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Chick-fil-A is now the 3rd-largest restaurant chain in America, and McDonald's and Starbucks should be terrified

Business Insider logo Business Insider 6/18/2019 Kate Taylor

Chick-fil-A has whipped past rivals to become the third-largest restaurant chain in the US.

The chicken chain's massive growth in 2018 moved it into the No. 3 spot on the ranking of the largest restaurant chains in the US, with $10.46 billion in American systemwide sales, according to Nation's Restaurant News analysis published Monday.

McDonald's maintained the No. 1 spot, with $38.52 billion in American system-wide sales. Starbucks held on to second place with $20.49 billion.

Chick-fil-A moved up from the No. 7 spot on last year's Nation's Restaurant News' Top 200, passing Wendy's, Burger King, Taco Bell, and Subway. Chick-fil-A's system-wise sales grew 16.7% in 2018, up from $8.97 billion.

Experts say there is no reason to believe Chick-fil-A's growth will slow anytime soon. If anything, Starbucks should be worried it could lose its silver medal.

Read more: Why Chick-fil-A's decision to close on Sundays is a brilliant business strategy

"Can they double that? I think that is a very reasonable goal for them," Kalinowski Equity Research founder Mark Kalinowski told Business Insider in May.

"I would be surprised if they didn't double that in the not-too-distant future," Kalinowski added. "Can they reach $30 billion? I think that's also a realistic goal if you give them enough time. And that should put them ahead of Starbucks."

Related video: How Chick-fil-A got big by keeping its menu small (provided by The Wall Street Journal)

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Why rivals should be scared

Chick-fil-A competes with chains that have many more locations because of its enviable average unit volumes.

On average, a Chick-fil-A location brought in $4.6 million in annual sales in 2018, up from $4.2 million in 2017 - more than any other fast-food chain. By comparison, the average McDonald's location made $2.8 million.

Chick-fil-A has plenty of room for growth as it continues to expand outside the South.

"They're severely under-penetrated," Kalinowski said. "Once you start looking at all these other big metropolitan areas in all these states, there's room for growth for, not just years and years to come but potentially decades to come."

Kalinowski says that some of the brands that should be most concerned about Chick-fil-A's growth are chicken rival KFC and Wendy's, which is known for its chicken sandwich. In an increasingly competitive restaurant industry, many chains are feeling the pressure from Chick-fil-A's growth, as rivals struggle to attract more customers.

"I would say there's pressure on the burger chains in general," Kalinowski said, "and they're fighting that off with varying degrees of success."

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