Chick-Fil-A: A Bird of a Different Feather

14 Pages Posted: 30 May 2017

See all articles by Paul J. Simko

Paul J. Simko

University of Virginia - Darden School of Business

Paul Farris

University of Virginia - Darden School of Business

Virginia Weiler

University of Southern Indiana

Peter Gerardo

University of Virginia - Darden School of Business

Date Written: September 23, 2016

Abstract

In 2011, sales at Chick-fil-A (CFA)surpassed $4 billion; however due to ownership's aversion to debt, the pace of expansion was significantly slower than the fast-food-segment average. And the biggest differences between CFA and other fast-food chains were its private, family-controlled ownership structure and its management philosophy. This case explores the relationship between an enterprise's philosophy and its long-term viability. This case is used in Darden's EMBA and Global EMBA programs. It works well in any course covering short- and long-term strategic issues for a privately held firm experiencing strong growth.

Excerpt

UVA-G-0632

Rev. Sept. 23, 2016

Chick-fil-A: Bird of a Different Feather

In 2011, sales at Chick-fil-A (CFA), a southern U.S. restaurant chain, surpassed $ 4billion, an increase of 13% over 2010. The privately held, family-run business headquartered in Atlanta, Georgia, was ranked 13th among U.S. quick-serve restaurant franchises, second only to KFC in the fried-chicken category.

CFA's business model varied significantly from that of most other fast-food chains. Advertising budgets and debt loads were lower than average, and operating hours were reduced. Franchisee recruitment, financial commitment, and management expectations also deviated from industry norms. Due to ownership's aversion to debt, the pace of expansion was significantly slower than the fast-food-segment average. But perhaps the most significant differences between CFA and other fast-food chains were its private, family-controlled ownership structure and its management philosophy, which was based on biblical principles.

In 2012, CFA came under fire for statements made by its COO, Dan Cathy, in favor of the “biblical definition of marriage.” These statements were perceived to be critical of gay marriage, a pending legal issue in a number of states that had been gaining popular support. Gay rights groups called for a CFA boycott; meanwhile, CFA supporters flocked to local restaurants for Appreciation Day, for which CFA reported record sales. Nevertheless, the controversy raised questions about the extent to which an ownership's views could affect or even compromise an enterprise's long-term viability.

. . .

Keywords: franchise, fast food, family ownership, succession, management philosophy, strategic issues

Suggested Citation

Simko, Paul and Farris, Paul and Weiler, Virginia and Gerardo, Peter, Chick-Fil-A: A Bird of a Different Feather (September 23, 2016). Darden Case No. UVA-G-0632. Available at SSRN: https://ssrn.com/abstract=2974607

Paul Simko (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-1391 (Phone)

HOME PAGE: http://www.darden.virginia.edu/faculty/simko.htm

Paul Farris

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-0524 (Phone)

HOME PAGE: http://www.darden.virginia.edu/faculty/farris.htm

Virginia Weiler

University of Southern Indiana

8600 University Boulevard
Evansville, IN 47712
United States

Peter Gerardo

University of Virginia - Darden School of Business

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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