• Chick-fil-A is the third-largest restaurant chain in the U.S. by sales — and the company that everyone in the restaurant industry is looking to beat.
• Even McDonald's, which outstrips Chick-fil-A by sales and footprint, is leaning into chicken to drive growth.
• Smaller chicken players are copying Chick-fil-A's playbook to expand nationwide, while Popeyes leans into new chicken categories to catch up to its top rival.

Every restaurant chain from McDonald's to Popeyes wants to take down Chick-fil-A, but its hold over customers is tighter than ever.

Since its founding in 1967, Chick-fil-A has grown to become the third-largest restaurant chain in the U.S. by systemwide sales, despite having fewer locations than Sonic Drive-In or Papa John's. The chain is barreling toward holding the majority market share of the chicken fast-food category.

The average non-mall franchised Chick-fil-A restaurant rakes in $8.7 million in sales annually. That's despite being closed on Sundays, although some New York lawmakers are pushing back on that policy.

For comparison, the average franchised McDonald's location that has been open at least a year sees about $3.7 million in annual sales. McDonald's, which is the largest U.S. restaurant chain by sales, has a clear size advantage over Chick-fil-A, with roughly 14,000 U.S. locations, and plans to build 900 more by 2027. But McDonald's hasn't been able to match Chick-fil-A's massive annual unit volumes or its reputation for customer service.

"We've got great competitors in all markets where we compete," McDonald's CEO Chris Kempczinski told CNBC. "We respect Chick-fil-A."

Chick-fil-A, which is privately owned by founder Truett Cathy's family, declined to comment for this story.

The chain has demonstrated a resistance to controversy, as well. Chick-fil-A has come under fire in the past for the family foundation's donations to anti-LGBTQ organizations and comments from former CEO Dan Cathy about same-sex marriage. Despite backlash, Chick-fil-A has opened locations in liberal bastions such as New York City and Seattle.

As the Atlanta-based chicken chain has expanded from the Southeast to roughly 3,000 locations nationwide, the broader restaurant industry has taken note of its success. McDonald's franchisees asked for a chicken sandwich that could rival Chick-fil-A's back in 2019. Popeyes' own chicken sandwich helped it overtake KFC as the No. 2 chicken chain. Southern players such as Raising Cane's are following Chick-fil-A's playbook to become national chains.

"Chicken is what is hot right now, and everyone is trying to get a piece of that action," said Kevin Schimpf, director of industry research and insights at Technomic, a restaurant-focused research firm.

Chicken consumption is projected to hit 101.7 pounds per capita in 2023, more than double how much beef Americans consume, according to U.S. Department of Agriculture data.

"As of right now, there's no signs of it really slowing down, especially with beef prices being so high," Schimpf said.

The Chicken sandwich wars

Nearly five years ago, 2019 marked a turning point for Chick-fil-A and the fast-food industry.

That year, Chick-fil-A leapfrogged Wendy's, Burger King, Taco Bell and Subway to become the third-largest restaurant chain. During that summer, Restaurant Brands International's Popeyes rolled out its first chicken sandwich nationwide.

Banter between Popeyes and Chick-fil-A on X, then known as Twitter, prompted many customers to try the new sandwich and compare to Chick-fil-A's menu staple. Popeyes sold out of the new sandwich in less than a month. When it permanently returned to the menu several months later, its popularity fueled strong same-store sales growth quarter after quarter.

Other chains took note, hoping to steal some of the sales momentum from Chick-fil-A and Popeyes.

McDonald's was one of the newcomers, launching its own version in 2021. Months earlier, as part of a broader investor presentation, McDonald's said it would lean into chicken, given its growing popularity in the U.S. and the rest of the world.

Chicken prices also make the meat attractive to restaurants: It's cheaper than beef, and its prices fluctuate less dramatically, too.

At its latest investor day earlier in December, McDonald's executives said the McCrispy chicken sandwich has grown into a billion-dollar brand, and chicken now generates the same amount of systemwide sales as beef. The chain said it would be expanding the McCrispy brand into wraps and tenders.

"I certainly think that chicken can be bigger than beef, but I say that because in Asia it is," Kempczinski told CNBC.

Ruling the roost

Inside the chicken fast-food segment, the competition is even hotter.

Still, Chick-fil-A remains on top. Its market share grew to 45.5% in 2023 from 38.3% in 2022, according to Barclays research.

The No. 2 player, Popeyes, holds only an 11.9% share, losing some of the market during the same period. In fact, out of the top 10 chicken chains, Chick-fil-A was the only to gain market share. Raising Cane's, the fourth-largest player, held onto 7.5%.

But Chick-fil-A's rivals have their eyes on taking down the chain.

"They're [Chick-fil-A] a formidable competitor, and we admire everything that they do," Popeyes President Sami Siddiqui told CNBC.

Building off the success of its chicken sandwich, Popeyes overtook KFC as the second-biggest chicken chain in the U.S. by market share this year, despite having roughly 1,000 fewer units. The chain just added chicken wings to its menu permanently, hoping they will attract new customers.

Smaller chicken players are plotting a more aggressive expansion. Raising Cane's, Dave's Hot Chicken, Pollo Campero and Bojangles are among the chains that grew quickly in 2023 and have plans to accelerate restaurant openings even faster in 2024.

"We think we deserve to be a national brand," Bojangles CEO Jose Armario told CNBC in a November interview.

Bojangles isn't the only chain that feels that way, but the market isn't saturated yet. There's roughly one chicken fast-food restaurant for every 12,000 people in the U.S., according to Barclays research. For comparison, there's a burger restaurant for roughly every 6,000 consumers.

The versatility of chicken also helps. There are "little things" that distinguish the chains from one another, Technomic's Schimpf said. "Some really focus on being spicy or having unique sauces."

Raising Cane's only serves heavily breaded tenders — even inside its sandwich. Dave's Hot Chicken serves Nashville-style hot chicken, leaning into the spiciness. Pollo Campero, which is based in Guatemala, also sells yuca fries, sweet plantains and empanadas at U.S. locations. Its menu mix has helped the chain retain its Central and South American customers while attracting new fans, according to Blas Escarcega, Pollo Campero's director of franchise development.

International ambitions

If there is anywhere that Chick-fil-A could be beat, it's outside the U.S. The chain's only international locations are in Canada, giving other chicken chains a clear leg up.

While KFC's domestic performance has lagged that of Chick-fil-A, the chicken chain is much larger outside of its home market. It's the largest fast-food brand by system sales in China, its largest market.

"KFC is so much larger in China and other international markets," Schimpf said. "So I think KFC is probably fine with their market share in the U.S."

Popeyes, too, is looking to expand its international footprint. Long term, the chain is aiming to have at least 1,500 locations in China. It's also looking to open more restaurants in the U.K., South Korea, Mexico and India.

Even Wingstop, which has roughly 1,000 fewer U.S. locations than Chick-fil-A, has more than 260 international restaurants.

Chick-fil-A has plans to expand internationally, now that it has conquered the U.S. It aims to open a permanent location in the U.K. by early 2025. Chick-fil-A plans to invest more than $100 million over the next 10 years in the U.K. The chain also plans to open restaurants in Asia by 2026 and have five international locations by 2030.

But Chick-fil-A's previous expansion plans have been foiled abroad before. A previous London pop-up location in 2019 only lasted six months after protests from LGBTQ rights activists.

— Charts by CNBC's Gabriel Cortés.