|CHICK-FIL-A: CAN A CHICKEN SANDWICH MAKE A
The question posed to Dan Cathy, President and Chief Operating Officer of Chick-fil-A, on July 16, 2012, appeared to be anything but controversial. However, when the journalist from Baptist Press asked Cathy a fairly innocuous question about his views on the family, a firestorm erupted throughout the country over the acceptable definition of a family in the Twenty-First Century. Cathy’s response to the question was:
“We are very much supportive of the family—the Biblical
definition of the family unit. We are a family-owned business,
a family-led business, and we are married to our first wives.
We give God thanks for that.”1
In the wake of the storm, a political debate ensued concerning the feasibility of a business taking a political stand on an issue that could have severe repercussions on the operation’s profitability.
History of Chick-fil-A
The company was begun in Hapeville, Georgia, by Dan Cathy’s father, Truett Cathy. He launched a restaurant named The Dwarf House in 1946 in this community on the outskirts of Atlanta.
In 1961, Cathy discovered a pressure-fryer that could cook chicken as quickly as one could cook a hamburger. The tag line adopted by the company for the chicken sandwich they created was, “We didn’t invent the chicken, just the chicken sandwich.”
Cathy opened the first Chick-fil-A restaurant in 1967 in the Greenbriar Mall in Atlanta. Opening a fast food restaurant in a mall was a very controversial action in those days because mall managers believed restaurants would emit the smell of cooking food throughout the mall which would be offensive to customers. The managers also believed that paper products would be taken away from the restaurant and strewn around the mall. However, Chick-fil-A was allowed into the mall as a test of the question of the feasibility of food service in a mall. One of the provisions in contracts signed by Chick-fil-A with mall managers was that the company would be allowed to close on Sundays.
By April 2012, Chick-fil-A had 1,614 restaurants in 39 states and the District of Columbia. Approximately 1,000 of those locations were stand-alone restaurants which were placed outside malls. In addition, the company had 32 drive-through-only locations and units located in universities, hospitals and airports.2 The success of the company caused analysts in the fast food industry to predict that Chick-fil-A would surpass sales of KFC in the near future.
Company culture. Chick-fil-A’s statement of corporate purpose was:
“To glorify God by being a faithful steward of all
that is entrusted to us. To have a positive influence
on all who come into contact with Chick-fil-A.”3
This statement had served the company well in the past and had successfully guided company actions. An example of this was the decision by founder Truett Cathy to close all locations on Sunday. His rationale for this action was:
“I was not so committed to financial success that I
was willing to abandon my principles and priorities.
One of the most visible examples of this is our
decision to close on Sunday. Our decision to close
on Sunday was our way of honoring God and of
directing our attention to things that mattered more
than our business.”4
On September 19, 2009, Dan Cathy was interviewed on ABC News Nightline about the Sunday closing policy of the company which his father had initiated. He replied:
“By the time Sunday came, he was just worn out. And
Sunday was not a big trading day, anyway, at the time.
So he was closed that first Sunday, and we’ve been closed
ever since. He figured if he didn’t like working on Sundays,
that other people didn’t either.”5
Controversy over definition of marriage. After Dan Cathy suggested he was “guilty as charged” on the issue of the traditional concept of marriage as occurring between a man and a woman, gay rights activists and their allies began boycotting the company. In response to the boycott, former presidential candidate, Mike Huckabee, called for a Chick-fil-A Appreciation Day on August 1. The result of this dedicated event was that thousands of supporters of Chick-fil-A waited hours to be served at company locations across the country. Some of the participants of the event suggested they were not supporters of Cathy’s stance against same sex unions, but they were supporting the principle of free speech. Even the ACLU, while disagreeing with his opinions, affirmed his right to speak them.
Business analysts speculated that the controversy may not significantly damage the firm, which is predominantly located in the more conservative South. However, it could limit opportunities for expansion into more liberal regions of the country.
Defenders of gay rights in denouncing Cathy’s statement, planned a “kiss in” of gays and lesbians at numerous Chick-fil-A locations. In addition, Campus Pride (a gay rights organization based in Charlotte, North Carolina) targeted the several hundred Chick-fil-A outlets on college campuses with an “education” campaign.
A report from a gay and lesbian advocacy group, LGBT, concluded that Chick-fil-A donated more than $3 million between 2003 and 2009 to Christian groups that opposed homosexuality. They stated that in 2010, the company gave nearly $2 million to such causes.
Backlash from the remarks and a record of financial support for conservative family organizations like Focus on the Family, resulted in a few instances of public pressure to close stores, particularly on college campuses, and some lost revenue for Chick-fil-A’s owner/operators. One Chick-fil-A store manager who was generally supportive of company leadership and has not seen discriminatory practices, nonetheless lamented,
“I know a lot of good people and good business owners who are affected by one man’s views.”6
The controversy also spilled over into the firm’s operations in Chicago where they had planned to open some new stores. In July, 2012, Proco Joe Moreno, a Chicago Alderman, told the Chicago Tribune he would refuse to permit a rezoning effort by Chick-fil-A that would have enabled them to open their first stand-alone restaurant in the city.
Withdrawal from stance? The following day, Alderman Moreno revised his statement to acknowledge that free speech rights supersede his authority, but he would press for revision of alleged discriminatory policies.6 He did so despite the existence of public statements by Chick-fil-A that it is committed to treating “every person with honor, dignity, and respect – regardless of their beliefs, race, creed, sexual orientation, and gender.”7 Later, Alderman Moreno claimed the company convinced him that it had withdrawn from the political battle over same-sex marriage by opening the books of their charitable foundation to prove they were no longer giving money to groups opposing same-sex unions.8 Chick-fil-A was said to have pledged to take a closer look at its donation decisions and follow a philosophy of not supporting organizations that with political agendas.9
Although some declared that Chick-fil-A had backed down from its initial positions, a document posted on the Chick-fil-A website asserted that Chick-fil- A was being mischaracterized and had indeed not changed their position.10 The document reiterated their position on funding and respecting all persons:
“A part of our corporate commitment is to be responsible stewards of all that God has entrusted to us. Because of this commitment, Chick-fil-A giving heritage is focused on programs that educate you, strengthen families and enrich marriages, and support communities. We will continue to focus our giving in those our areas. Our intent is not to support political or social agendas.”
“As we have stated, the Chick-fil-A culture and service tradition in our restaurants is to treat every person with honor, dignity, and respect – regardless of their belief, race, creed, sexual orientation or gender. We will continue this tradition in the 1,600 restaurants run by independent Owners/Operators.”
Intersection of Business and Political Issues
Chick-fil-A was not the only company boycotted for making a perceived controversial political statement. In the Los Felix section of California, the new owner of a beloved local health food store found himself in the middle of a controversy in the fall of 2011. When Peter Lassen bought Nature Mart, many of the local customers began to boycott the store when they discovered that he had given donations to groups opposing gay and lesbian causes. Blogger Howie Klein accused Lassen of donating tens of thousands of dollars to the “anti-gay jihad.” However, Lassen’s niece suggested, “We have a lot of gay and lesbian customers. We have nothing against them. To us, it is a moral issue, not a civil issue.”11
Companies that embraced gay pride issues have also suffered the same fate as those that have opposed gay unions. When Kraft posted a photo of an Oreo cookie with rainbow-hued filling in June, 2012, its profile on the social media site was overwhelmed with comments—many of which were denigrating of the company. J.C. Penney also was criticized for hiring lesbian Ellen DeGeneres as its spokesperson. In a similar manner, Home Depot was the recipient of a boycott by the American Family Association, a conservative group upset by the company’s support for gay rights including participation in Atlanta’s gay pride parade.12
Questions Entrepreneurs Face
As long as Chick-fil-A remained a predominantly Southern company, they found that most of their customers shared their conservative views. However, as the company continued to grow and expand geographically into more liberal-leaning areas, it was anticipated that many of their conservative views would be challenged. Ron Paul, President of the restaurant consulting firm Technomic he founded 45 years ago, suggested concerning their expansion:
“They have to move out of being a regional, cult brand
into being a true national brand with all the responsibilities
that go with it.”
One of the responsibilities of growing brand recognition is that Chick-fil-A will have to respond to attacks from those who hold different values. Wall Street Journal contributing author, William McGurn, argues that attacks on Chick-fil- A represent a new form of intolerance in which those with social or political agenda now use transparency laws to seek out and vilify companies as well as individuals.13
Out of this controversy, a number of ethical questions arise for entrepreneurs:
What ethical issues arise related to entrepreneurs speaking about and supporting causes consistent with their values?
What practices should entrepreneurs adopt to manage profitable businesses consistent with their values?
As the founder of a business, how can you ensure the current and future employees and leaders act consistently with the values of the business?
The challenge for your team is to discuss the relevant issues and provide practical advice for entrepreneurs, generally.