2 Brief History Founded: 1946 by Truett S. Cathy Original Location: Hapeville, Ga.Original Name: Dwarf Grill because of small size.Later the name was changed to The Dwarf House.After the introduction of the chicken sandwich, the name Chick-fil-ADwarf House was used.Innovation: Pioneered the In-Mall concept in 1967
3 Current Operations Currently over 900 stores. 11 Dwarf Houses, 746 Free Standing/Mall Units,158 University/Hospital locations, 1 Truett’s GrillExpected to reach $1 billion in sales in 2000Third largest quick serve Chicken restaurantAnnual sales increasing at 18% annuallyExpanding to international market4 locations in South Africa
5 Major Competitors Chicken Market Kentucky Fried Chicken ($8.9 B annual sales)Popeyes ($1.3 B annual sales)Fast Food MarketMcDonalds (approx $30 B)Wendy’s ($2 B annual sales)
6 Change of Distribution Service On May 5, 2000 Chick-fil-A, Inc. announced that it planned to change food distribution services from AmeriServe Food Distribution, Inc. for its entire system of Chick-fil-A® restaurants."Chick-fil-A has already arranged for distribution services for our more than 900 locations as we leave the relationship with AmeriServe," said James L. S. Collins, president and chief operating officer of Atlanta-based Chick-fil-A, Inc. "Our distribution services will now be handled by MBM Corporation based in Rocky Mount, NC. They will service our entire system."Privately-held MBM Corporation is based in Rocky Mount, NC with annual sales of $4 billion. The company currently operates 29 distribution centers with distribution capabilities throughout the U.S. and internationally. It also handles distribution services for other major quick-service chains.Complete switchover was completed in August, 2000 with Chick-fil-A expected to provide 7% of MBM’s total sales.
10 Order Quantities of Common Products per Week Typical Operations(Values are taken from Howell Mill Chick-fil-A and The Riverdale Dwarf House locations.)Chicken - 60/ 35 lb boxes per weekChicken Strips - 5/ 36 lb boxes per weekChicken nuggets - 20/ 30 lb boxesSeasoned Coater (flour) lbs per weekBread - 72 racks (32 buns per rack) per weekLettuce (Salad) - 3/ 30 lb bags shredded per week.Lemons - 5/ 15 lb boxes per weekCoke syrup - 7 boxes per monthWaffle Fries - 90 (28 lb boxes/week)Ice Dream Mix - 24 (7 lb bags per week)
11 MBM Transportation All shipments made by truck typical truck capacity 14 tonsTrucks refrigerated and compartmentalizedLoaded in reverse order so that next stop’s load isclosest to door (Minimizes stop time)Since trucks make multiple stops, all attempts are made to sendtrucks out with full loads. (Minimizes transportation costs)Trucks with less than full loads serve multiple restaurantsTrucks typically cover distances up to 400 miles.
12 Chick-fil-A inventory Management Safety stock:Food items - 5daysPaper Products weeksOut of stock items:Purchased from local vendors or from other localChick-fil-A stores
15 Product Flow Manufacturers (Heinz,Kraft,Tyson) Distributor (MBM) 3 day lead timeChick-fil-A, Inc.Consumer1 day lead timeLocal Produce GrowersDistributor (Alliant)noNominal lead timeStockout?!Local Chick-fil-A storesorLocal External SuppliersOrder necessary items that are out of stockyes
16 Relationship with Distributors MBM: 7% of annual salesMBM provides Chick-fil-A with order quantitysoftwareUses 4 week previous average order quantity to predictnext week order quantity. The Operator can accept thisvalue or increase/decrease as he/she deems necessary.Alliant: 4% of annual salesOrders placed through a weekly order guide supplied byAlliant.Weekly guide uses previous 2 week demand to predictnext week’s demand. 1/4 of this value is typically addedfor safety stock.
17 ConclusionsChick-fil-A is one of the leading quick serve chicken restaurantsMBM was selected over Ameriserve to help minimize costs by delivering supplies in a more efficient wayMBM supplies Chick-fil-A with software to help in the reorder processChick-fil-A is expected to reach $1 Billion in sales due to newly implemented inventory managementChick-fil-A currently plans continued growth while still producing a quality product