Across the street from the headquarters campus of Chick-fil-A is an unmarked industrial building. Deceptively ordinary on the outside, inside lies an innovation paradise with enough space to prototype full-scale restaurants. Spread throughout the spacious warehouse are different rooms dedicated to defining problems and learning different ideation techniques.
There’s also a full-sized Airstream trailer, and not far away hangs a large cardboard airplane that reads “Embrace Risk.” A toy cow, holding an “Eat Mor Chikin” sign, parachutes into the unknown.
Chick-fil-A customers are certainly heeding the mascot’s advice. The fast-food chain has become famous for its chicken sandwiches, waffle fries, and beloved secret sauce. And the popularity of their products continue to grow.
The privately-held company’s sales leapt by more than 13 percent in 2018, according to the restaurant industry consulting company Technomic, surpassing $10 billion. That gives it more revenue than Wendy’s and Burger King. Technomic also predicts that Chick-fil-A will become the country’s third-largest fast-food chain by 2020, after McDonald’s and Starbucks. (That’s in spite of controversies and boycotts related to non-profit foundations set up by the company and its founder, Truett Cathy, and the groups they support.) But with only 2,300 restaurant locations in the US, the company needs to think about efficiency, volume, and the customer experience to continue growing.
“How do we continue to grow at such a positive rate when our processes and our physical restaurants have maxed capacity?” asks Michael McCathren, who leads enterprise innovation at Chick-fil-A. “How do we…accommodate the needs of growing and changing consumer behaviors and preferences?”
To come up with answers to those questions, innovators throughout the company gather at Hatch—the hub for innovation at Chick-fil-A. Under one roof, teams from both headquarters and the company’s franchise operators design solutions to common problems in the business.
“We’ve instilled and imbued the culture that our Chick-fil-A operators feel the freedom to innovate,” says Woody Faulk, Vice President of Innovation and New Ventures at Hatch. “That innovation that happens [in restaurants] ultimately finds its way back to Hatch.”
According to Faulk, ideas from across the business pass through the same innovation process. Successes then roll out across the chain.
InnoLead interviewed Faulk and McCathren at Hatch in December of 2018. Throughout the conversation, the pair discussed Hatch’s innovation process, challenges in the fast-food business, and how they implement innovations with franchisees.
The Hatch Philosophy: More Building and Less Meeting
“Hatch was designed to be a making space—and not a meeting space,” McCathren says. “This is where people come to create things, to give shape and form around their ideas.”
Carpenters are a common sight at Hatch, carrying tools and building materials as they work on full-scale structures.
In the back of the space, innovators have simulated a kitchen built entirely out of foam-core and wood. One team at Hatch works on finding the optimal layout that will allow employees to serve more customers. They rearrange pieces to see what decreases the time it takes for an order to get out of the kitchen and into the customer’s hands. Findings from this prototype have been integrated into Chick-fil-A’s first New York City restaurant to help handle higher-than-usual customer traffic.
“Many innovation spaces are almost sacred spaces. You walk in quietly, and you see people working,” says Faulk. “We follow a different strategy. We want paint hitting the floor. We want sawdust and smoke. A little bit of planned chaos, just like in a garage or true studio.”
Hatch breaks the innovation cycle into the five stages of design thinking: understand, imagine, prototype, validate, and launch. Each phase of the process has a dedicated area in the building.
Teams focus on exploring a problem and refining their ideas during the first two stages. But the most visible part of the space, Faulk says, is dedicated to prototyping.
“We can come and experience the ideas in either small-scale modeling [or] real, live prototypes that we can walk team members through,” says McCathren.
According to Faulk, Hatch brings in customers, employees, and restaurant operators to engage with prototypes. These end-users provide instant feedback about what works —and what can be improved upon.
“We videotape. … We’re in a backroom watching what happens,” Faulk says. “We don’t want to interfere with the test. [They are] using the prototypes just like they were fully-built, high-resolution final products.”
The team then makes adjustments. Ideas often leave the prototyping stage looking different from when they started. “If we enter the prototype stage and then exit the prototype stage and the idea hasn’t changed, we probably haven’t done a good job of prototyping,” McCathren says.
After testing a prototype, the team moves the ideas out of Hatch to validate them in a handful of Chick-fil-A locations.
“It’s like a dress rehearsal for launch,” McCathren says. “Everything from marketing communication to operations to training, everything is in that validate stage with a small number of restaurants. Then once all that is pretty tight, then we’re ready to launch.”
Hatch celebrates its wins in the “Launch” section of the building. Ideas that have rolled out across the chain are displayed in commemorative wood blocks on the wall.
Standing Out on the Fast-Food Buffet
Competition is fierce in the fast-food space. Chicken—in nugget, wing, and sandwich form—can be found at most chains.
“[One challenge] that the fast-food industry is facing…is that sameness,” McCathren says. “How do I stand out and continue to differentiate my brand if the products [from chains] are looking and starting to taste relatively similar?”
Chick-fil-A has hatched innovations that seek to provide that differentiation. The company has created over 40 new menu items, and a test kitchen for new food offerings operates in a building not far from Hatch. Faulk also says that providing increased convenience can help the brand win big.
“We all have busy lives. … When we can find anything that provides relief in the form of convenience, we will test it and try it,” Faulk says. “[I]nstead of people going to the food, we want the food to go to the people—where I want it and when I want it.”
In order to keep cars moving seamlessly through the drive-through, one team created Drive-Through Play. It deploys workers on foot to gather a string of orders from the line of waiting cars, instead of taking orders individually through a speaker.
In the future, fast-food lovers may have their sandwiches brought directly to their door by a Chick-fil-A employee, eliminating the need for third-party delivery services. “You’ll know it’s a Chick-fil-A person, and you can expect certain levels of service from our delivery,” Faulk says.
Hatch also developed Chick-fil-A meal kits. Similar to Blue Apron, the package contains all of the ingredients and instructions needed to prepare pan-roasted chicken in 30 minutes. Customers at select restaurant locations in Atlanta can now try the product.
“Sometimes people are like, ‘Well, I really do like Chick-fil-A food, but I don’t want Chick-fil-A another time this week. I’d like to have something by Chick-fil-A—but make it different,'” Faulk says. “The key is that you do go by Chick-fil-A to get your meal kits. You’re on your way to eat anyway, to grab an immediate meal, but you can go ahead and pick up a meal for lunch or dinner.”
Chick-fil-A is the first fast-food restaurant to offer meal kits to its customers.
“We spent a lot of time understanding why people do and do not like meal kits and designed what we believe is an elegant solution that makes us unique,” Faulk says.
Which Ideas Leave the Nest
When deciding what leaves the nest and shows up in restaurants, Faulk says that projects have to meet three criteria.
“First, it has to make customer sense. Customers embrace [it and] score it high,” Faulk says. “Secondly, our Chick-fil-A operators and team members accept it. Sometimes the idea may be a great idea, but it’s so difficult to execute that there’s resistance. Then third, it needs to achieve a meaningful financial hurdle.”
If the project checks all the boxes, Faulk’s team decides if the innovation should be rolled out as a national launch, or gradually by market.
However, not every idea makes its way into restaurants. According to Faulk, learning from failure plays an important role at Hatch.
“Just like you have an ROI…there is a return on learning, because you learn [about ways] we could do it differently, or let’s not do that again,” Faulk says. “We think they’re both important, and we celebrate [both].”
The Future of Hatch
The team at Hatch is continually looking for ways to improve its innovation process.
“You’re visiting Hatch 2.0 today. We’re actually working on Hatch 3.0,” Faulk says. “We think it’s necessary to innovate innovation… We found [that] when we mix things up, people get re-energized about innovation again.”
Changes in the program could involve a greater focus on collaboration.
“One thing we’re finding is the more we are able to get outside voices [from different industries involved]…it expedites the solution finding, and it expedites ideas,” McCathren says. “Those perspectives that we may not have been looking for five years ago, we’re seeking now.”
Hatch also engages startups around the US to help explore opportunities or tackle problems, often inviting startup teams into the space. Faulk says he is looking to expand those relationships internationally.
“We’ll be kicking off a handful of projects [in 2019],” Faulk says, “expanding the same strategy and philosophy, but from a more global perspective.”