not what they talk about socially but The actual business of running a Business and how you go from 50 to 5 Billion and I can promise you it's not By doing what everyone else does and They did that without raising tons of Debt they did it over 76 years they did It after the founder died and have Continued to grow and they never had a Down year where they went down in sales For 76 straight years they sell one Quarter the amount of items of any other Franchise Subway has seven and a half Percent net margins their royalty alone Is 15 of Top Line meaning their stores Are running 20 30 plus percent margins In brick and mortar food and they do That being open only six days a week Having 52 days a week that they are Closed unlike any other franchise no Franchise he can own more than one
Location unlike any other store they get Sixty thousand applications a year and They only award less than one percent of Those people a store and they do it with Arguably a very controversial social Setting that would never work in a Publicly traded corporate company that Has to massage its PR so here are the Lessons that I take away from Chick-fil-A that I've tried to apply at As many different places in the Portfolio companies that we own and even Just at acquisition.com at the holding Company number one is that they sold Chicken sandwiches for 76 straight years And I don't think they're going to stop Having singular focus on the core Products and not getting cute and not Getting fancy and not having 49 menu Items but just saying what are the Things that the most people want and how Do I get better and better and better at Doing those things because better gives You leverage it means the same input Gets you more output rather than having Lots of different things you have to put Input in you just put more and more and More because you only have so much Juju If you had two items you can only split Test them half as much as you could want For example if you think about this like An Olympic runner the difference between First place and fourth place in the Olympics is a tenth of a second but the
Difference between first and fourth for A person's life Massively different we get these Outsized returns by making these Marginal improvements of being better Rather than being new despite our Entrepreneurial desire to have not a Chicken sandwich we're like what about Tacos What about Burgers right like how many Times could they have done something Like that but they did it because they Knew that they wanted to stick to the Essential few and they knew that focus Is what was going to compound over the Long term Despite being publicly criticized for Not taking on debt and not trying to Grow faster for talking five six seven Eight years having somebody beat him Boston Market remember Boston Market When they had their rotisserie chickens And the mac and cheese and all that Stuff they took on a ton of debt grew Super super fast and then imploded Boston Market shot up and then shot down Because he wasn't thinking on a five or A ten year time rise if Esther Kathy has Literally sold chicken sandwiches from The time he was 25 until the day he died He was a missionary not a mercenary he Wasn't doing it to brag about his ego he Was doing it because he believed that This way of doing business was what he
Wanted to represent I know that the Likelihood that my competitors are going To be here in 70 years is almost zero so If I build in a way that I'm going to be Here in 70 years I will win by default And I think that's powerful because so Many people want to say they're number One the question is when you look at the Richest man in the world I want to be The richest man in the world you got to Respond to somebody's answer with for How long Because eventually you die what are we Aiming towards for him he wanted to Build an amazing Chicken Franchise his Legacy outlasted his life and for me That's my dream My Hope Is that whatever We build can continue and not only just Stay alive but grow Beyond us and that You can only do through a mission not Through a mercenary cause because if You're just chasing the money people get Deluded out because there's always a Shiny easy win that distracts from the Core items the fact that they don't let Anyone have more than one store I think There's a lot of wisdom to this so there Are lots of people like let me let me Open a hundred and they're like no Because you're not gonna be able to Focus we want someone to put their heart And their soul into their location and Treat it like it's their own while he Was alive you have to have worked at a
Chick-fil-A I think they loosened that Up because you wanted to create a way For people to come in mopping floors Flipping burgers going all the way up And then eventually own their own Franchise he has profit check now mind You he doesn't share the whole profit But after he takes his pieces off they Have an ability to make more money and Having that kind of I'll say uncapped Earning potential for somebody is very Inspiring but he keeps it constrained to A singular Focus because they know that Somebody can give it their all at one Location they've already tested that They've learned over the years and I Think there's a lot of wisdom in that That we can take for our own businesses Number four sang No on Sundays means That you have to say no to things that Are obviously going to make you money But will detract from your values and so There are lots of opportunities on Entrepreneurship and you probably have Some on your docket right now that You're like I don't know this is a Little left of center but like such an Easy win imagine the new CEO comes into Chick-fil-A tomorrow and says you know What I found a way to make us 13 more Sales and have most of that drop to Bottom line they're like What's your Amazing idea and he's like we're going To be open also on Sunday
It would be such an easy play and Imagine how hard it is to say no because In the beginning he had to say no to an Extra 13 on a million dollars it makes It another hundred and thirty thousand But when 13 is 650 million dollars And you still say no it means that You're appealing to a higher power Something above the money values matter More than just about anything in my Opinion if they are true to the founder True to the business and they operate in That way and I would say that Chick-fil-A is a great example of a type Of company that believes in its values Through and through and they practice What they preach pun intended now I also Believe that appealing is something Above the money long long makes you more Money but you have to say no in the Short to get the long yes One of the things that permeates any Chick-fil-A if you've ever been there is That they have a culture of service You're one separate way from an awesome Lunch meal it'll be a pleasure serving You at our drive-thru window after two More things you know what that is just Gonna beat you guys are awesome one and Two yeah All right thank you Chick-fil-A and so What they did was they actually studied The hospitality industry and even hired People from Ritz Carlton to help them
Create an Exquisite experience At Chick-fil-A es true Kathy noted that When he wanted everybody in his team and His company starts saying my pleasure it Didn't change until he changed how he Spoke he's trained all of us to always Respond to thank you by saying my Pleasure so if somebody wants a refill My pleasure people will learn 10 times More from watching what you do than Listening to what you say and so if you Say hey we're all about being on time Here but you the CEO are late it will Never work we have to pick the very few Values that we know that we will never Break that we will always stick with Which is why values have to be true to You not nice words on the wall because They have to be things that you would Actually live otherwise they are Meaningless if you want to have a Business that grows even longer and Bigger you want to have a compounding Vehicle built within the business Chick-fil-A has a compounding vehicle of Capital within their business whenever a Store creates money they have the cash And they can pick the next location they Buy the land and they buy everything Itself too so they get the high return And they get some tax benefits and so if There's ever areas in the business that We can get some kind of compounding Effect where money compounds on itself
That is something that I always try and Build in every business that I have is How can I get this money that I'm Getting today to make me even more Tomorrow within the structure of the Business not taking the money out and Putting into stocks or putting it into Just like a random fund or whatever it Is but actually saying within my Business where I have active control Where I get the highest returns based on My skill and my competitive advantages I Get higher returns and that's how these Guys build Crazy wealth that beats the Market Ruthless prioritization on the essential Few items that they need to sell the Fact that they haven't changed their Menu in decades should be a testament to The fact that we as entrepreneurs want To change it all the time there's a Henry Ford story that I think drives his Home he was looking at a marketing Campaign and he had been working on it With his Executives Etc three or four Months in he walked past his marketing Cmo's office and was like hey when are We going to stop running that out he's Like I'm so tired of it and the Marketings I've looked up to him he was Like you haven't even ran it yet and so The thing is is that we have all these Things that happen in our mind because We're always iterating like we assume
Everyone knows everything about our Products we assume everyone's already Bored of it because they're talking About chicken sandwiches 24 hours a day But reality is that most people might Get Chick-fil-A once a month right as a Treat the customer's perception when we Change something slowly in our mind Every six months as a small business to A customer it just feels like it's Constantly changing there's no Consistency people value consistency People want to know that when they Exchange money they're going to get the Thing that they liked last time and if You make the same thing the same way Over and over again it also gives you The opportunity to improve move it if You have to improve a hundred things It's a hell of a lot harder than Improving two or improving one and so You've heard me say one product one Avatar one channel for anybody who's Trying to make their first million Each one of these stores if you think About them as a single business like That's how they're thinking now do they Have drinks yes Etc the principal behind It compared to everyone else in the Marketplace they have a quarter the Amount of things on their menu compared To McDonald's and they make twice the Money they have such a refined menu Because it makes the order process have
Fewer mistakes in it it makes the Drive-through process happen faster They're able to have less food go bad Because they don't have to have all These extraneous options they follow Proto's principle of 80 20. they know That 20 of their stuff creates eighty Percent of their sales they have all of These efficiencies in there because They're not trying to be cute they're Trying to be the best at a handful of Things and by doing that they've been Able to sell way more than anyone else Does with a way more constrained menu And do it so much more profitably There's wisdom there and so I try to Think about that is like okay even Though I could do those things should I And most times the answer is no I should Just get better at the thing that's in Front of me and confront the problem That I have which is how can I sell more Chicken sandwiches whatever your chicken Sandwich is and to drive even further on The phone Focus they have even at a Micro level within their core product The chicken sandwich if you compare that To McDonald's Big Mac or Burger King's Whopper McDonald's big now has six ingredients The Whopper has seven not including the Bun now compare that to Chick-fil-A's Sandwich which just has butter pickles And chicken that's it they even have
Half the ingredients on their One-quarter sized menu because even then They get more efficiencies at the Ingredient level they make it faster and Easier to prepare so it's more Consistent and they're able to do that With greater economies of scale and they Can make the process itself leaner and Faster and leaner and faster and then You do that for 76 years and become Unbeatable so one of the things that When they were asked why are you so Limited in their in your selection Besides all the reasons I already gave Their response was that every time they Added another item they just saw their Sales of their main thing declined so They're just splitting some sales off The thing their core products and so how Many of us have opened a new thing got People to switch from the old thing to The new thing and now you're doing two Different things for the same amount of Money Sound familiar happens all the time and So it takes the discipline to say no and Say we're just gonna get better the last Piece that makes them exceptional I Think is their VP of growth who was Talking about this you said 80 of what Fast food restaurants do between each Other is the same but I wasn't hired Here to do the same thing to the other 80 are doing I'm hired to do what the 20
Are not doing that much more efficiency Has been driven into how can we improve This business because if we change Nothing about this business we sell the Same 12 items you just get better and Better and better at the same thing they Even do practice runs in an indoor arena For the drive-through to test in real World scenarios to see how they can make The drive-through more efficient and Increase the accuracy that's the level Of detail that the kingpins can do Because they've been doing it for 70 Plus years the biggest takeaways I see From the big companies that I try to Apply to my own business is what is a Business that I could be in for a Hundred years I believe that if you only Try and solve the same problem for 100 Years you get pretty darn good at Solving it after Kathy lived that and Then he I mean technically even died That he took one concept a chicken Sandwich and thought how can I just do This one thing that everyone understands Better than anyone else and he built an Empire and he built a mission behind it That I think millions of people are Happy and frequent every day he has Edged his way to now being number three And likely will become the second Biggest food chain in the entire United States
