Gordon's post this morning on franchising reminded me that I wanted to post on Chick-Fil-A. I love Chick-Fil-A, and the scarcity of these Southern restaurants in the Midwest causes me some grief. On a VC post yesterday, Juan N-V used Chick-Fil-A as an example of why Blue Laws are unnecessary to allow stores that close on Sundays to compete with other stores. However, a commenter noted that Chick-Fil-A is a privately held company, so we don't know what the trade-offs of that policy are in terms of profits.
I wish we had data to determine whether Chick-Fil-A's mission is an example of CSR that actually cuts into profits or an example of CSR that benefits the company because of branding and customer loyalty. Chick-Fil-A is different; besides being closed on Sunday, Thanksgiving and Christmas, it has books and other "value-based" materials in kids' meals, and it offers caffeine-free Diet Coke and both regular and diet lemonade (one of the reasons we love it). It's website lists the following mission:
Our official statement of corporate purpose says that we exist "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." That's why we invest in scholarships, character-building programs for kids, foster homes and other community services. Come to think of it, it's also not a bad motive for striving to serve a really, really good sandwich.
Could Chick-Fil-A exist as a public company? Is there a trade-off between the mission and profits? Does Chick-Fil-A make 6/7 of the profits of its competitors? If true, would public shareholders be satisfied with that?
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1. Posted by geoffrey manne on November 29, 2005 @ 12:06 | Permalink
During my recent guest stint here, comments to one of my posts degenerated (they didn't have far to go) into a discussion of fried food. I'm not certain why Chik-Fil-A didn't make it into the discussion, because I've only once tasted a better fried chicken product, and that was in a small, out of the way restaurant in Florence, Italy. Chik-Fil-A would surely succeed as a public company because its product is so good. I'd invest. Of course, I'd also use my Vulcan hedge fund powers to force it to open on Sundays. I can't tell you how many times I've been ecstatic to find myself with a layover in the Atlanta airport, only to realize it's Sunday and Chik-Fil-A will be closed. By the way, not that I'm counting or anything, but I believe the closest Chik-Fil-A to Portland is in Salt Lake City. That's about 771 miles. I've considered making the trip.
2. Posted by Dave! on November 29, 2005 @ 12:42 | Permalink
I've had better fried chicken, but as fast-food sandwiches go, it's hard to beat Chick-Fil-A... and I love the diet lemonade thing, too. They also have a great advertising campaign with the cows that hold up signs that said, "Eat Mor Chikin". I love those.
Anyway, it is a shame we can't see the data, since data is king. But I suspect that brand loyalty, customer service, and frankly--treating employees to a day off, gains as much good will as it would profit. I tend to cringe at blatant evangelism, but if the company is up-front about their stance in their mission statement and operating procedures, why wouldn't they do well as a public company? I think a great many investors would still invest for ideological reasons, even if they thought they could squeeze out some more pennies by being open on Sunday.
It's all about how you quantify your personal ROI...
3. Posted by Anon on November 29, 2005 @ 13:00 | Permalink
The food's pretty good, but we stopped going because of the fairly blatent religious messages in the kids' toys. The kids didn't like them either. Plus, they use (or used to use) peanut oil in their french fries, which is scary if your kid has peanut allergies. I wouldn't be surprised if they changed that considering the explosion on peanut allergies.
4. Posted by tRJ on November 29, 2005 @ 15:13 | Permalink
As a displaced Southerner, I also have a deep fondness for Chick-Fil-A (ice dream anyone?) I wonder if the strong religious values at the core of the franchise would be lost if it went public? It seems many would prefer the stores to open on Sunday, even though the sentiment of the company-wide closure policy is one of the strongest manifestations of Truett Cathy's vision.
Once you give power over the shareholders, the company as we know and love it ceases to exist. Maybe some things are better left untampered, in the private realm.
5. Posted by AnonToo on November 29, 2005 @ 15:19 | Permalink
I think it highly unlikely that Chick-Fil-A could maintain its policies as a public company. As a private company, it is essentially an extension of the owners. It can freely lose money pursuing charitable or non-market-optimal strategies.
Lets leave aside the question as to whether Chick-Fil-A's strategies are really nonoptimal with regards to getting money. The only thing that matters is that they could easily be attacked as such
Here's the problem with a publicly held company: None of the directors or officers really "are" the company. Rather, they are only agents for the company and are required to represent the company's - as opposed to their personal - interests.
The company's interests are largely spelled out by law... and those interests are almost strictly financial. I would argue that even if the officers of a publicly held company felt that, for example, closing on Sunday was the right *moral* decision, they would still be bound by fiduciary duty to make the best *financial* decision (i.e., opening on Sunday).
The publicly held corporation is an amoral creation - the only limits on its operation are the markets and the law. Should moral restraints on corporations be desired by the public, those restraints must be expressed either through the market or the law. NOTHING else will get through.
6. Posted by Will Baude on November 29, 2005 @ 18:50 | Permalink
You people are very strange. Chick-Fil-A better than Popeyes? Surely you jest.
7. Posted by Gordon Smith on November 29, 2005 @ 22:30 | Permalink
I am with Will on this, completely missing the Chick-Fil-A boat.
By the way, I heart Popeye's red beans and rice.
8. Posted by tRJ on November 30, 2005 @ 8:47 | Permalink
Oh come on! Popeye's? I will grant that they make good food and go a long way to replicate a certain cuisine but I see them as being in the same category as Church's or KFC. Chick-Fil-A is all about that sandwich, man. And in that regard, their only competition in my eyes is Bojangles, which can't even hold a candle.
9. Posted by Scott Moss on November 30, 2005 @ 12:24 | Permalink
Chik-Fil-A (apologies if I'm getting their misspelling wrong) is the one food that ever made me nauseous when I wasn't otherwise sick. So at least with me, they didn't quite fulfil their mission of having "a positive influence on all who come in contact with Chick-fil-A." to give them the benefit of the doubt, this was a Chik-Fil-A location in Cambridge, MA, so maybe southern fried food just isn't the same up north -- kind of like my people's folklore about how bagels aren't the same outside NY because the water is different....
10. Posted by Bill on December 1, 2005 @ 17:56 | Permalink
You Chik-Fil-A fans are fooling yourselves.
Popeye's is the best fast food fried chicken. IMHO, their spicy dark chicken with extra hot sauce, red beans and rice and a biscuit is the best tasting meal you can get from a fast food restaurant in America. Though they should serve it with a side of defibrillator. You can get better fried chicken at non-national chains -- Harolds in Chicago and Lincoln Fried Chicken in Philadelphia come to mind -- but not at KFC, Church's, Bojangles, Roy's, Hardees or Chik-Fil-A.
Wendy's chicken sandwich is as good as Chik-Fil-A and not overpriced like Chik-Fil-A.
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