5 Nov 2019 – To the operators of Chick-fil-A, living out the company’s values isn’t just a mantra they tout to continue to hold on to a very profitable license – it’s a way of life. Maybe, just maybe, that’s one of the reasons this American fast-food chain holds pole position among industry peers with about US$4.6 million in sales per restaurant, over 60% more than its closest rival McDonald’s. Company estimates put growth at 20% year-on-year.
You could say the numbers are skewed since they have only 2500 restaurants compared to close to 14,000 McDonald’s in the US alone. But that’s where the facts and figures will intrigue. Chick-fil-A as a brand has been around for 52 years. Now in the hands of the second generation, this private company is in no hurry to expand. And that’s not for a want of interested parties. It receives about 20,000 applications from potential operators out of which they grant the franchise license to a mere 80.
David Danisan, the only Malaysian to run a Chick-fil-A restaurant can attest to the rigorous selection process. “I thought the 9 interviews I had to go through to land a job at Accenture was tough!” remarked the former consultant who migrated to the US. He waited 2 years with multiple interviews and meetings before he was granted the coveted license. An average wait time of 18 months is expected and it’s got little to do with one’s net assets and financial standing. To the owners, it boils down to whether operators can stay true to the values of the company.
In fact, once you become part of the family, it’s relatively plain sailing. All it costs is US$10,000 for the license, while a McDonald’s franchise fee can set you back about US$45,000. What’s more, Chick-fil-A will pay for startup costs, too. A McDonald’s restaurant can cost between US$1 and 2.3 million to set up – all on the franchisee.
The weeding-out process is necessary to make sure operators can meet the high ethical standards the company demands. For one, can operators live out the company’s purpose to “glorify God by being a faithful steward”? Can they agree to shutter on the most profitable day of the week for restauranteurs – Sunday? It’s a practice started by founder Truett Cathy when he set aside the day for his staff to “rest and worship”. The company has found over time, that those who do not and cannot espouse the values do start to be worn down by the selection process. The fall out rate is kept at a low 3%.
Some observers have described the company as “controversial”, particularly in the light of the most recent bad press from its nascent experiment expanding into the UK. The mall manager in Reading where Chick-fil-A’s first outlet in the UK decided not to extend its six-month lease with the restaurant after protests by LGBT activists. Their grouse was against the parent company’s contributions to two Christian organizations in the US which, the protestors objected, stand on biblical family structures.
When a company operates from staunch moral values, it is inevitable that they will face opposition from dissenters. It is easier to take populist and trending viewpoints than it is to hold on to beliefs that hail back to time immemorial. But it is these very foundations that guide operational decisions and long term goals that will determine success or failure in generations to come. That and the tenacity of future leaders to continue to hold on to these embedded values, for what are values of a company but deeply entrenched beliefs of individuals who make decisions for it.