ChickfilA Supply Chain Presentation Bobby Baptist Michael Haddad

Chick-fil-A Supply Chain Presentation Bobby Baptist Michael Haddad Dermot Kennedy Laurel Krauth Sabrina Spradley

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-A Dwarf House was used. Innovation: Pioneered the In-Mall concept in 1967

Current Operations • Currently over 900 stores. – 11 Dwarf Houses, 746 Free Standing/Mall Units, – 158 University/Hospital locations, 1 Truett’s Grill • Expected to reach $1 billion in sales in 2000 • Third largest quick serve Chicken restaurant • Annual sales increasing at 18% annually • Expanding to international market – 4 locations in South Africa

Current Locations

Major Competitors Chicken Market • Kentucky Fried Chicken ($8. 9 B annual sales) • Popeyes ($1. 3 B annual sales) Fast Food Market • Mc. Donalds (approx $30 B) • Wendy’s ($2 B annual sales)

Change of Distribution Service On May 5, 2000 Chick-fil-A, Inc. announced that it planned to change food distribution services from Ameri. Serve 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 Ameri. Serve, " 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.

MBM Distribution Centers

MBM Sectors

MBM Operations Common Products supplied by MBM • Chicken (breakfast, sandwich, nuggets, strips) • Waffle Fries • Carbonated Drink Syrups • Paper Products (including styrofoam cups) • Condiments • Eggs • Other meat products • Deserts (Ice Cream, Brownies, Hershey’s syrup) • Cleaning supplies

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 week • Chicken Strips - 5/ 36 lb boxes per week • Chicken nuggets - 20/ 30 lb boxes • Seasoned Coater (flour) - 66 lbs per week • Bread - 72 racks (32 buns per rack) per week • Lettuce (Salad) - 3/ 30 lb bags shredded per week. • Lemons - 5/ 15 lb boxes per week • Coke syrup - 7 boxes per month • Waffle Fries - 90 (28 lb boxes/week) • Ice Dream Mix - 24 (7 lb bags per week)

MBM Transportation • All shipments made by truck –typical truck capacity 14 tons –Trucks refrigerated and compartmentalized –Loaded in reverse order so that next stop’s load is closest to door (Minimizes stop time) –Since trucks make multiple stops, all attempts are made to send trucks out with full loads. (Minimizes transportation costs) –Trucks with less than full loads serve multiple restaurants –Trucks typically cover distances up to 400 miles.

Chick-fil-A inventory Management • Safety stock: –Food items - 5 days –Paper Products - 1. 5 weeks • Out of stock items: –Purchased from local vendors or from other local Chick-fil-A stores

Other suppliers Fresh Produce: Alliant Food Distributors: –Lemons –Lettuce –Tomatoes –Carrots –Cabbage –Onions –Pickles Orders placed weekly. Trucks arrive bi-weekly

Cagle Operations Supplies: – Chicken Nuggets – Chicken Strips – Chicken Breasts (Breakfast and Sandwich)

Product Flow Manufacturers (Heinz, Kraft, Tyson) Distributor (MBM) 3 d ay lea d ti me Chick-fil-A, Inc. Local Produce Growers Distributor (Alliant) ad y le 1 da l ina dt lea im e m No Local Chick-fil-A stores or Local External Suppliers Consumer time Order necessary items that are out of stock no Stockout? ! yes

Relationship with Distributors MBM: 7% of annual sales –MBM provides Chick-fil-A with order quantity software –Uses 4 week previous average order quantity to predict next week order quantity. The Operator can accept this value or increase/decrease as he/she deems necessary. Alliant: 4% of annual sales –Orders placed through a weekly order guide supplied by Alliant. –Weekly guide uses previous 2 week demand to predict next week’s demand. 1/4 of this value is typically added for safety stock.

Conclusions • Chick-fil-A is one of the leading quick serve chicken restaurants • MBM was selected over Ameriserve to help minimize costs by delivering supplies in a more efficient way • MBM supplies Chick-fil-A with software to help in the reorder process • Chick-fil-A is expected to reach $1 Billion in sales due to newly implemented inventory management • Chick-fil-A currently plans continued growth while still producing a quality product