Seven Key Location Factors for Chick-fil-A's European Expansion

Seven Location factors Anthony Powers College of Aeronautics, Embry-Riddle Aeronautical University LGMT 420: Management of productions and Operations Instructor Al Jordan May 28, 2023 1

Seven Location Factors Expanding a business, especially internationally, takes a lot of consideration from cost to even politics. The company chosen for international expansion is Chick-fil-A an American fast food chicken spot that is well known. For this assignment we will look into where Chick-fil-A should go in Europe an area of the world that would probably be excepting of Chick-fil-A. Using the seven location factors we will dictator where the first European Chick-fil-a will be. Labor Productivity The first factor is labor productivity which means should the first fast food spot be in a location that has high labor cost but product high yields or should they go somewhere tat has low labor but also low yield. Being a fast-food spot in Europe there aren’t many poor countries and cost of labor is fairly similar as well as education considering this is the European union. For this factor it isn’t much a of factor unless comparing a country from Africa to a European country. Exchange Rates and Currency Risk The second factor of exchange rates and currency risk is a very important as you don’t want to open shop in a location with a risky currency in loosing value due to inflation cause money to be worth nothing. For example, choosing a country that uses Euros would be smart as it is a stable currency that is on par with USD. Countries such as Germany have low exchange rates and make a good contender. Cost The third factor is cost which is broken down into tangible and intangible cost. Tangible cost are things like labor, utilities, tax, basically things that are easy to predict in that area. A great country with low business tax is Ireland at 9 %. Intangible costs are costs that are unpredictable such as will people like the food, will people want to work there. Looking at these 2

factors it seems Ireland would be the best pick as it is culturally similar to America and has by far the lowest business tax rate. Political risk, Values, and Culture The forth factor is political rick, values, and culture and Chick-Fil-A being a more Christian religious food spot can make finding a good location as some a location that also has a strong Christian population would be a good candidate (Jensen et al, 2015). Europe overall is dominantly Christian so the picks of Germany and Ireland would both still be great picks for category. Proximity to markets The fifth factor is proximity to markets, which means to be located in a market that would benefit your business such as a busy location near other places to eat. Large cities in Europe in populated areas would be a great market to be in. Proximity to Suppliers The sixth factor is proximity to suppliers which means to be in an area that has the supplies you need readily available such as a farm with chickens for Chick-fil-A. While being located in a busy city would be great for business, ensuring there are fresh supplies nearby such as farmland is very important for a company to rely on fresh ingredients and not want to pay extra due to transportation. Proximity to Competitors The last factor is proximity to competitors. With fast food you want to be close to competitors within a mile in most cases (Cusick et al, 2017). Chick-fil-A could see where McDonald locations are and then use that to see where they should put there fast-food spots. 3

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Summary Fast food expansion in general is much easier compared to some businesses such as airline hubs or auto manufacturers but using these factors to really zone in where an establishment such as Chick-fil-A should be located makes success more likely. Looking at Europe most European locations look to be a good please to start with Germany and Ireland checking off most of the factors. 4

References Cusick, S. K., Cortes, A. I., & Rodrigues, C. C. (2017). Commercial Aviation Safety (6th ed.) (p. 278). New York, N.Y Mcgraw-Hill Education Jensen, N. M., Malesky, E. J., & Walsh, M. (2015). Competing for global capital or local voters? The politics of business location incentives. Public Choice, 164(3/4), 331–356. https://doi.org/10.1007/s11127-015-0281-8 5

6.2 Anthony Powers

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