CASE 7

CHICK-FIL-A: BIRD OF A DIFFERENT FEATHER

STRATEGY MANAGEMENT COMPETIVENESS AND
GLOBALIZATION, CONCEPT AND CASES
 BY
02/23/2016
Executive Summary.

This case analysis evaluates Chick-fil-A. It is designed to show the Strength, weakness,
opportunities and threat. It delineates how the founding principles have guided the company
over the years, and how it has responded slowly to change over the years. CFA has grown to be a
force to reckon with in the industry with strength in customer experience and sandwich
trademark. However, the emerging markets, social changes, economic issues and intense rivalry
will continue to pose threat to this strong cultured company. At the end of the case analysis, we
would have been able to devise possible solutions for the present and future times.

Background.

The story of Chick-fil-A will be incomplete without the man who turned a dwarf house into a
giant brand. Samuel Truett Cathy was born in 1921 into a religious family and in fact was named
to honor a Baptist evangelist. These factors would plan a significant role in Cathy’s life. At an
early stage, Cathy developed entrepreneurial skills; he delivered papers and sold Coca cola and
helped with the meals.
And at the age of 25, he and his brother opened their first restaurant- Dwarf House. Cathy soon
realized he could prepare chicken faster and insert between two buns. He went ahead to
trademark the name Chick-fil-A borrowed from the then steak fillets.
Cathy explored expansion through licensing but failed because he could not control quality. And
in 1967, he opened his first chain restaurant from where he expanded till this date.

External Analysis.

For a restaurant business, there is bound to be several stakeholders such as shareholders,

creditors, management, suppliers, government, customers, operators and so on. CFA focused
more on “people”. Cathy was more interested in personal relationships than profit making. The
founder who is was an important stakeholder had high demands, hence, the rigid recruitment
process. He demanded enduring loyalty among customers and customers. CFA’s customers
spans through the entire population spectrum, however, it focuses on family.
The high expectations by CFA are obviously because of the need to preserve the founding
heritage and culture.
As CFA strives to be the best “quick-service restaurant”, key external factors affect CFA.
Demographics is a major threat, this includes race, age and gender. CFA is family oriented and
believes in marriage, but a comment he made on this issue earned him a bad publicity. However,
that created an opportunity in the Christian community. Despite the harm of this factor, revenue
went up same year. His adherence to his principles proved to people that CFA would not
downplay its core values. Another threat are rivalry and intense competitors. The industry is a
120 million dollar industry with about 50 percent offering the hamburger entrees. (hoovers.com
2008). Some of these competitors are KFC, Subway, Burger King, McDonalds and Taco Bell.
New entrants is a threat to CFA, example is Oporto who just made its way into the United States.
There is also the threat from substitutes. Since Sundays are off days for CFA, customers will like
to look for substitutes, and if rivals provided them, this might affect CFA. Example of substitute
from rival is McDonalds southern chicken sandwich which in fact can come with biscuit and
pickles in the morning. The crave for healthier food is also a threat.

Although, CFA has strategically positioned itself in strategic locations such as malls and
Christian communities, there is need to consider the potential future. There is need to look at
beyond the shores, into the international market as well as expanding locally. Moreover,
Customers are beginning to demand for healthier food and more customer experience. CFA
already has a niche in customer experience, and can go beyond the spinach and pickles to
healthier options. Doing this will bring in new customers, and retain the existing ones. The world
is tending towards a greener environment, and CFA is taking the lead in this sphere, this will not
only save cost but also endear customers to them. Generally, the industry, however competitive,
has more future potentials especially considering the emerging markets and need for healthy
options.

Internal Analysis.

Innovation and Market entry.

In the 1960s, CFA became the first to sell boneless chicken breast put in between two buttered
buns (http://www.businessfranchiseworld.com/chick-fil-a-franchise/). This concept was later
trademarked. CFA also was also the first to open locations in shopping centers. This early entry
gave CFA access to the market. At the governor square mall in Tallahassee, the quadrangle is
almost always filled up, with people seated and eating. This gives a vivid picture of how strategic
positioning would have played out for CFA especially in getting all the spectrum of customers.
This innovation and early market entry also gave Cathy various profit making options. He was
averse to restaurant chain, but had the option of licensing, although he claimed it was the easiest
route, he soon found out that it was a bad idea. Thus, licensing is easy and less stressful, but the
downside could be catastrophic because, the business owner would have no control over quality
and other success factors. In the case of CFA, some restaurants cooked the chicken breasts and
then cool it, to be later reheated and served; of course there would be variation. This
inconsistency can be observed in Nigeria, where Mr. Biggs (the pioneer of fast food business in
Nigeria) gave out licenses and the licensees could not maintain the quality. Mr. Biggs today is
struggling despite the fact that it was a first mover.
Although, we have no details on the barriers he encountered while entering the market, however,
it could be inferred that Cathy must have spent time strategizing, testing the market,
trademarking and so on, and it must have been easy for the restaurants (second movers) who
bought the license.

Top Management Team, Corporate Structure and Culture.

CFA is a privately owned business, in fact, one of the largest family owned businesses in the
United States of America. It has maintained a stable management team. Donald, Dan and Truett
are directors and founder respectively. Other top directors have been with CFA for about 20
years. (http://www.chick-fil-a.com/Company/Highlights-Bio). This consistence is beneficial
because it preserves the culture, mission, heritage and vision of the founding father. On the other
hand it could be disadvantageous if the management team is rigid. Obviously, CFA is still doing
well even across the population spectrum and this must have been because of dynamism.
CFA has a centralized structure, decisions are top down. The rules are made by the management
and everyone is mandated to adhere to them. Although each restaurant has a manager with
employees categorized by functionality, the employees have often times multi skilled. The
employees are also provided with job descriptions. The mechanistic and rigid structure can yield
slow change process. (managerial analysis by Justin Doss).
CFA has a culture and mission embedded in the biblical principles. The mission statement reads,
“Be America’s Best Quick-Service Restaurant”. The high standard of Cathy might be considered
controversial; however, thousands of potential operators apply yearly. Only few get to become
operator. Cathy must have learnt his lessons when he lost control at the early days of the
business. He believes in loyalty to self, family and business.

Corporate Strategy, competitive advantage and Weakness.

Chicken sandwich is CFA’s trademark; this distinguishes it from its competitors. It must have
been valuable, rare, inimitable at the get go, with the emergence of compettiton, all this factors
might be considered applicable. CFA has not only built but preserved its brand and quality. I
often wonder why CFAs are located at distance, unlike McDonalds, yet there are lines each time
I visit. Yes, they have a good sandwich, good environment, but the greatest differentiator is their
customer focus, the experience customers get. This can be seen in their implementation of a play
room for kids as well as the way they are so concerned about customers individually, the
common slogan is “my pleasure”. The management has been able to trickle down and instill the
mission and culture in the employees. The employees are obviously a huge resource at CFA.
However, CFA has few weaknesses such as technology, menu option, and hours of operation.
Offering just one chicken sandwich limits the options of customers. Product diversification
becomes imperative amidst tight competition. CFA lacks flexibility, for example they do not
open on Sunday, unlike other restaurants. Also, CFA is not in support of LGBT which some
people considered as a reputational loss. Although, this has been considered weaknesses, CFA
contuse to grow. (Free SWOT analysis).
Performance Analysis.

Key Problems facing the Firm.

CFA has done well for itself, maintained a solid brand for over 40 years and carved a
niche for itself. However, the company is faced with problems and potential problems.
First is the death of the founder. The culture of CFA has been upheld obviously because of the
physical presence of the founder. He personally experienced a change in quality due to loss of
control when he gave out licenses at the budding stage. Now that he is late, the management
team might be at loggerheads due to difference in opinions. The younger generation might be
more liberal and perhaps flexible. This might affect the core values which have stood strong
amidst the social tides and threats. Nevertheless, being rigid might invite problems in the future.
As the market spectrum changes and competition becomes stiffer, there might be need for
flexibility on menu options, healthy options and global expansion.
Another Problem is the social problem, which has raised enormous controversy. CFA has
its foundation embedded in family values. Cathy believes in the biblical principles of marriage.
This has drawn protests from the LGBT market segment as well as law suits from Government
agencies. Although, CFA has moved on and in fact reduced its funding towards anti-LGBT
organizations, the threats remain. This problem in fact goes beyond the LGBT issues; as a former
worker went on to sue the parent company for supposedly being paid to be a stay home mum. Of
course, CFA believes in the values of family. Other problems include structural and policy
problems which includes no expansion, minimal menu options and excessive intrusion not only
towards the employees but the operators as well. CFA wants every entity in its value to embrace
its principles, and this might become a bottle neck in the future if requisite actions are not taken.

Solutions to the problems.

The company has come a long way, existed through many generations, adhered with its
principles and remained very profitable. In fact the reason why its customers keep growing and
in fact become fanatics in some cases, is because of the fact that CFA has held on to its core
values and promises. Therefore, it will be imperative to uphold the principles, to avoid any Cathy
from changing this, the company can have enough board members that will support the mission,
and any potential change will have to go through voting. Also the mission statement can be
placed in strategic places if not in existence yet, this will continue to resound. It is also important
to inculcate these principles and values into the kids and much younger generation, since they
would be the next CEOs and Presidents.
For the social problems, Chick-fil-A will have to soft pedal. Even the bible says we
should love our enemies. In fact one of the cathys became friends with a top LGBT rights activist
(Huffington post February 2013). The company does not have to go all out on gay issues. As a
matter of fact it has continually soared in sales despite the uproar; this shows that they are doing
something right. With a continuous focus on customer experience, quality and exploring more
opportunities, they are bound to sail above this threat.
Other problems such as the structural and policy problems can be solved by going
expansion beyond the shores.

Strategy and Operational Decisions to implement the solutions.

The top management will have to deliberate and justify the need for a more a more
flexible policy in certain areas. They have to see that the flexibility makes strategic sense.
Afterwards they would have to plan on how to implement. For example, if they have to expand
beyond the shores to somewhere like Africa, then they have to reach to the local operators to
understand the culture and other factors that are peculiar to the market. A typical example is
pizza in Nigeria, where foreign pizza companies have incorporated “Jollof rice” into it. This is
because Nigerians love that kind of rice, thus, they called it “Jollof rice” flavor. A flexibility in
the aspect of healthier and menu options as stated is imperative. To achieve this CFA can invest
in farming – vertical integration or perhaps outsource some aspects. This is an opportunity for
innovation. An option on the menu can have spinach, wheat bread, fresh tomatoes, grown
chicken, fish and so on. This must then be publicized so that people can be aware. This will be a
differentiator especially because it is coming from an organization who already has strong brand
and is environmentally friendly. CFA can make it known on their cups, bottles and plates how
involved they are in these green activities. Example, every purchased bottle can say “you have
contributed to the making the world better for posterity”, this will encourage the customers to
buy more due to empathy. Chick-fil-A already differentiates itself with its product and customer
experience, going green in all aspects will further differentiate it.

Performance Analysis.

In the restaurant market, CFA holds over 20 percent with females has the highest target audience
in the 18-44 range. These women have children. And of course the phycology of kids is
powerful; the desire for a kid to go to the play room at CFA can boost performance. Another
segment is the school segment, where students are in demand for quick food. It can also be
observed that the new target audience enjoying spending time with family. With the involvement
in sports, which is a key performance index, the performance is sure to be high. (emmabparker
and strategic management by Hitt 11Ed).
 CFA is expanding locally, as they opened 93 new restaurants in 2013 during the LGBT
controversy (Huffington post – 2013), they need to explore the emerging markets such as Africa
and other culture or religious conscious regions.

References.
“Strategic Management, Concept and cases, Competitiveness and Globalization,” 11 ed.