The Buc-ee's and Chick-fil-A wide moat way

I’m taking a break today from writing about publicly traded companies to talk about publicly traded companies.

No, you didn’t read that wrong. And it wasn’t an editorial mistake.

I’m just taking a different approach to my normal topic by showing two ideal investment examples… that aren’t actually listed. These are some of my favorite companies, Buc-ee’s and Chick-fil-A.

They’re not out there wowing investors every quarter. But they are wowing customers day in and day out. And in so doing, they’ve built truly exceptional economic moats that every single CEO on Wall Street should admire…

And every investor should recognize, holding the companies they can buy to the same high standards.

I know I have these fan favorites in mind as I continue to build up Wide Moat Research. Because while Wall Street obsesses over minute-to-minute headlines and quarterly valuation multiples, it tends to forget a much more important long-term detail.

That the greatest businesses don’t obsess over numbers. They focus on impressing the people they purport to serve.

Most people think Buc-ee's is a gas station.

In which case, most people are wrong. It’s a much larger customer experience that just happens to include gasoline.

The chain started in 1982 when Arch "Beaver" Aplin opened the first Buc-ee's in Lake Jackson, Texas. After graduating from Texas A&M with a degree in construction science, he thought he’d go on to build skyscrapers.

Instead, he began one of America's most beloved retail brands.

Buc-ee’s mission right from the get-go was remarkably simple. Not easy, necessarily, but simple nonetheless: to create America’s cleanest, friendliest, most well-stocked convenience store.

And not only did it achieve that goal, it’s kept it ever since despite all of its expansionary efforts. Today, Buc-ee’s operates more than 50 massive travel centers across nine states, with plenty more room (and intention) to grow.

Being a privately run company, Buc-ee’s doesn’t disclose its numbers to the public. But industry evaluations put its average annual sales at $55-$65 million per location.

Brand-new Buc-ee’s have generated close to $1 million on their opening day. The busiest stores, meanwhile, reportedly exceed $100 million per year.

If true, that easily makes the chain one of America’s highest-volume convenience retailers. And I think it’s safe to say that it’s the only “gas station” brand with a cult following.

Its customers could stop at any other competitor along the way for fuel and a snack. But they don’t, driving 15 minutes… half an hour… or more off course to experience the Buc-ee’s way of doing business, complete with:

All of which consumers joyfully scoop up.

One quote from Aplin especially stands out to me: “Building a brand is as much about your customer as anything. It's providing an exceptional experience that your customers can count on time and time again.”

Not maximizing quarterly profits. Not financial engineering. Not advancing same-store sales.

Just good old customer satisfaction. That right there is Buc-ee’s moat.

Customers go because they hear about the experience. And they keep coming back because they know it never disappoints.

I also can’t help but admire how Aplin still personally selects new Buc-ee’s locations. Even after four decades of success – including achieving worldwide fame – he's still obsessed with getting the real estate right.

As someone who spent 20 years as a commercial real estate (CRE) developer, I appreciate that he appreciates how:

And that brings me to my final point about why Buc-ee’s stands out. Its leadership knows that growth for growth’s sake destroys businesses. That’s why, much to many would-be customer’s dismay, the company has never chased store count.

It only chases excellence, and that's why its stores feel so special.

In the same way, Chick-fil-A might sell chicken sandwiches, waffle fries, and delicious milkshakes. But that’s all built on a foundation of intentionally applied values.

When founder Truett Cathy established the fast-food company in 1946, he did so with a very specific condition: It would be closed on Sundays. And even 60 years later, when practically everyone else has set that conviction aside, that rule still stands.

I can’t imagine a single business school that would encourage such a practice. Imagine telling Wall Street that you're willingly and even purposely giving up a seventh of your annual revenue.

Most analysts would call that irrational. Or worse.

Yet Chick-fil-A’s no-Sundays policy has become one of its greatest competitive advantages. It communicates to everyone – franchise owners, employees, customers, and suppliers alike – that there’s something more important than profits at stake.

There’s an ethical and even spiritual understanding of how the world should work. And everything needs to be subject to that, including how everyone – franchise owners, employees, customers, and suppliers alike – are to be treated.

For instance, everyone knows Chick-fil-A employees say, "My pleasure.” It might seem like such a simple phrase. Not even a complete sentence, really.

Yet it’s a constant reminder that every single customer interaction matters.

People are much more likely to trust a company that values them, as is definitely the case with Chick-fil-A. That’s the reason why it has such pricing power.

So much pricing power, in fact, that I’d say that’s its economic moat.

Today, Chick-fil-A operates over 3,300 fast-food restaurants across 48 states (Alaska and Vermont are the exceptions); Washington, D.C.; Puerto Rico; Canada; and several international markets as well.

Chick-fil-A’s set of values also means it operates an exceptionally unique franchise model. While operators need to put a mere modest initial investment down to open a new location, they don’t actually own the restaurants.

So they can’t sell them. And they’re not allowed to build a chain of multiple locations.

In fact, most Chick-fil-A operators manage a single store. That way, they’re much more likely to stay on top of how that store is run, giving it singular attention.

As such, Chick-fil-A doesn’t create investors; it encourages operators. And it doesn’t reward empire building; it rewards operational excellence.

This also gives it greater control over its brand, excellent customer experience and all. The result is distinct: Chick-fil-A is one of America’s highest-volume restaurant chains despite operating fewer hours.

Its average freestanding restaurant generated about $9.2 million in sales last year, with the top-performing location topping $20 million. Compare that to individual McDonald’s (MCD) locations, which make roughly $4 million on average.

I like McDonald’s as an actually investable opportunity. Don’t get me wrong.

But just think about how much more money it could make its shareholders if it adopted a Chick-fil-A approach to customer service?

Many of you know that the past year has been a busy one here at Wide Moat Research. After buying the business back, I’ve been hard at work migrating platforms, building new products, expanding into YouTube, launching newsletters, and creating new partnerships.

And there’s still a lot of work to do from here.

Yet I've found myself focusing on what’s best for you, my readers, instead of mere growth. Like Buc-ee's, I want to create consistency; and like Chick-fil-A, I want to bring value.

The result is an investment space filled with excellent analysis of wide-moat ideas that keeps you coming back for more.

Part of that is reminding you that fast, flashy profits don’t usually last. While I’m hardly against standout quarterly results, they should be the result of corporate strategies that know what to prioritize and how to prioritize them.

Buc-ee's and Chick-fil-A both remind us that the widest moats – the most enduring competitive advantages – are built through an unwavering commitment to customers. Any company that loses sight of that principle is one I'd be very cautious about trusting with my capital.

At Wide Moat Research, we share that same commitment. We put our readers first by delivering independent, high-quality research designed to help you build lasting wealth.

Just as the world's best businesses earn loyalty one customer at a time, we're committed to earning our subscribers' trust every single day. So thank you for sticking with us, no matter if that’s been a day, a year, or a decade.

We aim to please!

Happy SWAN investing!

Brad Thomas
Editor, The Wide Moat Daily

We put together another great Wide Moat Show episode for you last week titled “7 Strong Buys”… two of which come with especially attractive price points.

There are always worthwhile bargains to be found in the stock market, no matter what. And we’re proving that with finds like:

Discover all this and more when you click right here.