Ravi Nagarajan

Alternate Business Models that Drive Retail Brand Value

I am more personally familiar with Chick-fil-A than R.C. Willey from a customer perspective, and with the business results of R.C. Willey from my perspective as a Berkshire shareholder. I can say without question that Chick-fil-A does have a loyal following - in many cases, people who would not think of going to another fast food restaurant if they can possibly avoid it. To the extent that people do not eat fast food every day, it is easy enough to shift consumption from Sunday to another day of the week. I've done this myself many times.

Chick-fil-A has the fanatical type of customer base that just screams "moat". Drive by a stand alone location sometime around lunch and look at the drive thru window and compare it to the nearest KFC or MCD location. Name another fast food restaurant that can get customers to camp outside for 12 hours at a store grand opening to get free sandwiches. The only comparable chain is In-N-Out burger on the west coast.

R.C. Willey competes mainly on price but also on service and the integrity of the business practices followed by management. In terms of market share and profitability, they seem to be doing quite a bit well and for some reason, they keep killing the competition (particularly in Utah).

The Sunday closure policy is not the source of the competitive advantage, nor is it even the most important aspect of the business model. But I would argue that it certainly does not hurt either business and could possibly help drive interest and sales for the reasons mentioned above.