Chick-Fil-a Case Study

Chick-fil-A: A Case Study Rhonda Coleman, Natosha Neal, Terrence Ridley, Greg Susnik, and DeRon Walker, Indiana Wesleyan University Seminar In Business / Bill Brown, Facilitator January 26, 2010 ————————————————- I have read and understand the plagiarism policy as outlined in the syllabus and the sections in the Student Bulletin relating to the IWU Honesty/Cheating Policy. By affixing this statement to the title page of my paper, I certify that I have not cheated or plagiarized in the process of completing this assignment.

If it is found that cheating and/or plagiarism did take place in the writing of this paper, I understand the possible consequences of the act/s, which could include expulsion from Indiana Wesleyan University. Abstract This case study primary focused was on the Christian values of Truett Cathy, founder and CEO of Chick-fil-A, and their positive effect on the Chick-fil-A organization. A personal interview was conducted by our project team of local area managers the information obtained from that interview was used as a guide for determining the values implemented by Cathy and the Chick-fil-A organization.

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The results of this research proved that consistent and proper application of Christian values within a workplace setting can positively influence the culture of that organization and contribute largely to its ongoing success. Introduction Students of the Indiana Wesleyan University BSM45 core group organized a project team for the purpose of identifying and researching an organization who models itself after true Christian values, which have resulted in a proven track record of success. In today’s tough economy organizations around the globe are experiencing the stress of surviving financially. The ews headlines everywhere are full of companies who have fallen prey to poor organizational planning solutions and consequentially have been forced to file bankruptcy with no means of returning. And prior to the economic crisis of our country we were subjected to organizations, which were led by unprincipled leadership. Organizations like Arthur Anderson, Enron, and World Com, Inc. among many others who were influenced by leadership with unethical values that resulted in their untimely demise. How organizational leaders conduct themselves and the values they set forth for their subordinates to also follow are key.

Values under gird the foundation of all our lives and help define who we are and whose we are. Our decision to adhere to moral, ethical, or Christian values guides us to the success that is destined in living by them. The purpose of this case study is to examine the Christian leadership values of Truett Cathy, the founder and CEO of Chick-fil-A, one of the largest privately held restaurant chains, and the second largest quick service chicken restaurant chain in the nation. And how those values are applied throughout his organization and contribute to its success. Purpose of Study

We intend to cover the significance of study which will convince everyone why Chick-fil-A is a worthwhile topic to discuss. Meaning we intend to explain what can be gained and learned from Chick-fil-A’s philosophy. The organization overview will cover competition, employee turnover rates, the interview process, and special programs provided by the company. Finally we will have the analysis of issues, where we will take a look at, and examine the data from our research thoroughly. The purpose of this analysis is to prove the facts given from all of the prior sections of this study.

Once everything is covered we will then conclude our study with the conclusion where we will show what we learned and give appropriate recommendations. The success of Chick-fil-A continues to rise as of December 2009; the chain has over 1,600 locations in 37 U. S. states and the District of Columbia. What makes it distinct among fast-food chains is the fact that all of its stores are closed on Sundays. Due to the owners religious background they like to close all stores, and we will break down whether that helps them generate customer appreciation or does it hurt them.

Chick-fil-A is both founded and still operated by S. Truett Cathy a devout Christian who has taught Sunday School for over 51 years and whose religious beliefs sets the company apart from other fast food chains. The company’s official statement of corporate purpose says that the business exists “to glorify God by being a faithful steward of all that is entrusted to us and to have a positive influence on all who come in contact with Chick-fil-A. (Wikipedia) The central problem of Chick-fil-A if you could call this a problem is the fact that it is Christian base.

Many admire them for implementing their Christian beliefs into the business, meanwhile there are still those who are out there who see this as a problem. There are people (atheist) who get offended by the fact that the company promotes Christianity. Many atheists in our world will not support Chick-fil-A due to the owner’s religious viewpoint. A quote from an article trying to influence people not to eat at the restaurant says “I’ll never eat at Chick-fil-A because I do not want to support any of this. I don’t care how good their food might be; there are plenty of alternatives that do not fund Christian extremism”. www. atheistrev. com) In our study we intend to prove that even though this seems to be a problem, Chick-fil-A continues to push forward in a positive way no matter who stands against them. Our purpose from here on out is to show the brilliance of Chick-fil-A, and even though not many people agree with their philosophy Chick-fil-a doesn’t allow it to influence the way they will continue to do business. Overall the study intends to cover the positive attributes of Chick-fil-A, and we will site important facts in order draw everyone to a closer understanding of how this business has and will remain successful for years o come. Significance of this Study In a world where righteous living is shunned and Christianity is constantly under media attack, it is encouraging to discover profitable Christian companies willing to blatantly advertise not only their CEOs and founders as Christian, but also their entire company philosophy, mission, and vision. Chick-fil-A’s is a company who mission is to serve a high calling. The company’s official statement of corporate purpose is “to glorify God by being a faithful steward of all that is entrusted to us and to have a positive influence on all who come in contact with Chick-fil-A.

Chick-fil-A certainly fulfills its mission. Why is this topic significant to the writer? The founder of Chick-fil-A, Truett Cathy, believes very strongly that you can be successful in business using biblical principles. The core values of this business have both a spiritual side and a practical side, which in return makes the business as successful as it is today. Before the company makes any decision’s regarding the business they ask “Are we going to fulfill the corporate purpose? ” To some Chick-fil-A would appear to be a Christian business, however that is not true.

The company see itself as a business that rest on Christian principles. Despite the fact that Chick-fil-A has developed its corporate principles for the company based on Christian principles they do not display their corporate principles in any of their restaurants. Instead they use the Christian principles as an internal motivator. Another reason their Christian principles is not on display in the restaurants is because they value and respect all of their customers’ own religious beliefs and do not want to offend them.

Chick-fil-A instead shows their testimony of their Christian principles in how they act in their stores, how they service their customers and in the quality of the product they provide. The fact that Chick-fil-A is closed on Sunday to allow their employee’s time to participate in religious worships with their families is the biggest visible statement of the Christian values and principles the company has. Why it is significant to the department, division, company, sister companies, alliances, major stakeholders, etc?

Since Chick-fil-A is not a publicly traded company this eliminates any opinions from outside investors. When a company has outside investors this can tend to create problems for a company that would not really be a problem for a privately funded company. As for Chick-fil-A it has found that maxing religion with work has been very successful for there company which teaches to be servant for God oppose to just focusing on making money. Chick-fil-A is also a significant company to its employees and the impact they may have on the type of person that employee develops into while working in their restaurant.

Due to Chick-fil-A instilling core values and principles in their employees is what attracts many of the people that apply for jobs at the restaurant. It is important for a person that is looking for a good company to work for to look at what the company’s core values are and what guides them as a company along with the principles by which those values are implemented. This will help the person identify what those are so that they know who that company is overall. Does the topic have broader implications for: * The larger industry of which it is a part?

Many companies striving for unprecedented growth by cultivating intensely loyal customers while investing lost of time and money measuring customer satisfaction. This is important because when customers recommend a business to someone else they are putting their reputation on the line. A customer will take a risk of recommending another business only if they’re intensely loyal to that business. When compared to its competitors Chick-fil-A has been rated as far better then leading competitors such as McDonald’s and Burger King.

One way that this rating was measured was in the area of the average transaction which at Chick-fil-A takes far less time to complete their orders when compared to McDonald’s average handling time even though the customer is ordering essentially the same thing. Many customers also stated that they have never heard managers yelling at their employee’s at chick-fil-A however they have witnessed on numerous occasions this type of treatment from manager at McDonald’s. * Global Significance? Despite it’s growing success in the United States, Chick-fil-A recently opened it’s first international restaurant in Yorba Linda on January 14, 2010.

Organization Overview In 1967, Truett Cathy started the first in-mall restaurant – Chick-fil-A in the Atlanta’s Greenbrier Mall and served exclusively chicken products like the original Chick-fil-A chicken sandwich, a specially seasoned fried chicken breast served on a buttered bun with a pickle (“Eat”). By 2005, Chick-fil-A had grown to more than 1,200 stores, operating in 38 states, and with sales totaling $1. 9 billion (Baldwin and Moore). Chick-fil-A’s founder, Truett Cathy, noted in his book Eat Mor Chikin that “The history of Chick-fil-A, in fact, is a series of unexpected opportunities.

When we responded to them, we often found ourselves richly blessed” (4). Cathy’s religious experience has had a tremendous impact on his personal and professional life. Cathy’s mother was a devout Christian, spending time listening to the “Old Fashioned Revival Hour” on the radio, listening to the Scripture being read, and radio preachers like Charles Fuller (17). Truett Cathy’s mother had a deep impact on shaping his character. Dan Cathy, Truett’s oldest son and then a vice president for Chick-fil-A, began asking simple, yet pointed questions that led the discussion.

Cathy recalled, “Dan, asked more basic questions: ‘Why are we in business? Why are we here? Why are we alive? ’” Cathy continued, “By the end of the day we had developed two statements, which became Chick-fil-A’s Corporate Purpose: ‘To glorify God by being faithful stewards of all that is entrusted to us’ and ‘To have a positive influence on all who come in contact with Chick-fil-A”. The development of the corporate purpose set a foundation for the next phase of growth for the organization. Today Chick-Fil-A daily operation is based off of Christian values.

They hold daily prayer meetings to pray for the employees as well as the customers that might pay their stores a visit that day. Managers also get together every Friday morning before they open and have devotional time together, they also use this time to use what applications they have learned from their devotional time together to instill those values in their groups of employees. This is what has separated themselves from their competition. Chick-Fil-A believes in their employees and their management. Potential employees go through a three-step process in the interviewing stages for their employment with Chick-Fil-A.

The first interview is with the store manager. In this interview, if the potential employee does not make continued eye contact with the interviewing manager they are not invited back. This is very important to the customer service aspect of Chick-Fil-A, all employees are expected to look all customers in the eyes when they are ordering food and if the potential employee cannot do this, and then they are not the quality of employee that fits the business strategy. In the second interview they will meet with another store manager where they will get more involved in what the potential employee can bring to the family of Chick-Fil-A.

What they do outside of work, what kind of organizations are they involved in and so on. What Chick-Fil-A is looking for are well-rounded individuals. They are looking for employees to be stewards of the Lord, as well as individuals that are a positive influence in their community. They expect to be held accountable for their actions, to have integrity (no excuses if your late) and to be honest as well as be able to have open lines of communication with all peers and management.

In the third and final interview they will meet with the owner operator of the store or stores to make sure that they will be a good fit, they want to make sure that they are willing to work under the Lord and that they will get along with the current staff members. This is important because they want all of the employees to be comfortable with each other. If this happens, then everyone is happy to be working and it shows with the customers on the level of service that they will receive from the staff. Another reason this interview is important is they want to know if this is just a job or what are the person’s aspirations beyond Chick-Fil-A.

Chick-Fil-A has a 93% retention rate within their organization. This is compared to the industry standard of 70%. Chick-Fil-A believes in understanding its competition. Managers of stores will go out as a group and critic their competition. They taste the food, check for consistency, as well as the prices and cleanliness of the restaurants that they visit. They are also looking at the overall attitudes of the employees and how the customers are reacting to it. Chick-Fil-A believes in teachable moments with its’ staff.

If there is a customer that is not happy with the service they are receiving or the food that they are eating, the managers ask the employees that they actively listen to what the complaint is so that they can best correct the problem of the customer and not just say sorry and give them a free sandwich. This is not always that case and the employees are expected to understand what it is that the customer is really asking for. In 2009, Chick-Fil-A posted sales in excess of 3 billion dollars from its over 1350 store locations, and this is all done in a six-day workweek, as they do not open on Sundays for this is the Lords day.

They achieve these great numbers by treating the customers differently. For example, instead of saying your welcome, they say my pleasure. Another example would be that instead of asking for a refill they ask if you would like their drink refreshed. These are the qualities that stick out in the customer’s mind because it is not something that you hear from your local fast food chains and it leaves a lasting impression. Chick-Fil-A also believes in growth, but they do not believe in using funds they cannot supply themselves. All of the new stores that are opened are opened with only cash.

With this being said, if an employee decides that they want to become and owner operator they are required to put up a $5000 cash deposit, which after six months they will get back. The reason for the cash deposit is that they want to know that the employee is vested in the business. They also do it by watching their labor costs. On average Chick-Fil-A has a labor cost average of 16% while the industry standard is 22-24%. When Chick-Fil-A decides that they want to introduce a new product, they make sure that the product is fully researched as well as tasted by all employees.

For example, they are working on a spicy chicken sandwich that has taken over 3 years to research and develop. It is currently being offered on the west coast at this time and will soon be moving into our market. Chick-Fil-A might not be the cheapest chicken sandwich on the market but it is of the highest quality and served by the friendliest staff in the industry. Case Solution There are several reasons the Chick-Fil-A fast food restaurant chain deserves the accolades of the industry and consumers alike. There is the obvious choice to honor the Sabbath and not to be open for business on Sunday’s.

To do something so contrary to the industry norm is a testament to the moxie of the leadership within the Chick-Fil-A organization. Another foundation of the fast food chain is their commitment to the nutritional benefit of their product. They recognized the on going shift of Americans towards healthy choices and are offering these choices as menu front liners, as apposed to sideliners, as with other chains that offer a dollar menu or a fat free menu. It’s curious that other restaurants are conscience of the need to make healthyfat free menu items available to their patrons but have not considered the way in which they prepare these items.

Chick-Fil-A exclusively uses peanut oil to prepare their menu items. Peanut oil is considered a healthier alternative when frying foods. Peanut oil is fat free and cholesterol free. It is outside the scope of this paper but the heart health associated with peanut and other organic oils has long been accepted. With heart disease being the number one killer in America, Chick-Fil-A could be well served in being more aggressive in promoting their nutritional commitment. According to the Health Blog on Ignite. com chicken sandwiches typically have ten grams of fat, two grams of saturated fat, and zero grams of trans fat.

While larger hamburgers have 29 grams of fat (vs. 10 grams for chicken sandwiches), ten grams of saturated fat (vs. 2 grams for chicken sandwiches), and 1. 5 grams of trans fat (vs. 0 for chicken sandwiches). These statistics alone should convince you of the benefits of chicken. Also to be considered, if you’re watching your calorie intake, registered dietician Rebecca Mohning comments on the Ignite Health Blog that chicken sandwiches typically have 420 calories while large hamburgers, like McDonald’s Big Macs, have as many as 540 calories.

And in part due to the versatility of ways to prepare it, it is noted that chicken is the world’s primary source of animal protein. Chicken sandwiches having 32 grams of protein while small hamburgers only has 12 grams of protein (www. whfoods. com). Based on this nutritional breakdown, the negatives of the hamburger outweigh the positives. Hamburgers have more calories but substantially less protein. You could actually consume more and still feel hunger because of less protein grams ((http://www. goarticles. com).

There haven’t been any noted controversies of late but in the 1990’s there was a constant barrage of health related issues involving the hamburger industry. In 1993 there were several deaths related to hamburger patties being contaminated with the E-coli virus. Then again in 1996, the world was terrorized by the spread of the mad cow disease (http://en. wikipedia. org). Giving more credence to the Chick-Fil-A slogan, “Eat More Chicken. ” Chick-Fil-A is known for their famous chicken sandwiches but they also offer chicken strips, great wraps, soups, salads, and much more.

They have a full breakfast menu and several desert options that aren’t conducive for the argument of making healthier choices (http://www. goarticles. com). The things that are exclusive to Chick-Fil-A are potentially areas of concern. First of all, all Chick-Fil-A franchises are closed on Sunday’s in observance of the Sabbath. Secondly, they have an exclusive menu. While other restaurant chains are expanding their menus, Chick-Fil-A is committed to what has brought them success: chicken. These two issues alone could deter perspective investors looking to purchase a Chick-Fil-A franchise for the fear of loss of revenue.

However, upon closer inspection you’ll find that despite the challenging economic times, Chick-Fil-A has experienced continues growth (http://www. goarticles. com). If recommendations were to be made to an already successful company, it would be to make their health smart choices more visible in their marketing efforts. While other chains are emphasizing their “drive thru diet” menu and advertising that they are lowering their fat content, Chick-Fil-A is head and shoulders above the competition in providing healthy choices.

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