Expansion of Chick-fil-A into Brazil

Maura Manor, Taylor Duffin, Jessica Adams, Carolyn Capka, Taylor Martz, Eriko Mizuno, Alex

Lombardo

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Company Background

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Chick-fil-A● Based in Atlanta, GA

○ Truett Cathy - Founder, 1946.

● Largest quick-service U.S. chicken restaurant chain○ Famous for boneless chicken sandwiches

● Over 1,950 restaurants in 42 states and Washington D.C.

● Annual sales of $6 billion in 2015 alone ○ 48 years of consecutive positive growth

● 8 innovative franchise opportunities○ Small investment commitment of $10,000 to

operate

● Currently in the U.S., Chick-fil-A holds 20% of the chicken restaurant market share

To glorify God by being a faithful steward of all that is entrusted to us; and to have a positive influence

on all who come in contact with Chick-Fil-A.-Chick-fil-A Mission.

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● WinShape Foundation○ Youth Leadership Programs○ Family/Marriage Programs

● “Eat-Mor-Chikin” Campaign● Use of real food

○ No Antibiotics Ever campaign■ 100% white breast meat■ No fillers or additives

○ Simpler Ingredients and Balanced Options

● Mindful dining○ Sustainability○ Energy-efficient ○ Recycling

Chick-fil-A

Serving Better Food, Caring for People, and Communities Matter

-Chick-fil-A EnvironmentalStewardship Promise.

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Chick-fil-A boasts a menu based on chicken products and fresh ingredients, tasty side dishes, enjoyable desserts and “hand-made” preparation techniques for many products such as our hand-breaded chicken and freshly squeezed Chick-fil-A® Lemonade. Its menu offers a variety of choices of delicious products that can fit into a balanced, healthy diet.

Chick-fil-A’s Food Statement

Chick-fil-A Sales ● 48 years of consecutive positive growth● System-wide sales in 2015 exceeded $6 billion● Chick-fil-A generates more annual revenue than dozens of other chains that have more

than twice as many locations, such as KFC, Pizza Hut, Domino's, and Arby's● To put it in perspective….

○ KFC has 4,370 U.S. stores, while Chick-fil-A has 1,887○ Each KFC store makes $960,000 a year, while each Chick-fil-A store makes $3.1

million ○ That’s $4.2 billion for KFC in 2014, and $5.8 billion for Chick-fil-A

■ That’s with 57% fewer stores, each closed on Sunday

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“Nearly every moment of every day we have the opportunity to give something to someone else - our

time, our love, our resources. I have always found more joy in giving when I did not expect anything in

return.”

- Truett Cathy, Founder of Chick-fil-A

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Why Rio de Janeiro, Brazil?

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Rio de Janeiro, Brazil● Emerging country due to large and growing population

○ Second most populous municipality in Brazil and sixth

largest in the Americas

● Official language: Portuguese

● 87% urban population

● Makes up 55% of Latin America’s economy

● Over 50% of the population is under 30 years old● Only 11% obesity rate

○ 52/70 ranked nations in the world, so generally a healthy

nation

● Large resource-base/market

● Categorized as an upper/middle income country○ The Sudeste region – home to both São Paulo and

Rio de Janeiro – enjoyed the highest levels of consumer spending per household in Brazil, at US $26,739 in 2013

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Rio de Janeiro● As of 2014, there are 6.35 million people in the city

of Rio de Janeiro ○ In the past 60 years the population has gained 7 million

people with a population growth of 150% ○ Estimated projections for 2025 show the population

will grow to at least 13.1 million people○ By 2030, that number is projected to reach over 13.6

million citizens● Luckily, expansive amounts of land make additional

urban development strategies a possible option for this swelling city○ It is one of two megacities in Brazil and South America,

the other being Sao Paulo○ The Portuguese makes up the main population of this

bustling city, with more people of Portuguese descent than Brazil’s capital, Lisbon

○ Other ethnicities that call this city home include those of Asian, European and African descent

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Impact of Tourism

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● Rio de Janeiro’s hotels occupancy rate in 2010 showed an average of 73.75% according to ABIH-RJ (Brazilian Hotel Industry Association) and the hotel industry showed an

average rate of 295,44 Reals (US$8,411.35) and approximately 1.6 million tourists stayed in the hotels

● Brazilians represent 60.62% of its tourists total and international tourists are represented by 39.38% of the city demand

- Americans are usually most seen on the streets;

however the international tourists came mostly from Europe mainly from England, France, Germany and Italy (ABIH)

● Reasons why people travel to Rio de Janeiro:- 39.36% traveling on business- 32.08% leisure purposes, - 11.86% congresses conventions and fairs

● Rio de Janeiro has two main airports; domestic is called Santos Dumont and Tom Jobim is the international airport

● Rio de Janeiro is a popular tourist attraction- 908,667 tourists visited the city from December

2009 to February 2010

- The tourist flow increased 1.5% regarding the same period last year according to Riotur, the city tourism authority, with a total amount of US $1.88 billion provided by tourism activities

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Popular tourist attraction

● Chick-fil-A would attract U.S. consumers and other

consumers visiting Brazil, as well as the people who

live there

Carnivals and Events

● Rio de Janeiro Carnival, an annual event, expected to

reach a total of nearly 5 million festival goers

○ Generating a profit of $431.9 million from

travelers

● 600,000 foreign tourists and 3.1 million Brazilians

participated in the 2014 FIFA World Cup Events

(games and Fan Fest)○ Spending a total of R$4.05 billion in twelve

different host cities in Brazil during the month-long event (Ministry of Tourism)

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Rio de Janeiro Attractions

From Atlanta to Rio de Janeiro

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Chick-fil-A’s Values and PhilosophyOur Giving Tradition

● For the past 66 years, we have built a foundational commitment to service○ Service to our customers○ Service to our franchised restaurant operators and their team members○ Service to our communities

“This begins in the restaurant – one customer at a time. We firmly believe in treating every person who comes through our doors with honor, dignity, and respect”

● We serve our communities through volunteerism and giving

● We also make a commitment to take care of the people who take care of our communities

○ For example, by giving sandwiches to first responders in times of crisis, we honor the

commitment they make to serve all of us

○ Our philanthropic giving reinforces that commitment to service by helping children and

families in need. This is what makes us who we are.14

Chick-fil-A’s Values and PhilosophyClosed on Sundays?

Our founder, Truett Cathy, made the decision to close on Sundays in

1946 when he opened his first restaurant in Hapeville, Georgia. He has

often shared that his decision was as much practical as spiritual. He

believes that all franchised Chick-fil-A operators and their restaurant

employees should have an opportunity to rest, spend time with family

and friends, and worship if they choose to do so. That's why all Chick-fil-

A Restaurants are closed on Sundays.

It's part of our recipe for success!

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“I believe that being closed on Sunday says two important things to people: One, that there must be something special about the way Chick-fil-A people view their spiritual life and, two, that there must be something

special about how Chick-fil-A feels about its people.”

- Truett Cathy, Founder of Chick-fil-A

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Brazil’s Religious ViewsA Melting Pot of Different Religions

● Due to the diversity of its cultures and its heritage, this country boasts an array of religious ideals and

affiliations

● Recent censuses have revealed that around 90% of the Brazilian population subscribe to some

religious ideal, making it more religiously inclined than any other South American country

● 75% of Brazil’s population claims to be Roman Catholic

○ In fact, there are more Catholics in Brazil than in any other country in the world

○ Many who identify as "Catholic" practice religions common to Brazil such as Umbanda and

Candomble

● In terms of Christian religions, the main churches in Brazil are: Catholic, Protestant, Methodist,

Episcopal, Pentecostal, Lutheran, and Baptist17

Growth Strategy

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Having a location that is a high producer of poultry would benefit our retail in terms of reducing the risk

of running out of supply for the demand we may generate when opening our store

Entry into Another Country● Chick-fil-A has immense success in the U.S., so

spreading its market to reach another country with a high consumption rate of poultry may also bring about

success in that specific region○ Chick-fil-A is strictly chicken, with no beef, so we

needed to enter a market with high chicken consumption

● Brazil is one of the leading poultry producers worldwide- Its share in the world production raised from 2.2%

in 1974 to 14% in 1999

- During this period, Brazil went 10th to 2nd in ranking of the largest world producers, only below the U.S.

● In 1970, Brazil produced approximately 200,000 tons of poultry, and by 1995, the production had increased to 4 million tons

- The industry grew 1,760% in the period of 25 years with an average annual rate of 14.42%

● In 1999, according to ABEF, the annual per capita consumption of poultry was 29kg, which exceeded the consumption of pork

- By 2008, total red meat and poultry meat consumption had risen to 89 kilograms per person, 31 kg above the 1993 level (USDA,2009)

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● USDA Agricultural Projections to 2018 indicate that 2.9% annual Brazilian income growth will lead to gain in consumer spending on food

- Consumption of red meats and poultry will increase from 89kg per person in 2008 to 92kg per person in 2018

- Poultry will be the fastest growing component of meat consumption increasing from 45% in 2008 to 47% in 2018

- Beef consumption is projected to decrease 0.2% per year during 2008-18

This is important for our retail because we sell strictly chicken, so we are aiming to enter an

area with a large and quickly increasing percentage of per capita poultry consumption

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Entry into Another Country

● Brazilians are very health conscious○ They use food as a means to take control of their

health● Increase in full-time employment = hectic lifestyle that

goes with it

○ This has compromised the healthy Brazilian diet

● Brazilians want to eat healthy food, however they are not as willing to sacrifice taste for healthiness

● Believe in buying organically grown food, and want to

avoid processed foods and unknown chemicals or

ingredients

How this is good for Chick-fil-A:

1. An increased hectic lifestyle will result in more people eating out for meals, which matches with the convenience of Chick-fil-A

2. Chick-fil-A has good quality taste but remains healthy, so our market would not need to sacrifice taste for health

3. Chick-fil-A does not use growth hormones, fillers, or additives in their food, so Brazilians do not need to be concerned about unknown chemicals or ingredients

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Health Trends in Brazil

● Rio de Janeiro has already been immersed into U.S. Fast Food Industry

○ KFC, McDonalds, Burger King, Domino’s and

Subway have been opened in Rio

Therefore, we believe our growth strategy is not risky due to the fact that these U.S. fast food

competitors have been operating in Brazil successfully

● The Brazilian fast food market has seen rapid growth over the past five years with the sector hitting sales of 50 billion Brazilian real ($21.7 billion) in 2013 (up 82% since 2008)

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Fast Food in Brazil

We are confident that when opening stores in Rio de Janeiro we will beat out KFC just as we

have in the U.S. market

● Ranked 4th largest in the world, Brazil’s foodservice sector was valued at US$146 billion in 2012

● Between 2008 and 2012, the Brazilian foodservice market saw a compound annual growth rate (CAGR) of 10.9% and is expected to continue to expand with a CAGR of 10.6% through 2017, achieving total sales of US$228 billion

● Middle class population in Brazil has grown, which means more people have higher amounts of disposable income

○ Driving up the sales where fast food chains

would definitely benefit from this

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General global trend over the last couple of decades towards less structured meal occasions, resulting from such factors as…

1. Busy lifestyles2. Unconventional working hours3. Rise in single households 4. Increased number of working women

● Euromonitor International predicts eating habits will continue to evolve over the next few years towards less structured meal times, greater use of prepared ingredients and increased snacking

● According to the survey, consumers in the emerging markets of Brazil, China and India are the most prolific snackers

Brazilians proved most likely to regularly order a home delivery or takeaway for home consumption

(25%)

● Takeaway meals are cheaper than dining in a restaurant, and allow time-starved consumers to have prepared meals without shopping, cleaning and preparation, or simply have a treat on weekends

● In Brazil, consumers spend only about half as much on food as Americans ($1,123 vs. $2,215), but as a share of consumer expenditures per person in Brazil ($7,063), spending on food is almost 2.5 times higher (~16%) than the U.S. (6.6%)

● Brazil’s emerging middle class with disposable income has helped fuel the popularity of fast food with nearly

1 in 10 Brazilians eating in a fast food shop at least once a day 24

Eating Out or Eating In?

Reasons for Eating Out

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Expansion Strategy

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Expansion Via Franchising (What) ● Provide franchisees with business

model, training, operations manuals, start-up package, license, trademark, and on-going support

● Duplicates effective, proven business model already in place elsewhere (U.S., etc.)

● Revenue generated from sales is shared between franchisors and franchisees

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Benefits of Franchising (Why)

● Opportunity for accelerated growth● Reduces our risk profile

○ Less financial investment required on

our part

○ Risk distributed between us (as

franchisor) and franchisees

● Local entrepreneurs have a better understanding of the local market and culture

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Our Franchising Strategy (How)● Build relationships with Brazilian

entrepreneurs● Leverage brand recognition,

successful business model, etc. with franchisee investments and assumptions of risk

● Share revenue generated from sales with franchisees

● Earn revenue (in addition to sales revenue) from licensing fees, annual fees, etc.

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Challenges of Franchising● Critical that we both understand and

adapt to local tastes, customs and tradition○ Example: KFC in China has BBQ squid and

egg tarts

● Less control over franchisee locations than company-owned locations

● Can be difficult to establish a new, reliable, quality supply chain locally

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Opening Chick-fil-A in Brazil

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How Many Will We Open?2 Freestanding Chick-fil-A’s

● We don’t want to risk only opening one store in case the location it is in does not initially succeed do to a low

volume of customers○ Therefore we are going to open two stores in Rio

de Janeiro to make sure that we allow more chance of gaining customers in the area

● High tourism during the upcoming Olympics will bring business from the U.S. and other countries○ Therefore, having two stores open will allow us

to quickly serve customers and not have a long wait period with the high volume of people

○ Because Chick-fil-A is very popular in the U.S., we are confident this will lead to increase in sales when U.S. tourism is at a high rate in the area we are opening the stores

1 Food-Cart

● Rio de Janeiro is very popular with street food○ It also allows us access to move along the

streets and spread the word out to the locals that Chick-fil-A is also open in freestanding stores

● The tropical climate and culinary melting pot of influences from Africa, Europe and the Middle East make Rio an incredible opportunity for wealth from the street food scene

● Recent changes in legislation in Rio de Janeiro regulate the operation of street carts, allowing their owners to park their trucks on public roads and close to bars and restaurants, even allowing them to place chairs and tables for customer convenience

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Types of Terms & Leases

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Name of Fee Low High

Initial Franchise Fee $10,000 $10,000

Opening Inventory $20,000 $65,000

First Month's Rental of Equipment $750 $2,000

First Month's Lease/Sublease of Premises $2,100 $42,000

First Month's Insurance Expense $125 $5,250

Additional Funds (1st 3 Months of Operation) $98,000 $920,000

Total Estimate of Initial Investment $130,975 $1,044,250

Adapting Our Menu

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Variety & AssortmentClassics: Chick-fil-a Chicken Sandwich, Chick-fil-a Chicken Deluxe Sandwich, Chick-fil-a Spicy Chicken Sandwich, Spicy Chicken Deluxe Sandwich, Chick-fil-a nuggets, Chick-fil-a chick-n-strips, Grilled Chicken Club Sandwich, Grilled Chicken Sandwich, Chick-fil-a Chicken Salad Sandwich, Chick-fil-a grilled nuggets

Wrap and Salads: Chick-fil-a Cobb Salad, Grilled Chicken Cool Wrap, Chick-fil-a Grilled Market Salad, Chick-fil-a Spicy Southwest Salad

Sides: Chick-fil-a Waffle Potato Fries, Chicken salad cup, fruit cup, greek yogurt parfait, Hearty breast of chicken soup, side salad, superfood side

Kids Meals: Chick-n-strip kids meal, Chick-fil-a nuggets kids meal, Grilled nuggets kids meal, Waffle potato fries kids meal, fruit cup kids meal, Cinnamon applesauce (buddy fruits), milk, chocolate milk, Honest Kids apple juice

Breakfast: Chick-fil-a Chicken biscuit, Plain biscuit, Bacon egg and cheese biscuit, sausage egg and cheese biscuit, chick-fil-a spicy chicken biscuit, chick-fil-a chick-n-minis, Chicken egg and cheese on sunflower multigrain bagel, Cinnamon Cluster, Sausage Breakfast Burrito, Chicken Breakfast Burrito, Multigrain Oatmeal, Greek Yogurt Parfait, Chick-fil-a chicken platter, chick-fil-a bacon platter, chick-fil-a sausage platter, hash browns

Dessert: Chocolate Milkshake, Cookies and Cream Milkshake, Strawberry Milkshake, Vanilla Milkshake, Chick-fil-a frosted coffee, chocolate chunk cookie, chick-fil-a frosted lemonade, icedream

Beverages: Chick-fil-a Diet Lemonade, Coca-cola, Diet Coke, Dr Pepper, Dasani Bottled water, sprite, honest kids apple juice, simply orange juice, Chick-fil-a Coffee, Chick-fil-a Iced Coffee, milk, chocolate milk

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Variety & AssortmentDressings: Avocado lime ranch dressing, Barbecue Sauce, Chick-fil-a Buffalo Sauce, Buttermilk Ranch Sauce, Chick-fil-a sauce, Creamy Salsa Dressing, Fat Free Honey Mustard Dressing, Honey Mustard Sauce, Honey Roasted BBQ sauce, Light italian dressing, Polynesian Sauce, Zesty Apple Cider Vinaigrette, Chili Lime Vinaigrette dressing, Light Balsamic Vinaigrette Dressing, Garlic and Herb Ranch dressing

Trays: Chick-fil-a Nuggets tray, chick-fil-a chicken-strips tray, grilled chicken cool wrap tray, chicken salad sandwich tray, grilled chicken cool wrap and chicken salad sandwich tray, chick-fil-a chick-n-minis tray, garden salad tray, cinnamon clusters tray, fruit tray, chocolate chunk cookie tray, chilled grilled chicken sub sandwich tray

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How Are We Adapting?OUR CHANGE

Flip Flopping Menu by Putting Grilled Chicken as First Option, with Fried as the Second

● Offer side of beans since it is one of the most popular food staples in Brazil, accustom to target market’s taste

● Add most popular side dish FAROFA!- Farofa is a toasted cassava flour mixture- It is eaten in South America- Can be found commercially produced and

packaged but is often prepared at home based on family recipes using ingredients such as flour, butter, onions, and meats or vegetables

- Beans or fruit are also common additives in farofa dishes

- Stuffed foods, such as poultry dishes, are often prepared with this yuca mixture

● Adding Brazilian condiments that are popular- ketchup - ketchup- mostarda - mustard- maionese - mayonnaise- molho de pimenta - pepper sauce/hot sauce- molho de churrasco - barbeque sauce- molho inglês - worcestershire sauce- molho de soja/shoyu - soy sauce- molho de alho - garlic sauce- vinagre - vinegar- molho para salada - salad dressing

Sales of sauces, dressings, and condiments increased by 56.6% in value over 2012-2013, with table sauce sales having grown by

43%, and wet cooking sauce by 87.8%

Between 2013 and 2017, these figures are expected to rise further, hovering around a 22% increase in constant value terms

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Target Market & Customer Buying Behavior

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Our New Target Market

When moving into Brazil, Chick-fil-A’s new primary target market

would be growing middle class males and females with children● Our expected secondary target market includes

individual men and women in the same economic class

Target Market ChoiceOur Current U.S. Target Market

Research says our primary target audience reaches females within the age range of 18-44 who live in the southern

region of the U.S.- Those women who have children are 11% more likely to

eat at Chick-fil-A

Chick-fil-A strives to provide quality meals to those who enjoy southern comfort food, but

also enjoy healthy options

Whether one is looking to lower their caloric intake, eat fewer carbohydrates or reduce fat in their diet,

Chick-fil-A has options throughout their menu to help with our target market’s goals

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IMPORTANCE WEIGHTS PERFORMANCE BELIEFS

Performance Attributes

Middle Class

Individuals

Middle ClassMale/Female with

ChildrenChick-fil-A KFC Pão de Açúcar

Price 7 8 5 6 8

Convenience 7 10 7 8 8

Nutritional Value 8 8 8 6 4

Service 8 8 10 5 6

Values 5 6 8 4 5

Quality 7 7 9 7 7

Overall Evaluation:

Target Market 1 331 255 210

Target Market 2 365 289 298

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*10= very important, 1= very unimportant (overall evaluation is the sum of the performance beliefs multiplied by the importance weights)

Multi-Attribute Attitude Model

IMPORTANCE WEIGHTS PERFORMANCE BELIEFS

Performance Attributes

Middle Class Individuals

Middle ClassMale/Female with

ChildrenChick-fil-A KFC Pão de Açúcar

Price 7 8 5 6 8

Convenience 7 10 7 8 8

Nutritional Value 8 8 8 6 4

Service 8 8 10 5 6

Values 5 6 8 4 5

Quality 7 7 9 7 7

Overall Evaluation:

Target Market 1 331 255 210

Target Market 2 365 289 298

Target Market 2 (Middle Class Families) aligned more closely with Chick-fil-A’s values, beliefs and consumption trends, making this group our primary target audience 41

Target Market & Customer Buying Behavior

Consumer Traits

Common psychographic traits of Brazilians:● Brazilians typically have strong culinary sense ● Very apparent food and drink traditions● Content with their quality of life● Strong association with brand loyalty and quality

Therefore, it is important for Chick-fil-A’s Brazil store to align with natives when offering their product and

services

Consumer Behavior for our Target Market

● Currently, there is a large growth in the Brazilian

economy with an emergence of a larger middle class with an increased income per person○ Brazilian consumers have tempered optimism in

their financial security and are optimistic about future economic success

● Growing materialism and brand consciousness○ 77% say quality is extremely important

● Current consumers are willing to spend more on indulging themselves, rather than restricting their spends to basic necessities

Brazilians are beginning to seek convenience and

therefore spend more on eating out

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Top three performance benefits our target market segments care about:

1. Nutritional Value

2. Convenience

3. Service

Target Market & Customer Buying Behavior

“Southern food- Give them anything and they will fry it for you” 43

Brazilians are more for eating in and enjoying their food with

the perk of quick service

Brazilians place more emphasis on eating healthier options

The U.S. market is more on-the-go when it comes to

picking up Chick-fil-A

Desire for good quality

food at a decent price

Importance of good quality

service

BRAZIL UNITED STATES

Competition

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Intratype & Intertype CompetitorsIntratype Competitors: Quick-Service Restaurant

- KFC (Main Competitor)- McDonalds

- Burger King

- Subway

- Habibs

- Bobs

Intertype Competitors: Grocery Stores

- Pão de Açúcar- Carrefour Bairro

- Mercadorama

- Nacional

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Pão de Açúcar is considered an Intertype

Competitor because it is a supermarket that not

only sells frozen ready-to-cook chicken, but pre-

packaged or prepared meals that an individual

could walk in and quickly pick up that would be

ready to eat at their own convenience

These retailers are considered Intratype Competitors due to the fact that they are

all quick service locations that sell a variety of chicken

Primary Competitor: Kentucky Fried Chicken (KFC)

● Based in Louisville, KY○ Colonel Sanders - Founder, 1952○ Parent Company: YUM! Brands

● Famous for bone-in-chicken ● Annual sales of $16 billion in 2015● First quick-service restaurant to

introduce reusable take-out food containers

● World famous for “Original Recipe” Fried Chicken

To sell food in a fast, friendly environment that appeals to pride conscious, health minded consumers.

-KFC Mission. 46

● As of 2014, there are 18,875 KFC outlets in

118 countries and territories located across the world

● Entered Brazil in the first quarter of 2007 with

4 restaurants in Rio de Janeiro

● Currently there are 21 locations in Brazil

○ Most focused primarily in Rio de Janeiro

○ Remainder in Sao Paulo

● Aligned with the BFFC (Brazil Fast Food

Corporation); 100% franchised in Brazil

● Globally there are 300 products served

Primary Competitor: KFC in Brazil

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Primary In-Direct Competitor: Pão de Açúcar (GPA)

● Based in Brazil● Controlled by Companhia Brasileira de

Distribuição○ Biggest Brazilian company in food retail

● Prides themselves on:○ Sustainability○ Quality of food○ Company transparency○ Human development

● Sell a variety of different types of chicken:○ Frozen○ Readily-prepared meals○ Fresh

To ensure the best shopping experience to all of our customers, in each of our stores.

-GPA Mission 48

Pricing

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Food Prices in Rio de JaneiroItem Brazilian U.S. Chick-fil-A (U.S.)

Basic lunchtime menu (business district) R $31 (US $8.75) US $12 US $6.45

Combo meal in fast food restaurant (Big Mac Meal or similar) R $23 (US $6.49) US $5.69 US $6.45

500 gr (1lb.) of boneless chicken breast R $8 (US $2.26) US $3.98 ---

1 liter (1 qt.) of whole fat milk R $3.32 (US $0.94) US $0.88 ---

12 eggs, large R $7 (US $1.98) US $2.75 ---

1 kg (2lb.) of tomatoes R $5.82 (US $1.64) US $3.64 ---

500 gr (16oz.) of local cheese R $17 (US $4.80) US $4.84 ---

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Our Overall Price Strategy

Pricing Policy

We will use Every Day Low Pricing for our price strategy because prices will stay generally at a fixed price, at a slightly higher price than the competition,

to reflect the quality of our food and high level of service

We will use variable pricing in our price bundling and our discounts from digital coupons

We would utilize price bundling in our combo meals where you can get multiple items for one price, like a

chicken sandwich, fries, and a drink51

We decided not to decrease or increase the prices of Chick-Fil-A products

● Our prices are slightly higher than our competitors

○ Our price difference separates us from the

other products in the market● Focus on the quality and taste of our food

○ Prices of our products display an accurate

representation of what Chick-fil-A offers its

consumers

If Chick-fil-A were to decrease its prices, we fear that the consumers will assume that our quality has also

decreased.

By keeping our prices the same, we are able to

continue to reach our target audience’s desired

consumer needs

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Item U.S. Single Item Menu Price

U.S. Meal Menu Price

Chick-fil-A Chicken Sandwich

R $10.55 (US $2.99) R $20.64 (US $5.85)

Chick-fil-A Chicken Deluxe Sandwich

R $12.67 (US $3.59) R $22.16 (US $6.45)

Spicy Chicken Sandwich

R $11.47 (US $3.25) R $21.49 (US $6.09)

Spicy Chicken Deluxe Sandwich

R $13.59 (US $3.85) R $23.61 (US $6.69)

8 Piece Chick-fil-A Nuggets

R $10.55(US $2.99) R $20.64 (US $5.85)

12 Piece Chick-fil-A Nuggets

R $15.49 (US $4.39) R $25.37 (US $7.19)

3 Piece Chicken Strips

R $11.61 (US $3.29) R $21.70 (US $6.15)

4 Piece Chicken Strips

R $15.35 (US $4.35) R $25.37 (US $7.19)

Our new menu prices for our Brazil retail

store will be the exact same as the current U.S. fixed

price menu!

vs.

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Coupon Advertising

Since Brazil is a very digital country, we decided we would release digital coupons by expanding

the capabilities of the free Chick-fil-A app

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Our Goal for the App

1. Make Chick-fil-A’s app more interactive a. Tracking customer’s orders and

purchasesb. Offering digital coupons based on their

purchase2. Introduce a rewards program within the app

a. For every $1 the customer spends, they will earn 1 point

b. Once the customers reach certain point levels, they will receive reward coupons and discounts

i. For example, if a customer reaches 100 points, they might earn a coupon for a free chicken sandwich

Current Chick-fil-A App

● Currently, allows users to view the menu, order online, and add money to their account to pay through their phone

● Very limited in capability

Advertising & Promotion

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Advertising and Promotion ProgramsOUR PLAN

Paid media (e.g., traditional and digital display advertising,

sponsorships, radio and television advertising, and paid search)

Digital Display Advertising (computer) account for 50%Radio and TV advertising will account for 30%

Earned media (publicity)

People walking around with their Chick-fil-A purchases

and word of mouth 5%Owned media (social media pages)

Facebook/Social Media pages 15%

FAST FACTS:

- Chick-fil-A’s FB page consists of 7,547,399 friends

- Chick-fil-A’s total advertising expenditure was $51 million, up from $31 million in 2013

- Chick-fil-A remains one of the lowest fast food advertising expenditure compared to U.S. competition

- Brazil enjoys an international reputation for producing some of the world's most creative

advertising- Brazil is the fourth largest leading country

globally in terms of digital users with approximately 139 billion

- 8 out of 10 young Brazilians are on Facebook- 67 million Brazilians were using the mobile

internet in 2013- 59.5% of Brazilians will be using the internet by

2017, growing at an exponential rate 56

Advertising and Promotion ProgramsTelevision: Take a more forward approach in television

advertisements; Emphasizing our distinct features to place us at the top of our market

- Evening soap operas (telenovelas) and sporting events (soccer) are extremely popular; especially during the hours of 7 and 8 o'clock

- The associated commercial slots form nearly perfect media opportunities for advertisers; therefore, we are aiming to choose some of the prime commercial spots during these hours in order to get our presence known within the first few months of our opening.

- Currently, TV advertisements account for a vast majority, over 75%, of the company’s budget; comparable to Brazil’s current advertising trends (⅔ of Brazilian ad spend being used for television accounts)

- Creating more television ads that feature consumers choosing Chick-Fil-A over the local competitors because of our healthier choices, including emphasis on our removal of all artificial trans fats from our menus and condiments

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Advertising and Promotion ProgramsDigital: Opportunity to reach consumers through cost-

effective digital marketing, products and services- Push by the government to offer free Wi-Fi, we plan to

integrate ourselves with communication through mobile, smartphones and tablets

- Mobile communication will be an integral part of our brand’s marketing mix, especially with our goal being to talk to the new emerging class

Social networking: Social media is essential to our

promotion in a new international location; Connect with consumers over the web

- Facebook: continuing to grow in Brazil’s society, with 31% of the country’s citizens being active Facebook users; new feature offers online ordering- key to increasing our presence in Brazil and adding to their desired convenience

- Youtube: Brazil is 6th in the world based on video views; Competitors, like Burger King, have been largely successful launching new products using large budget video campaigns, therefore, we are aiming to create video displays and demonstrations with Chick-fil-A’s values

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Summer Olympics in Rio - 2016

The Olympics proves to be a perfect opportunity to insert ourselves into the

market this summer and gain recognition, while reaping the benefits of U.S. tourists

and athletes marketing our franchise through word of mouth at little to no cost

Reasons why the Summer Olympics can help:

● 2016 Summer Olympics will generate around 480,000 tourists, which could even be surpassed based on the

positive effects of the World Cup in 2014 (IOC)● Only 18,000 Brazilians went to Beijing in 2008, compared

with 50,000 who went to London in 2012, representing a

growing enthusiasm for Olympic sports

● Subsecretary of State for Tourism, Carlos Luiz Martins, believes the success of the World Cup will further enhance Rio’s reputation as a major tourist destination

● In London, 8.8 million tickets were sold for events in 26 different sports over 16 days○ Many empty seats in the opening rounds

of the football competition – something which is not expected to be a problem in Brazil

● By comparison, the total number of tickets sold during the World Cup was 3,429,873○ Rio will have 28 sports on display, after

the addition of golf and rugby

How does this stack up to London’s Summer Olympics in 2012?

● 10,768 athletes from 204 National Olympic Committees (NOCs) participated, according to Wikipedia

● More than 7,000,000 tickets were sold59

Advertising for the Summer OlympicsAdvertising Appropriately

Another factor affecting attendances in 2016 will be the

large numbers of Latin American tourists who similarly

traveled to Brazil during the World Cup

According to Professor Mendes Bayard Boteaux of Universidade Cândido: “They forgot to display signage in Spanish. There were no information signs in Spanish in Rio’s subway, for example. For us, Portuguese can be very similar to Spanish, but for Latinos it is often difficult to understand Portuguese.”

Advertising the City’s Hospitality

The foreigners who came expecting to find a real jungle in

2014, feared being robbed but instead saw that Rio is a

kind and hospitable city, and know that the Brazilians

cope with diversity really well.

This was very good for the image of Brazil and will

resonate well with our company values, especially

during the months of the Summer Olympics

We will take extra steps to ensure all our summer advertising parallels the wide array of visiting athletes, tourists and spectators

during this time60

Branding Approach

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Branding ApproachThe interior of Chick-fil-A’s U.S. retail store follows their red

and beige color scheme

● The color red is known for its ability in marketing and consumerism to enhance human metabolism and is known to stimulate people to make quick decisions○ Perfect color to act on the “buy now” feeling in

retailing

● The color tan is ageless and timeless, straightforward, uncomplicated and natural○ Working on that “down-home, family” environment

Chick-Fil-A tries to create in their restaurants

● Flowers are placed on inside tables to enhance the feeling of “family-feel” that the company tries to instill in their consumers

Therefore all of our packaging will be in red and tan, the signatures of Chick-fil-A 62

Store Design and Visual Merchandising

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Typical U.S. Store● Sit on 1-1.5 acres that are able to accommodate

a freestanding restaurant with a drive-thru ○ Some double drive-thrus

● Also exist in:

○ In-line, end-cap, and drive-thru only locations

○ College and university campuses

○ Airports

○ Healthcare facilities

● Each Chick-fil-A is required to have:○ Front counter serving area○ Back-of-house prep and storage

○ Fully staffed point-of-sale registers on front

counter with dynamic routing capabilities ○ Central cash register system

● All Freestanding Chick-fil-A’s have:

○ An enclosed play area for children

■ Features healthy facts & mind-

stimulating games

■ Encourages daily play

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The U.S. Store Interior● The design of the interior of Chick-fil-A

restaurants follows Chick-fil-A’s red and beige color scheme

● Flowers are placed on inside tables to

enhance the feeling of “family-feel” that

the company tries to instill in their

consumers while inside

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Our Plan for Brazil Retail Locations

● We will add graphics, pleasant lighting, bright colors and signage so that we always have a welcoming environment

● Aiming to match the more modern, sleek design of our competitors in order to keep up with architectural trends

● Implementing Chick-Fil-A signage, including the famous cow campaign, will stay consistent in our stores in Brazil

Visual Merchandising: Street CartsStreet food is a large segment of the food supply

chain for urban populations that is expected to expand along the projected population growth

for large and medium-sized cities in Brazil

● Recent changes in legislation in Rio de Janeiro regulate the operation of street carts, allowing their owners to park their trucks on public roads and close to bars and restaurants, even allowing them to place chairs and tables for customer convenience

● Little food regulation standards exist however, so Chick-Fil-A has a chance to thrive with being one of the only street cards to whole-heatedly promote in consistently fresh and healthy products, whether in free-standing or street cart vendor

● Our street cart will be an original way to increase brand awareness

● Many full service restaurants are trying this new format to reach more consumers and promote their brands

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● The very first Chick-Fil-A street-cart will follow the guidelines of food presentation described for our stores as

well, but will take a different route of presentation due to its innovative and unique design

● The cart will mix the traditional Brazilian street cart look (small, portable, etc.) with the modern, branded Chick-Fil-A look (red color scheme, cow graphics, friendly and inviting, etc.)

● Our food products will be organized logically and visually appealing; appearing in a clear food warmer that allows the buyer to view fresh, newly cooked product

“The joy you get in being in the restaurant business is not ringing the cash registers, but the compliments

that you receive on your employees and on your food.”

- Truett Cathy, Founder of Chick-fil-A

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Chick-fil-A in Rio de Janeiro

Works because of the emerging middle class, pre-existing success of the quick service market, and increasing poultry consumption

rate in Brazil!

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Thanks!Maura Manor

Taylor Martz

Jessica Adams

Taylor Duffin

Carolyn Capka

Eriko Mizuno

Alex Lombardo

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Questions?

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Works Citedhttp://www.religionfacts.com/brazil

http://www.euromonitor.com/fast-food-in-brazil/report

http://www.fastfoodmenuprices.com/fast-food-chains-battle-brazil/

https://www.trekksoft.com/en/blog/rio-olympics-2016-tourism-impact

https://www.expatistan.com/cost-of-living/rio-de-janeiro

http://www.franchisedirect.com/foodfranchises/chick-fil-a-franchise-07431/ufoc/

http://worldpopulationreview.com/world-cities/rio-de-janeiro-population

http://www.slideshare.net/annaelizabethbrewer/international-marketing-kfc

http://www.oecdbetterlifeindex.org/countries/brazil/

http://www.internationalpoultrycouncil.org/industry/industry.cfm

http://www.globalmeatnews.com/Industry-Markets/Chicken-consumption-is-up-in-Brazil

http://www.businessinsider.com/chick-fil-a-changes-this-year-2016-1

http://www.businessinsider.com/what-it-costs-to-open-a-chick-fil-a-2016-1

http://www.businessinsider.com/chick-fil-a-history-and-facts-2016-1

http://www.statista.com/statistics/261957/ad-spend-of-selected-restaurants-in-the-us/

http://sevenpillarsinstitute.org/case-studies/financing-ethics-and-the-brazilian-olympics

http://www.rio2016.com/en/transparency/frequently-asked-questions

http://www.slideshare.net/Aamirabbasi72/advertising-in-brazil-17680642

http://www.bbc.com/news/uk-23370270

http://thebrazilbusiness.com/article/the-ultimate-guide-to-why-you-should-do-business-in-brazil

http://www.cnbc.com/2013/11/08/fast-food-giants-locked-in-battle-for-brazilian-market.htmlhttp://www.fastfoodmenuprices.com/fast-food-chains-battle-brazil/http://www.naturalproductsinsider.com/articles/2014/04/emerging-trends-in-brazil-health-and-environmenta.aspx

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