The Chick-fil-a Way: Cultivating Loyalty Inside and Outside of

the Company

Justin Finley

12/2/2010

Econ 325: Professor Simon

Company History

Dan Cathy quoted his father, Truett, as saying, “‘I don’t want to ask people to do that

what I am not willing to do myself.’” Truett Cathy’s quote essentially sums the vision of the

entire organization. Chick-fil-a is a company that prides itself on being the little guy in the

world of fast food and embraces the family atmosphere. As the company grows towards two

thousand locations and well over three billion dollars in revenue, how does it intend to maintain

its family oriented atmosphere and brand loyalty inside and outside of the company? In this

paper I will explore the history of Chick-fil-a which is key to its current level of brand loyalty,

explore its training process and how these employees are tasked with building the brand at a

grass-roots level and how that empowers them and builds their own loyalty to the company.

In 1946, S. Truett Cathy and his brother Ben opened their first restaurant, the Dwarf

House in Hapeville, Georgia. The location is chosen by Truett and Ben due to its close

proximity to a Ford plant and the Atlanta airport. The brothers sold Truett’s car and took out a

bank loan to start the restaurant with a total of $10,600. In the beginning the country was

shifting from a wartime mentality to peacetime so supplies were short but the brothers made due,

even going so far as to using scrap construction materials to finish the restaurant. On their first

day open the restaurant brought in $58.20, it was a start. Over the course of the next few months

the brothers noticed that most of their customers were repeats and regulars. Truett came to a

realization of the importance of maintaining these customers and is later quoted in his book It’s

Easier to Succeed than Fail as saying, “Word of mouth in the food business is more important
than any other source of advertising. It's better to maintain your present customers than to spend

a lot of time and expense replacing them with new ones.”1

Also during this time, the brothers institute another famous Chick-fil-a staple. Sunday

afternoon is one of the best times of the weeks for restaurants from a sales standpoint. It is

clearly visible for anyone to see. People leave church and go directly to their favorite restaurant

to eat. Most restaurants are full during this time. Neither Truett nor Ben wish to work on

Sundays, rather they choose to spend that time with their families. As Truett’s first quote states,

“I don’t want to ask people to do that what I am not willing to do myself,” he does not make his

workers work these days either. Forgoing sales in an effort to cultivate a family atmosphere is

an integral part in maintaining its customer loyalty. Many loyal customers remark fondly of this

attribute.

In the 1960s, Truett began experimenting with a fast-food type of meal to incorporate

into his restaurant. He eventually comes up with the chicken fillet sandwich. As the slogan

states, “We didn’t invent the chicken, just the chicken sandwich.” He then patents it with the

Chick-fil-a logo and thus the company is born. Weary of someone stealing his idea he decides to

open its first restaurant in 1967 at the Greenbriar Mall near Atlanta. Truett has struck a chord of

genius. Remarking at the lack of food options in malls and how the patrons go to the mall and

eat elsewhere, Truett decides to pursue the opportunity to reach the customer before they left the

mall. Within four years Chick-fil-a had grown to seven restaurants in Georgia and South
Carolina. In three more years the company had tripled that number. Before this rapid

expansion, Truett has state four basic principles of Chick-fil-a: 1) The company will not grow by

selling franchises, but by forming joint ventures with independent operators; 2) they will operate

exclusively out of shopping malls (of course he eventually changes his stance on this) 3)

financing would come not through debt but primarily through the company’s own profits; and 4)

people are the primary focus of Chick-fil-a.

These principles are integral in building the franchise. By not selling the franchise the

company maintains private ownership of its product and thus is able to control much more of its

product. Furthermore, they take steps in order to cultivate the family atmosphere in the way they

choose the candidates in the operator agreement. The company chooses its location, and instead

of shopping for franchisees, Chick-fil-a searches for the most responsible and proven people

from within their own company. They only want those with high morals and good character to

operate their restaurants and there is a focus on the adage that “hard-work pays off.” In fast-

food, the initial investment into a franchise can run over a million dollars but in Chick-fil-a it is

only $5,000, and is returned upon separation from the company, used to sublease the restaurant.

The operator is guaranteed a salary of $30,0005. The operator is then compensated with half of

the net profits, after 15% of gross sales are given to Chick-fil-a. The ROI on an initial

investment of $5,000 is quite substantial when the average operator makes above $100,000 4,

according to www.payscale.com. Instead of rewarding those who have already made a

substantial amount of money in their lifetime, the company chooses to give their own employees
the chance to make a large amount of money; in essence they are cultivating brand loyalty from

within the company.

In 1982, the company hits a slump as inflation increases and mall construction slows.

Truett chooses not to take a salary during this time in order to avoid pay cuts to his employees.

During this time Truett calls a special executive committee and is described as the company’s

“defining moment.” With all of the committee being Christian they all describe their faith as

playing an important role in business decisions but they also do not wish to force their religion

on anyone. From this meeting came the company’s new purpose: “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.”2 The goal was not to thrust their religious beliefs onto the customers

but rather to influence those within their company by setting an example with their lifestyles and

by the way they treat people.

After this meeting the company comes out with “guns blazing.” The company that once

relied on word-of-mouth advertising is now taking a proactive step into advertising. Their sales

have fallen during this time due to other companies mimicking the chicken sandwich and in

response they issue a campaign titled: “First ‘n’ Best.” Also, during this time they began

circulating three new principles on the operators title “QSC” which stood for quality, service and

cleanliness. The new Chick-fil-a proves successful. Within six months sales have increased by

forty percent. Also, during this time they “invent” the chicken nugget and come out with a small

Dwarf House line after the original restaurant.

 In 1986, Truett decides to forgo the second principle and venture outside of malls and the

company would grow even faster. By 1997 Chick-fil-a is celebrating its thirtieth consecutive

year of increased sales. While it is still third in the chicken fast-food market (behind KFC and

Popeye’s/ Church’s) it also the only privately owned. The company is valued at over $1billion

and despite pressures to take it public Truett decides to keep it in the family and still has no

intention of ever making it public. Truett’s main reason behind staying private is his insistence

on giving away money to charities. In 1983 he began the WinShape foundation in order to give

educational opportunities to those less fortunate and is still actively involved. Truett also teaches

a Sunday school class to 13 year old boys and has done so for several decades. In his book It’s

Easier to Succeed Than Fail Truett says this, “Contrary to what you may have been taught in

business school, your net worth is not the sum of all you have managed to accumulate in your

lifetime. When you die, those who survive you will measure your net worth by what you have

given.”

Screening and Sorting

Chick-fil-a focuses on its people, whether it is the customers or its employees. The

company prides itself on maintaining loyalty from customers and also its employees. In an

industry that maintains a turnover rate of one-hundred and fifty percent for hourly workers;

Chick-fil-a’s is just fifty percent. I myself spent three years as an employee of Chick-fil-a in

high school and when upon returning I recognize a number of people whom where fellow
employees of myself. In an industry which garners such disdain from outsiders towards the jobs,

how is it that Chick-fil-a is able to retain its valuable employees? It is certainly not the pay as

they are right on with the national average of fast food restaurants. In their paper titled Turnover

Culture in the Hospitality Industry, Roderick Iverson and Margaret Deery build a model to

measure the determinants that go into turnover in the hospitality industry. The model is broken

into five variables: structural, pre-entry, environmental, union, and employee orientations. They

found that “job satisfaction is increased by greater variety in work, compatible role expectations,

have advancement opportunities and do not possess a negative mood disposition”8; all of which

seem to be lacking in the fast-food industry. Furthermore, their findings state that many

employees enter the industry with the expectation of working a minimum amount of time in the

organization. Essentially, they are not expecting to work there for an extended period of time.

So, how is it that Chick-fil-a maintains such a low turn-over rate?

Chick-fil-a carefully screens each new employee in an attempt to deter anyone that does

not possess the same attributes as the company. Of course it has not always been this way.

Since 1988 the company has been sued a total of twelve times for employment discrimination.

One manager was invited to a corporate retreat for additional training. When asked to participate

in a prayer to Jesus Christ he refused due to his Muslim faith. One day later he was fired. A

number of such cases have been brought up so now the company carefully screens new

employees and even further so new managers. According to Iverson and Deery’s model, the

company is engaging in compatible role expectations by building a culture based around God.

Each candidate lists activities and those involved in churches or other Christian organizations are
given preference over others. For example, the process for becoming an Operator is long and

grueling. Often lasting over a year and consisting of countless interviews, often lasting hours.

Of course at the lowest levels it is not so grueling and younger hires are the norm because it is

easier to build the loyalty they are looking to cultivate.

Chick-fil-a’s employee loyalty stems from the very beginning of the hiring procedure.

Initially you are interviewed by the General Manager of the restaurant (sometimes this is also the

Operator in smaller stores). If this interview goes well then a second interview will be scheduled

between the potential employee and the Operator. In the second interview the potential

employee is introduced to managers and the team that is on shift and goes on a tour throughout

the store. The tour introduces the potential employee to the family like atmosphere and begins to

instill a sense of excitement towards the new job. Usually at the end of this interview the

employee is offered the job.

On the employee’s first day of work they are more than likely introduced to other new

hires and all watch training videos together. By allowing the new hires to do this they are doing

two things: 1) growing the teamwork attitude that is familiar in the company and 2) saving time

and money by consolidating training into one session. These videos are intended to not only

give the employee instructions on how to perform their job but also instill import values into the

new employees. Values such as teamwork, cleanliness, and the customer experience. Each

employee is trained on how to deal with an unsatisfied guest (never referred to as a customer).

They are taught to do almost anything to make sure that the guest leaves satisfied and that their
experience is enriched by coming in contact with the employee. Also during these videos the

employee begins to notice that they are not referred to as an “employee” rather as a team

member. The team member aura is utilized in order to create a sustaining and comfortable

environment for the team member to work in. The goal is to create a job in which the team

member does not mind working and enjoys his or her relationships with the fellow teammates.

The family and team atmosphere is a key to their low turnover because it creates a happier

employee. According to Iverson and Deery’s model, a bad disposition in the workplace leads to

higher turnover.

As our team member begins to learn his specific job sorting can take place, he is assigned

new tasks throughout the store. One day he is breading chick nuggets in the kitchen and the next

he is running a cash register up front. Over time one of two things will occur: 1) he will be

assigned a specific job at the store and more than likely spend the vast majority of his job

performing said job or 2) he emerges as a “star” or a jack of all trades. These are the employees

that are good at multi-tasking and leading people. They are also committed to their jobs and do

not present any issues for the managers and Operator. Over a period of several months towards a

year he will be promoted to a team leader. These team leaders are tasked with handling small

groups of employees assigned to specific areas of the store. They may be in charge of the

kitchen or the front counter and keep everyone on track for the shift and ensure certain tasks are

carried out. The team leader follows a natural progression as they did when they were first

hired. He will eventually lead shifts in the front counter and kitchen areas. After performing
these duties for a period of time (1-2 years) he is eventually promoted to a manager and is now in

charge of managing the team leaders on the shifts. As one can see, the advancement

opportunities are available in the individual store and promotions are celebrated. Going right

along with Iverson and Deery’s model this helps to lower the turnover rate. Of course the

manager is there to lead everyone but the team leader handles all the smaller tasks while the

manager oversees the store and handles administrative duties like bank deposits and handling the

operating systems at the end of the day. Of course in order to carry out these duties the

managers and team leaders are subject to training retreats utilized to not only introduce them to

the overall attitude toward managing and teamwork but also for a more long-term reason.

The management role, as it is in any establishment, is essential to creating a positive

work atmosphere. As Julio Cammarota wrote in his paper titled Now Serving Advancemnt

Possibilities, “To instill positive attitudes among low-wage workers and thus succeed at their

jobs managers become key players in the firm’s strategy of raising quality without raising wages.

To implement this strategy, managers need to accomplish two goals. First, they must ensure

workers understand that their principal task is to make the customer happy. Second, without

necessarily offering monetary incentives, they must advocate the possibility of promotions to

elevate the workers’ enthusiasm while serving customers.”8 Chick-fil-a goes a step further with

this by utilizing their franchisee qualifications. By allowing their managers who are successful

opportunities to be Operators it instills hope for the lowly uneducated minimum wage worker

that some day he to can run his own store. In actuality the process is arduous and those without a

formal education are not seriously considered.

 Furthermore, the managers who do not qualify to operate a store fall victim to these

hopes. They accept being over-worked in hopes that they can become an Operator. It seems

they get so caught up in advancement opportunities they inadvertently overlook the glaring fact

of being poorly compensated. It is not uncommon for a college educated manager to spend 4-5

years at a store for less than $30,000 a year. These managers end up leaving for better

opportunities more suited to their education and experience levels.

Investment in Skills

The aforementioned training retreats are not geared toward the teammates rather for the

team leaders (assistant managers) and managers. The retreats often occur at Chick-fil-a’s

headquarters in Atlanta, Georgia. The headquarters were built in the 1980s following the

company’s resurgence and are situated on a sprawling 72 acre parcel of land. It is a magnificent

complex and is utilized for a number of different events. The retreats consist of team building

activities, open forum discussions, and recreational time intended to foster a team atmosphere

between those which are participating. The managerial retreat goes a little more in-depth and

explores specific topics and problems that are posed from a managerial stand point. Of course,

most of these problems can be solved from their stores with other managers or team members but

this is not the only intention of the training sessions.

They are utilized to further build the team atmosphere and to also begin searching for

potential Operator candidates. Most Operators hired from within go through these training
retreats. The higher ups in the company keep profiles on the managers and the worker builds

their resume through attending these sessions and seminars and ultimately influences the

company’s decision on whether or not to give them their own store in the future. The ultimate

goal of our newly minted Chick-fil-a manager is to eventually become an Operator and he also

knows that ninety percent of Operators come through this method of recruiting and also knows

that it is performed in order to establish a more efficient store right from the opening. When the

new store is up and running the new Operators already know exactly how things are going to run

and can more quickly respond to problems that arise because they have done it dozens of times.

Rewarding Performance

Our manager is no longer new to his position. He has now been in the leadership

position for a number of years and is now a veteran at the chicken game. He has gone to the

retreats and training seminars and proven himself capable of running a shift all by himself and

now the natural progression continues. Chick-fil-a knows that he possesses all the values of the

company and they have complete faith in his ability to successfully run the store. They now

have chosen to test his skills and operating a store all on his own.

Unfortunately, not all Chick-fil-a Operator agreements work out. In order to fill these

vacancies the companies will place potential operators in these voids in order to satisfy two

needs: 1) to quickly fill the void left by the ex-Operator and 2) to field test the potential

Operators. Our Operator has been chosen to fill an interim-Operator position in Denver,

Colorado. The store has been left vacant due to the Operator choosing to open his store on
Sundays a number of different times and the corporation choosing to terminate the contract. The

move was relatively sudden and they need to fill the position rather quickly and since our

manager is high on their list they have called him up to the big show. He runs the store smoothly

for the first month and sales do not fall from where they were before his arrival so they choose to

keep him there for another month. After the second month is up they have already found their

new operator and our potential Operator is sent back to his home store. Just as he has added the

seminars and training sessions to the resume, now he has added Interim-Operator. Within the

next two months he is called back up to another interim position. After returning from the next

trip he is asked to stop at the headquarters in Atlanta. He is picked up from Atlanta International

in a large limousine and driven to the headquarters where he meets with the COO Dan Cathy and

the rest of the staff who congratulate him on being chosen for an Operator position in one of their

emerging markets in Bakersfield, California.

The company places an emphasis on retaining the good managers. They know that the

process of becoming an Operator is long and can be frustrating. So, by providing the

opportunities to manage other stores it helps to alleviate some of the frustration. College

graduates may become frustrated at the slow pace and see a better opportunity elsewhere to make

more money at that point in time. The interim-Operator positions tend to pay more so that helps

to retain the better managers for the time being. There is an upside to the long process (at least

for the company); it is used as a process to weed-out anyone that is there for just the money. So,

by the time the Operators are chosen the “cream has risen to the top.”
 Chick-fil-a is no different from any other company in the way it awards bonuses based on

performance. The better performing stores are given awards based on sales figures and the

Operator chooses whether to pass these onto the employees. Some stores Operators choose to

give out bonuses to all their employees while some choose to just give them to their

management. The company is unique in how it awards its newer managers. If a manager is

outperforming its market, meaning the sales at the store he or she took over is surpassing

projections then this may be attributed to the manager. If this is the case then the manager may

find himself in the position to be promoted to a store in a larger market which in effect leads to

the potential of earning more money.

Furthermore, in an effort to retain and reward long-term employees, the company gives

out scholarships. According to a www.restaurantnews.com article, the store has given out over

$25,000,000 in scholarships6 to employees of its stores. This works out to be 25,000 of their

$1,000 scholarships. To be eligible for the scholarship, the employee must be employed by the

company and having been there at least two years. So, one can see another attempt at retaining

employees and also cultivating the brand loyalty.

Operators are encouraged to reward regular employees with gift certificates to various

stores based on performance. Furthermore, the Operators are encouraged to hold parties for the

employees for holidays in order to boost morale. It goes a step further by encouraging Sunday

getaways to amusement parks, beaches, etc. Employees are encouraged to attend church together

and to participate in various activities outside of work.

 As stated before, the average pay of a Chick-fil-a worker is on par with the rest of the

industry and this mainly due to the commitment to hiring high school and younger workers but

with such a good retention rate one would assume that the average pay would be higher. When a

worker stays at a company for long periods of time they are routinely rewarded with higher pay

but it does not seem to be so here. One can assume that the workers stay with the company due

to the environment, fellow employees and the atmosphere. Furthermore, one can assume that the

retention rate would be higher if they were to pay better but with such a good rate there is no

need to raise their pay. Managers do fairly well, averaging anywhere from $20,000-$34,000 4

according to www.payscale.com. The upper end of the spectrum are for the more seasoned

managers and do not take into account interim-Operator positions or bonuses from the company.

Organizational Structure

Chick-fil-a is an example of a hierarchical company throughout. From the smallest store

all the way to the corporate offices the hierarchy is prevalent. Here is the corporate layout:

S. Truett Cathy
Founder, Chairman, Ceo

Dan T. Cathy
President and COO

Donald M. Cathy
Senior Vice President
James B. McCabe Steve A. Robinson Perry A. Ragsdale Timothy P. Tassopoulus
VP- Finance, CFO VP- Marketing, CMO VP- Construction VP- Operations

As you can see the hierarchy is present and this is mainly due to it being a privately

owned family business and it ensures the family maintains control of the company. The

company is then broken into functionality due to its somewhat small size. If it were a larger or

more complex company it could then be formed into divisions but not so in this company. It

needs to be noted that under the Senior VPs are a number of titles, each overseeing between 10-

25 employees all with titles pertaining to their category.

The hierarchy also assumes the same role in the store: CEO- Operator, COO- General

Manager, Senior VP- Manager, and all the VPs would be team leaders. One can safely assume

that the corporate offices act much like those of the store in that a team atmosphere is cultivated

and training retreats are a normal occurrence. The company is broken into this manner because

it works for their type of company. Chick-fil-a is fairly large but nowhere near the size of

McDonald’s. Furthermore, it is not international so it does not require it to be broken into

divisions or network structures based on geography. It seems to be working for them but if they

wish to expand internationally they will need to adjust accordingly as they are currently based
out of Atlanta, GA and they are probably experiencing problems managing their new stores on

the west coast and northeast. In the close future I would not be surprised to see them expand and

adjust their corporate environment in order to deal with the company’s growth and new markets.

Despite it being a multi-billion dollar company, Chick-fil-a still maintains its original

vision and environment. The company has made the customer and its employees number one on

their list of priorities and has brought about a level of loyalty that cannot be rivaled by any other

restaurant chain. By continuing to place an importance on high morals and value they attract a

higher level of employee and offer a higher level of service to a guest that values each in their

dining experience. If the company can maintain its vision while maintaining its level of growth

there is no telling how far it will go.

 References

1. Cathy, S. Truett, 1989. It's Easier To Succeed Than Fail, Oliver-Nelson Books

2. Cathy, S. Truett Eat Mor Chikin: Inspire More People, 2002 Looking Glass Books

3. “ About Truett” http://www.truettcathy.com retrieved 12/1/2010

4. http://www.payscale.com/research/US/Employer=Chick-Fil-A_Inc/Salary

5. http://www.buyerzone.com/professional-services/business-franchises/ar-chick-fil-a-franchise/

6. http://www.restaurantnews.com/students-receive-chick-fil-a-scholarships/

7. Cammarota, Julio, 1999. Now Serving Advancement Possibilities: The Time-Pressured Work and

Family Lives of Middle-Class Managers of Fast-Food Restaurants. Center for Working Families,

University of California, Berkely.

8. Iverson, Roderick; Deery, Margaret, 1997. Turnover Culture in the Hospitality Industry. Human

Resource Management Journal

A lot of the material is attributed to my own experience at working for Chick-fil-a for a

number of years and also interning two summers ago. I really liked the company and I could not

find a decent company analysis so I took the opportunity to do it myself. Thanks!