How Chick-fil-A Totally Crushed KFC, Popeyes

Investors are eyeing the privately-held Chick-fil-A, a rising fast food chain that’s quietly emerged as a competitive threat against publicly-traded giants like McDonald’s and KFC.

Unbeknownst to many, Chick-fil-A has dethroned Colonel Sanders to claim the greatest market share in the American limited-service chicken segment, according to a new report from Janney Capital Markets (JCM). Its rise to chicken champion actually occurred in 2012 when Chick-fil-A won 25.1% market share, slightly more than KFC’s 24.4%, a remarkable growth story shadowed by controversy over Chick-fil-A’s owner’s social views and other strange reports.

Here’s a time-lapse chart with data from JCM showing how Chick-fil-A has gobbled up market share from KFC, Popeyes and other chicken chains like Zaxby’s and Bojangles’ Famous between 1999 and 2013:

On the surface, Chick-fil-A pales in comparison to its competitors: it has only 1,700 stores, a small handful compared to KFC’s 4,491 stores, and because it’s a private company its financials are undisclosed, making it impossible to know precisely its earnings. Yet the report estimates that Chick-fil-A posts an average annual growth rate of 12.7% — huge when compared to KFC’s 1% — thanks to its strong sales and store expansion.

But it’s not Chick-fil-A’s newfound dominance over KFC or Popeyes that interests investors—it’s that Chick-fil-A could soon overpower McDonald’s. While the golden arches have dominated the American fast food market, McDonald’s reported declining U.S. sales in recent months, a trend that might allow Chick-fil-A to steal McDonald’s growth opportunities over the next 10 years, according to the report.

McDonald’s is projected to add between $1 and $10.3 billion to its U.S. sales between 2014 and 2023, while Chick-fil-A is projected to add between $6.3 and $9.0 billion, indicating that Chick-fil-A is nowhere near done growing, especially as it expands northward to compete with McDonald’s stores.

“Chick-fil-A should get more attention from the Street in coming years, in part because it represents a growing competitive threat to other sizable quick-service chains, perhaps most notably McDonald’s,” the report states. “It is entirely possible that [Chick-fil-A’s sales growth] will be similar to—or worst-case, from McDonald’s perspective—greater than the systemwide sales that McDonald’s can add to its domestic business over that same time.”