How Chick-fil-A is taking on Starbucks by Daniel Roberts @FortuneMagazine August 21, 2015, 2:34 PM EDT E-mail Tweet Facebook Linkedin Share icons Chick-fil-A had a coffee problem. For years, “Customers were walking into our stores in the morning to have our delicious breakfast, but holding a competitor’s coffee cup in their hand,” says David Farmer, the chain’s vice president of product development. It crystallized further for Farmer when he was visiting the company’s corporate museum in Atlanta and saw a replica of a 1950s sign that said: Hot coffee, made fresh every hour. “We were not making fresh coffee every hour,” he concedes. To address the coffee gap, Chick-fil-A partnered with Thrive Farmers, an Atlanta-based startup that shares revenues of beans with the farmers that harvest them, flipping the usual model that leaves many farmers underpaid for their work. (It doesn’t hurt that this do-gooder model might also help Chick-fil-A’s image, which came under fire in recent years after controversial comments made by its CEO about same-sex marriage.) Chick-fil-A launched the new coffee in all Chick-Fil-A stores one year ago. It has been quite a success. Chick-fil-A tells Fortune that its coffee sales have doubled since the launch of Thrive coffee last August. More interestingly, iced coffee has driven 75% of that growth. Chick-fil-A has offered coffee for decades, but many loyal customers had no idea. That’s changing. With its push into better iced coffee, Chick-fil-A isn’t just tapping into the growing demand for iced coffee (which is especially high among millennials, who enjoy the drink in the afternoons rather than just in the morning). It is also part of the exploding cold brew craze. Cold-brew iced coffee is suddenly everywhere. As opposed to traditional iced coffee, which is brewed like hot coffee and then chilled, cold brew is steeped for 24 hours (sometimes longer) in cold water. In many cases the beans are even roasted differently—think of it as iced coffee by design, rather than normal coffee that was iced after the fact. It is the kind of thing that has obvious appeal to moneyed hipsters who buy local, organic, and artisanal everything. “When we rolled out the new coffee, our focus was on the hot,” says Matt Abercrombie, Chick-fil-A’s senior consultant on menu development. “But then we found our customers really like this iced product, the cold brew. So we have put more emphasis on that. Millennials especially like it. So you have older generations that have been drinking hot coffee their whole life, then you’ve got millennials who are more familiar with iced coffee from Starbucks and they’ve been drinking that since the time they began drinking coffee.” Starbucks jumped into the cold brew game this summer, launching it at some 3,000 stores. Peet’s Coffee replaced its iced coffee with cold brew this summer. Bakery chain Le Pain Quotidien launched cold brew in May. Everyone is hopping aboard the cold brew train. Chick-fil-A’s success with cold brew is even shifting the time of day when it sells the most coffee. In the past, Abercrombie says, “Our approach with coffee has been very tied to breakfast. Breakfast is a really big deal for us, and our coffee predominantly sells at breakfast.” That is still the case, but sales of its coffee in the afternoon are on the rise. The conservative, closed-on-Sundays chain is so proud of its new coffee that Abercrombie specifically boasted to Fortune of Chick-fil-A earning the title of No. 1 best “fast food coffee” in a survey by Thrillist (though Abercrombie was careful to use the term “quick-serve,” as these chains typically eschew the label “fast food”). It beat out Burger King, McDonalds, and even dedicated coffee-first chain Dunkin Donuts. Starbucks wasn’t among that survey, but Chick-fil-A beat the Seattle-based giant to the cold brew game by nearly a year. Abercrombie is hesitant to discuss Starbucks: “For us, it’s not about what any other companies are doing, it’s about what our customers are asking for,” he says. “We knew our customers wanted a better cup of coffee. We certainly noticed a growing trend in the iced coffee space with millennials, but that was only part of the motivation.” Chick-fil-A continues to update its menu; it also rolled out a new grilled chicken option in the past year. But coffee, Abercrombie admits, “is the most challenging one to get right” on the whole menu. If Chick-fil-A has truly gotten its coffee right, look for its small partner Thrive Farmers to grow quickly as a result.