- Chick-fil-A is taking over fast food, leapfrogging rivals to become the third-largest chain in the US and tripling annual sales over the past decade.
- The chain's business model is unique among its competitors - it's a family-owned company explicitly guided by Christian values.
- Founder Truett Cathy's faith has been translated into business practices that have directly contributed to the fast-food giant's success.
- Its secret weapon is its rigorous franchise operator-selection process that finds and trains "Truett Cathy clones" who are deeply committed to the chain.
- Chick-fil-A's sales have only improved following the controversy regarding CEO Dan Cathy's opposition to same-sex marriage, with annual sales going from $4.6 billion in 2012 to $10.5 billion in 2019.
- The chain is now looking to fuel growth through tech and expansion, with its first international location opening this year.
It was 1982, the worst year in Chick-fil-A's still young history, and Steve Robinson was scared.
He was Chick-fil-A's first chief marketing officer. He'd started his job less than two years before and had just bungled his first big project, a coupon-related marketing debacle that cost Chick-fil-A $2 million.
America was in an economic tailspin. Shopping malls - where nearly every Chick-fil-A restaurant was located at the time - were no longer being built. Chick-fil-A had opened most of its 255 or so locations in the past few years, draining the corporate bank account.
The company had recently started building its Atlanta headquarters, something that Truett Cathy, the founder and CEO, had begun to fear would be his "$10 million tombstone."
To cap it off, McDonald's, previously a chicken-free zone, was testing McNuggets.
That was the grim scene as Robinson headed into a two-day retreat at Georgia's Lake Lanier Lodge with the rest of the Chick-fil-A executive team.
"The cash-flow situation was dire," Robinson told Business Insider. "It was a real potential crisis."
The first day of the retreat was business as usual, with the team of nine - Robinson, Cathy, his sons Dan and Bubba, and five other executives - balancing the budget and talking chicken nuggets. On day two, things took a turn.
Instead of trying to figure out the company's 1983 financial plan, Chick-fil-A heir apparent Dan Cathy posed a bigger question. "Why are we here?"
In response, they all bowed their heads in prayer.
"I vividly remember we paused, we had a word of prayer, and said, 'OK, let's tackle it,'" Robinson said. By the end of the day, the nine men had created Chick-fil-A's purpose statement: "To glorify God by being a faithful steward of all that is entrusted to us. To have a positive influence on all who come in contact with Chick-fil-A."
Thirty-seven years on, the mission statement is engraved on a plaque hanging by the front door of Chick-fil-A's headquarters. It has seen the company through decades of explosive growth. (1982 was the only year Chick-fil-A's same-stores sales declined.)
Today, Chick-fil-A is the third-largest chain in the US by sales, growing revenue by 16.7% in 2018 to reach nearly $10.5 billion, according to Nation's Restaurant News. Only McDonald's and Starbucks brought in more money in the US last year, and with vastly more restaurants.
Conversations with more than a dozen current and former Chick-fil-A executives, operators, and other insiders describe how Chick-fil-A took the Christian principles of Truett Cathy and used them to establish a fast-food chain that's more efficient, more polite, and perhaps more beloved than any other.
Truett Cathy's beliefs became a rule book for running a restaurant. Chick-fil-A created an army of "Truett Cathy clones," true believers in the company's message of hospitality and fried chicken who spread this gospel of Chick-fil-A across America. Anti-same-sex-marriage interviews from Dan Cathy - Truett's son and the current CEO - and controversial donations failed to slow growth.
Since backlash exploded against Chick-fil-A in 2012, the company has more than doubled annual sales and opened nearly 700 more locations. Now it's looking to technology and international expansion to continue its ascendance.
And it's done it all while staying closed on Sundays, to respect the lord's day.
The gospel of Truett Cathy
Truett Cathy is like a god at the company that he founded.
Cathy's office in Chick-fil-A's Atlanta headquarters is preserved just as he left it when he died in 2014 at age 93.
His vintage-car collection, including the original Batmobile from "Batman Returns," remains on display. Chick-fil-A executives constantly name-check Cathy unprompted, recalling memories of dinners at his home, countless acts of charity, and dozens of children who considered him a foster grandfather.
Before founding Chick-fil-A, Cathy and his brother, Ben, ran a 24-hour diner called the Dwarf House. For nearly two decades, it was just another reasonably successful diner. Then, in 1964, Cathy invented the chicken sandwich that changed everything.
People have been putting poultry between carbs for ages, but Cathy created something that revolutionized fast food.
It was a well-mannered, unassuming sandwich of lightly breaded chicken, buttered bun, and two pickles. It was quick and easy to make, and there was nothing like it on any menu in America.
The chicken sandwich went from a beloved menu item at the Dwarf House to a cult phenomenon when Cathy began opening Chick-fil-A restaurants in shopping-mall food courts in the 1960s. As malls took over the South in the '70s, Chick-fil-A spread with them.
To match growth with consistency, Cathy developed a model that would form the backbone of Chick-fil-A's success: a system of operators who run locations across the country.
"He figured out how to attract leaders who were great at being leaders - attracting and keeping great people," said Robinson, who recovered from 1981's coupon debacle to serve as Chick-fil-A's CMO for 34 years. "You've got this army ... that, in some sense, are Truett Cathy clones."
Building an army of 'Truett Cathy clones'
Quincy L.A. Springs IV wouldn't call himself a Cathy clone, but he is well versed in the gospel of Truett.
Springs runs a Chick-fil-A location in Atlanta's Vine City neighborhood, one of the chain's first attempts to open in a lower-income urban area in a concerted effort to revitalize the community.
Springs was recruited for the job, but his application process still took a year and a half. He says he wrote at least 12 essays and went through about 10 interviews, including three, some informal, alongside his wife. Chick-fil-A asked for his high-school transcript.
"I'm a US Army Ranger," Springs said. "I've been deployed to Afghanistan. When I got the opportunity to become an operator, I cried. Something overwhelming came over me when I realized the opportunity that I had to be the Truett of my community ... I just broke down like a baby."
Springs believes in Chick-fil-A as a force for good, through hiring, community building, and charity.
"Part of the reason why I cried is when Jesus says, 'You will do even greater things than I' … when I first read that, I was, like, how in the world is anybody going to do greater than you, Jesus?" Springs said.
"And then I remember the fact that this was the first Chick-fil-A of its kind in this community," Springs went on. "When Truett started this, there was no thought of going into a very heavily urban environment. Now, I'm able to do even greater works than Truett in that way."
Springs is one of the roughly 1,800 operators trained to follow in Cathy's footsteps. Chick-fil-A's first operator was Doris Williams, a former school-lunchroom worker who opened up shop in Atlanta's Greenbriar Mall in 1967. Williams was the first to follow in Cathy's footsteps through the operator system, which remains essentially unchanged five decades later.
Operators pay just $10,000 - up from $5,000 in the '60s - to open a restaurant. The company doesn't require candidates to meet a certain wealth threshold, and Chick-fil-A covers all startup costs, including real estate, restaurant construction, and equipment. By comparison, McDonald's requires franchisees to pay between $1 million and $2.2 million in startup costs, including a $45,000 franchise fee.
Chick-fil-A's process may not be pricey, but it is selective. Truett Cathy used to meet with every operator individually before they were hired, telling them to consider that the partnership "like a marriage, with no consideration given to divorce," as he wrote in his book.
The company has a 0.15% acceptance rate, believed to be the lowest in the industry, making it 37 times as selective as Harvard University. Last year, the company received roughly 68,000 inquiries from franchisee candidates and accepted around 100 new operators.
The process favors people who deeply believe that a restaurant serving fried chicken can be a positive force in a community. Their locations become operators' lives, with each operator typically allowed to run one store only. Operators split sales evenly with Chick-fil-A, after subtracting an annual licensing fee and expenses associated with running the restaurant.
"They are in the stores tending to guests," John Hamburger, president of the trade publication Franchise Times, said. "They also have an ownership mentality, much more than the general managers of the large multi-unit franchisees."
The model isn't for everyone. Joel Libava, a franchise adviser, said that in many ways Chick-fil-A isn't really a franchise. Operators can't sell their locations, and they have to obey Chick-fil-A's regulations, which include a rule that operators can't have any other jobs.
And, Libava says, there's the question of who has historically been welcome to join the exclusive club of operators.
"I bet they have as many same-sex operators as they do Jewish operators," Libava said. Which is to say, not many.
Chick-fil-A's communications team emphasized the diversity of its operators and staff, saying in an email that "145,000 people represent our brand nationwide and they both represent and welcome all people, regardless of race, gender, ethnicity, sexual orientation or gender identity."
"What we all have in common is a heart for service in our restaurants and our communities," the email continued.
As Chick-fil-A evolved from a food-court player into a Southern staple, the company's values and operators' commitment to them became interwoven with the chain's success.
Christian covenants in a corporate world
In the '80s and '90s, Chick-fil-A expanded beyond the food court as its growing army of operators began opening freestanding restaurants. In the mid-'90s, it launched its hugely successful "Eat Mor Chikin" campaign, causing brand recognition to skyrocket. Through it all, Chick-fil-A was guided by its founder's faith.
"Truett did not shy away from his faith," Rodney Bullard, head of the Chick-fil-A Foundation, said. "And his faith was a faith of opportunity and a faith of inclusion."
Cathy and other executives held weekly devotionals in the Chick-fil-A headquarters, a nonmandatory practice that continues today. The founder gave roughly 10% of his income to charities and opened the foster-care program WinShape Homes. According to a 2007 Forbes article, one in three Chick-fil-A operators attended WinShape's Christian-based relationship-building retreats at the time. (Carrie Kurlander, Chick-fil-A's vice president of external communications, says this is far less common now.)
"The corporate purpose is something that I always talk about right up front because … it was not written by McKinsey, obviously," Kurlander said, referring to the well-known consulting firm. "It doesn't look like most corporate mission statements. But I think it is important to understand the founder."
In 2000, the Cathy family drew an even more direct connection between Chick-fil-A's business plan and its Christian values. In January, the next generation of the Cathy family - Dan, Bubba, and Trudy - signed a covenant promising to continue to carry on Chick-fil-A's history of philanthropic work, to grow conservatively and never take the company public, and to never open on Sundays.
"We will be faithful to Christ's lordship in our lives," the covenant says. "As committed Christians we will live a life of selfless devotion to His calling in our lives."
Christian values pay off
Fast-food rivals like In-N-Out and Cook Out might print Bible verses on cups, but there is no other major restaurant chain in America that willingly surrenders more than $1 billion in annual sales by closing on Sundays. And, for Chick-fil-A, it's worth it.
The day off leaves employees and operators rejuvenated, and people are more likely to consider Chick-fil-A a part of their community, Hamburger said, because it creates a sense of genuine care among the company, workers, and customers. For customers, the knowledge that they can't get Chick-fil-A on Sundays helps drive them to visit the chain when it is open.
"It provides a sense of urgency - you better get to that restaurant today, because they're going to be closed on Sunday," Mark Kalinowski, a restaurant-industry analyst, said. "I don't think the company designed it that way at all. But it's a call to action every single week."
Closing on Sundays exemplifies how Cathy's approach to Christianity powered the chain's success.
One of Chick-fil-A's biggest advantages is its hospitality and customer-service policies. Chick-fil-A tops rankings of the most polite chains in fast food and was named the most beloved fast-food chain in the American Customer Satisfaction Index's annual survey for the past four years.
Industry-high customer satisfaction boosts Chick-fil-A's average unit volume, with the average Chick-fil-A location making quadruple what the average KFC would make.
Robinson said Cathy's understanding of the Bible and "insight of the Holy Spirit" led to Chick-fil-A being built with a central mission to serve as a fundamentally welcoming place, with friendly employees and spotless locations. But it was Dan Cathy who took these lofty ideas and created concrete practices.
"Dan's the one that came up with the idea to build on the principle going the second mile from Matthew 5:41," Robinson said, citing the Bible verse that instructs "Whoever compels you to go one mile, go with him two."
In the early 2000s, Chick-fil-A brought in fine-dining guru Danny Meyer and Ritz-Carlton executive Horst Schulze to crack the hospitality code. Soon after, Chick-fil-A began requiring operators to use many of what have become the chain's defining details, such as having employees say "my pleasure" instead of "you're welcome" and adding flowers on tables in all locations.
This strict codification of an ephemeral idea - hospitality and politeness - paired with a fanatically loyal army of operators helped Chick-fil-A expand without quality declining. From 2000 to 2011, the chain quadrupled its annual systemwide sales, from $1 billion to nearly $4 billion.
A firestorm against Chick-fil-A
In 2012, Chick-fil-A was pushing beyond its identity as a cult Southern chain, inching toward national prominence. Truett Cathy was no longer a small-town chicken salesman. His net worth was north of $4 billion, which earned him a spot on the Forbes 400, and he befriended powerful allies such as former President Jimmy Carter and Warren Buffett.
The chicken chain was about to see a massive new outpouring of support, though not for the reasons most companies would want.
In a June 2012 interview, the Biblical Recorder newspaper asked Dan Cathy about Chick-fil-A's "support of the traditional family." The Chick-fil-A president answered, "Well, guilty as charged."
The same day Dan told "The Ken Coleman Show": "I think we are inviting God's judgment on our nation when we shake our fist at Him and say, 'We know better than You as to what constitutes a marriage.'"
LGBTQ activists had already been speaking out against the millions of dollars the Cathy family and Chick-fil-A donated through the WinShape Foundation to groups opposing same-sex marriage, from Christian charities to more extreme anti-LGBTQ lobbying organizations. For example, in 2010, WinShape donated $1,000 to the Family Research Council, a nonprofit that has been labeled as an antigay hate group by the Southern Poverty Law Center.
With Dan's condemnation of same-sex marriage, smoldering concerns exploded into rage. The LGBTQ activist group HRC posted a mock-up of Chick-fil-A's logo with the slogan "We Didn't Invent Discrimination. We Just Support It."
Activists planned a Kiss In for early August.
Conservatives who opposed same-sex marriage sprang into action to defend Dan and Chick-fil-A. Mike Huckabee declared August 1 to be "Chick-fil-A Appreciation Day." More than 646,000 people RSVP'd on Facebook that they would participate in the pro-Chick-fil-A celebration.
A few days after Dan's interviews, the company put out a statement saying all people were treated with respect at Chick-fil-A and that "going forward, our intent is to leave the policy debate over same-sex marriage to the government and political arena." Chick-fil-A did not engage with "Chick-fil-A Appreciation Day" or other efforts to support the chain.
"We'd always tried to avoid social- or political-agenda engagement, and we kind of got dragged into it," Robinson, the chain's CMO at the time, said.
Employees watched as the narrative spun out of control, something made more challenging by the fatal heart attack of the company's head of public relations on July 27. Operators gave protesters free food and drinks. Dan quietly met with LGBTQ activists, including Shane Windmeyer, the founder of Campus Pride. In the fall, outlets reported that the company stopped donating to anti-LGBTQ organizations; tax returns showed that Chick-fil-A ceased donations to all groups highlighted as anti-LGBTQ in 2012, except Fellowship of Christian Athletes (FCA) and the Salvation Army.
Chick-fil-A worked with the consulting firm Prophet to understand the incident's effects on the brand. Despite the massive negative press and protests, Prophet found that Chick-fil-A's customers continued to believe that Chick-fil-A was a significant part of their lives. What's more, 2012 was Chick-fil-A's most profitable year yet, with sales up 12%, to $4.6 billion. Chick-fil-A's reputation seemingly suffered a blow, yet sales grew.
Kurlander said 2012 "signaled the year of entering adolescence."
"We are quickly maturing, but we're still in this adolescence, sort of awkwardly growing very fast," Kurlander said. "It forces us to talk about the real stuff."
Backlash continues, and sales rise
Chick-fil-A has continued to see periodic backlash over the past seven years as the Chick-fil-A Foundation donates to FCA and the Salvation Army, two organizations with histories of opposition to same-sex relationships. The most recent round of backlash came this spring with progressive publications running stories with headlines like "In News That's Shocking to Literally No One, Chick-fil-A Is Still the Worst."
There have been internal conversations about whether the partnership with the FCA is worth the backlash. Much of the controversy is tied to FCA's purity pledge, which requires members to vow to avoid premarital sex and same-sex relationships. Chick-fil-A leadership decided the benefits of the donations, which fund nonreligious youth sports camps, outweigh the negative, especially as kids going to camp are not required to sign purity pledges.
Kurlander said outsiders often suggest how Chick-fil-A can "fix" its reputation, with recommendations like having LGBTQ operators speak with the media or announcing Dan has changed his position. She says neither of these options would be authentic. Instead, Chick-fil-A has attempted to be aggressively apolitical, even as the right and left treat the chain as a symbol to be revered or denigrated.
"We are a restaurant company that's focused on influence, really great food, really great service," Kurlander said. "That's the conversation that we believe we should be in."
Figures seem to indicate the approach is working. In 2019, as in 2012, criticism has failed to negatively affect sales. As backlash spread online this spring, same-store sales were up more than 16% from early April to early May, compared to the same period in 2018. In April, Chick-fil-A again ranked No. 1 in Piper Jaffray's survey of teenagers' favorite restaurant chains.
An explosive new era
From 2012 to 2019, Chick-fil-A went from $4.6 billion in systemwide sales to nearly $10.5 billion in American systemwide sales, according to Nation's Restaurant News. Unit count grew from 1,669 locations to 2,363. The company consistently grew how much money each location made, with average unit volumes going from $2.8 million to $4.6 million.
"People like to write about the Sunday closings and the LGBT matters, but the secret to this company's success is a top-notch management team, a willingness to invest in the future, and a store-management structure that brings the operator closer to the customer and provides direct incentives for store performance," Hamburger of the Franchise Times said. "It is absolutely the best system I have ever seen in the restaurant industry."
Dan Cathy became CEO in 2013 when Truett stepped down at age 92, leading Chick-fil-A in this new era of growth.
"Truett had this philosophy always getting better, always getting better," David Farmer, vice president of menu strategy and development at Chick-fil-A, said. "He didn't care so much about getting bigger. He was just obsessed with getting better. He would drill that into us: If you focus on getting better, bigger will take care of itself."
Farmer, who has worked at Chick-fil-A for nearly three decades, said Dan Cathy has a different approach, one centered on innovation. Dan wants to get better, but he's also ready to get bigger.
In December 2012, Chick-fil-A opened an innovation center called The Hatch, a 35,000-square-foot building inspired by companies like Pixar and Apple. (The center is set to expand by roughly 15,000 square feet in the next few years.) Chick-fil-A's headquarters are undergoing a Silicon Valley-esque transformation, with employees losing desks for an open-office plan filled with nooks, hanging chairs, and an upscale café selling vanilla cardamom lattes.
The mission statement - to glorify God - is still hanging by the front door, but posters hanging from the walls of The Hatch quote the Zen monk Shunryu Suzuki and the psychoanalyst Carl Jung.
The renovations represent a psychological shift at Chick-fil-A, taking Christian values and injecting them with Silicon Valley ideology.
"There's really no sacred cows when it comes to the methodology anymore," Farmer said. "The values don't shift. Everything else is sort of on the table."
Digital made up nearly 20% of Chick-fil-A's sales as of early May. According to Kevin Purcer, Chick-fil-A's director of customer digital experience, Chick-fil-A is preparing for a future in which digital orders, in one form or another, could represent at least half of the chain's business.
At The Hatch, employees in the "Beyond the Restaurant" group have been studying drones and driverless cars. Culinary staff test dozens of items, including meat alternatives, though few will ever make it onto the chain's minimalist menu.
Executives say they grapple with tension between Cathy's principles (hospitality, warmth, rejuvenation) and same-store-sales-boosting tech and services, some of which can limit human interaction.
"We're trying to predict, what does care look like as our customers' experiences continue to evolve?" Khalilah Cooper, Chick-fil-A's director of service and hospitality, said. "Will they be OK being served by a robot? I don't know. They might be."
Chick-fil-A eyes global dominance
Thinking big means moving beyond America. Chick-fil-A is set to open in Toronto this year, its first location outside the US. In five years, the company plans to open at least 15 locations in the Canadian city and is seeking applications for new operators.
With international expansion and a large tech investment, it's almost certain the chain will grow richer and more powerful. Since the 1980s, Dan Cathy has proved himself to be a master in translating his family's values into the business ecosystem of the moment. And the next generation of Cathys are rising in the company, ready to carry on the legacy.
But even for the seemingly unstoppable chicken chain, success is not guaranteed. Industry experts say that while Chick-fil-A's nonpartisan stance and welcoming operators have worked in the face of backlash in the US, it could be harder to shake its anti-LGBTQ reputation internationally.
"Their reputation could absolutely impact their ability to expand or land partnerships with other brands," Chris Allieri, founder at brand consultancy Mulberry & Astor, said. Allieri said he would never counsel a CEO or brand to work with a company that appears to support "discrimination and hate."
Still, Chick-fil-A continues to evolve.
Earlier this year, Dan Cathy met with suppliers. During the meeting, according to Farmer, who was in attendance, Dan made a sobering comment. One day, Chick-fil-A will no longer exist.
"He says that because, if you look at history, organizations don't last," Farmer said. "How long can we stay relevant and meaningful so that customers would not want you to not exit? It means you have to evolve."