McDonald’s has been touted as a symbol of American ingenuity as well as the beginning of a segment of the restaurant industry that has transformed not only American society in many ways but has also edged its way into other cultures throughout the world. Over the last several decades, people began to question whether McDonald’s business model was actually a good thing; it had become indicative of America’s excesses as well as representing a society based on materialism and convenience rather than more traditional values of quality and uniqueness. Conversely, most people are comforted in knowing that when they enter a McDonald’s restaurant they will nearly always get the exact same product that they are able to purchase at another store. McDonald’s is perceived as the first real fast food restaurant chain but in reality it is one of the first drive-thru restaurants while other companies like Chick-fil-A have roots at nearly the same time. Chick-fil-A was begun in 1947, and the McDonald family opened it’s first drive-thru in 1948. Chick-fil-A captured its own niche when it became the first restaurant in 1967 to open up a store in a shopping mall (The Chick-fil-A Story 2010). McDonald’s and Chick-fil-A essentially were created based on two very different business models. McDonald’s seeking to maximize profits through standardization, streamlining operations and efficiency. Chick-fil-A in contrast saw a market niche but created a company that held profits behind providing a quality product and service and doing the right thing. Is the Chick-fil-A, values based management model superior to the profit-based McDonald’s and if yes, can it be replicated without a religious component?
The concept for McDonald’s, as revolutionary as their food delivery process was and the success that has been achieved because of its consistent delivery of food and service, has never been about the food or service to the customer beyond ensuring they return. The McDonalds were already very successful financially, the McDonald’s concept known today was a means of eliminating the worst headache of the drive-in business, hiring and retaining competent car hops. “It was designed to increase the speed, lower prices, and raise the volume of sales.” (Schlosser 19) People were not delighted to have to get out of their vehicles to go get their food but the prices and quick service were very appealing and finally provided a place where anyone could afford to take their family to dinner. Hanging in Chick-fil-A’s stores is one of Truett Cathy’s philosophy that food is essential to life therefore make it good (Lofton 3). Cathy did not set out to make a lot of money but to operate his own business providing something that people needed and doing it well. Truett Cathy, founder of Chick-fil-A, is credited with “inventing” the boneless chicken breast sandwich. It was only after it opened its first shopping mall location in suburban Atlanta that the company essentially found an untapped market. The business has since grown to more than 1,430 locations and is the second largest fast food chicken chain in the United States (The Chick-fil-A Story 1). The company remains a family owned privately held company that is currently run by Cathy’s son although Truett continues nearing 90 to report to the office daily (Lofton 3). Both chains grew during the same time period but while McDonald’s growth has been highly aggressive and resulted in its symbolizing America throughout the world, Chick-fil-A’s growth has been slower and perhaps higher quality as the company seems able to earn as much operating in six days as others do in seven.
McDonald’s has a fairly standard franchise arrangement with each store owned and operated by the franchisee. In exchange for actually owning the franchise, the operator must make a significant financial commitment, generally $500,000, which cannot be borrowed. The down payment is generally 25% of the purchase price of the restaurant and the remaining balance can be financed over a period not to exceed seven years. Non-borrowed assets can be derived from “cash on hand; securities, bonds, and debentures; vested profit sharing (net of taxes); and business or real estate equity, exclusive of your personal residence.” (Purchasing Your Franchise 1) With that type of investment, one assumes that the properties will be run well just to recoup and pay off the loan. One of the tenets of capitalism and free societies is the notion of ownership and its impact on one’s attitude, the effort one is willing to put into making a venture succeed. Even lenders are more willing to take on clients with less than stellar credit histories if they are willing to put enough money down on the vehicle because having made an investment in it they will be more inclined to make the vehicle payments if they have financial problems. Viewed from that perspective, the rather unusual franchise arrangement that Chick-fil-A has structured seems more like it would attract those not willing to make a sacrifice but the success of its managers suggests that it is superior to the investment required at McDonald’s. For a $5,000 investment, someone is a self-employed independent business owner subleasing the restaurant, with 15% of gross sales going to corporate, and 50% of profits the franchise fee (Lofton 3). Operators are guaranteed $30,000 annually but most earn six figures, with average operators taking home approximately $170,000, and exceptional locations earning as much as $400,000 annually (Deliver. Building an Organization That Creates Promoters 46; Schmall 1).
Another exceptional factoid about Chick-fil-A is that its operator turnover is 5% and its hourly employees, 60% compared to an industry average that is 107% (Schmall 1). Why does Chick-fil-A manage to do so well in those six days of the week? Because the business is more than a job, employees are treated like family and profits are not put before doing the right thing. Rosabeth Moss Kanter in Super Corp indicates that the new paradigm for highly successful, vanguard businesses, centers on innovation, profits, growth, and social good (Kanter 2009). Chick-fil-A is a vanguard company because it is innovative, has experienced steady and managed growth, and it was doing social good before other businesses recognized that it looked good. Profits flow because it delivers a good product efficiently and also because consumers are aware that the company is different. Merely closing its doors on Sunday may be somewhat frustrating if you have a yen but most people like the fact that the company puts principles before profits. Values-based management is only beneficial when a company puts its money where its mouth is and acts on what it says it believes. Cathy’s business was established because he believes that serving one of the necessities of life is in itself important. One of the eleven dos and don’ts in his 2007 book “Be kind to people. Courtesy is very cheap but brings great dividends.” (Cathy 2007, 1) The corporate mission hanging in every Chick-fil-A store includes that their purpose is to glorify God. It is the only national food chain that closes Sunday and Cathy stresses that one does not have to be a Christian to work for the company but they ask their employees to observe “‘biblical principals because they work.’” (Schmall 1) Chick-fil-A chooses its operators and other employees very carefully because they really want people to sign on for life when they start working for the company.
Truett’s five steps to successful business include climbing with care and confidence (measured growth, doing things right before moving ahead); creating a loyalty effect (employee’s are the company); never lose a customer (treat everyone like they are the most important person in the world); put principles and people ahead of profits (more than selling chicken, give back to the community); and closing on Sunday (“Our decision to close on Sunday was our way of honoring God and of directing our attention to things that mattered more than our business.”) (Cathy(a) 2004, 1) Cathy promotes the employee behavior he requires by funding or sponsoring foster homes, school clothes to the Department of Social Services, a summer camp for children, juvenile diabetes research, and college scholarships since 1973 totaling more than $23 million thirty years later (Brief: Eat Chicken Tonight 1; Cathy(a) 2004, 1; Grants/Contracts 1). Corporate staff lunched together for years, including Cathy, because families eat together and get to know each other (Miller 42). The company also recognized when it had grown to a level that required finding leadership important because the old way of finding the right type of people and promoting that talent was not going to staff all of its stores. Unlike other companies, Chick-fil-A entered into serious study about the type of people that were good leaders in order to find a means of attracting them (Miller 43). Customers find the company’s sense of humor, particularly its cows, very appealing (Bingham & Galagan 36). Chick-fil-A is voted the top or one of the top drive-thru restaurants repeatedly (Chaudhry 1993, 24; Chaudhry 1994, 48; Consumer’s Choice in Chains 19; Thomson 60). This year, Chick-fil-A is reporting its 42nd consecutive year of growth; can this be attributed to ethical business practices alone? The answer to that question is no, and deals with how a company that is not motivated by profits keeps making them.
Chick-fil-A’s business succeeds because of its simplicity and its principles but it is also employs cutting edge business practices. By hiring and retaining quality employees, Chick-fil-A makes sure the company provides an experience for each customer, whittling the 10,000 operator applicants to 100 annually (Emmerich 62; Lomasney 10). In late 2007 it was working with Bank of America to implement a cash-management technology that would simplify cash procedures and facilitate quicker access to funds (Cash Cow for Chick-fil-A 166). The company continually tracks customer preferences by conducting surveys and really listening to feedback (Chicken 62). Parents appreciate the character-building children’s meal “toys” as well as the child-friendly food (Focus on the Family 1; Kids Menu Winners 44). Chick-fil-A was one of the first in a spate of quick-service chains expanding to breakfast (A.M. Awakens QSR Sales 13). One of the most extraordinary things about Chick-fil-A is the intense customer loyalty the company achieves. Every year, loyal customers wear cow suits on Cow Appreciation Day, rabid fans wait for the new Eat Mor Chikin calendars, fans love anything with the cows, the company sponsors sports at all levels, and promoted contests during major sporting events (Amour Amour 14; Chick-fil-A Cows Spoof 1; Chick-fil-A, Dr. Pepper 1; Collier 1; Higgins 10; Killian 10; Kramer 6; Reaching Out to NASCAR 1). When Foundry Agency was signed to design and build Chick-fil-A’s website it concentrated on the core strengths of the food, the people, and the company’s outreach program (Chick-fil-A Taps Foundry 1). Facebook has also been a source of branding for the company (Morrissey 40). Chick-fil-A is one of a few unique companies that have turned customer loyalty into company promotion (Sraeel 8). Cathy’s idea that every customer should be treated with kindness and respect seems to have paid off.
Company problems have been limited to one suit brought by a Muslim employee that was fired for refusing to participate in a Christian-based prayer and people who believe that a business should not promote religious ideology (Ruggless 1). Supporters note that they appreciate the paternalistic nature of the management team and believe that the same people that accuse Christians of hypocrisy are criticizing the chain for walking the walk (Stone 16). Deron Boyles (2005) also authored a journal article analyzing the Character Education program that is funded by Chick-fil-A and brings religious and biblical references indoctrinating students in an unhealthy way (45). On the surface, the lawsuit seems a problem but refusing to participate in the prayer was a choice because he could have in his mind, replaced what was said about a supreme being with his own beliefs. The company does not require following the faith just embracing principals espoused by all of the major world religions anyway. Customers/fans are offended by the suggestion that Chick-fil-A is a cult while others are free to voice that opinion. It’s success suggests that few care about the religious practices of the company and its employees because they like the food, the people and the way they feel when they patronize a Chick-fil-A – like they matter. Although other companies are operating with values-based management philosophies it is not clear whether the success enjoyed by Chick-fil-A could be duplicated in another company without the religious component. And yet Banco Real, IBM, Proctor & Gamble, Publicis Groupe and Southwest Airlines all seem to have achieved what Chick-fil-A has without the religious overtones and guidance (Kanter 1). In a highly competitive industry, however, the company continues to differentiate itself and one of the reasons is because of its open conviction to the religious precepts embraced by the company’s founder.
At one time McDonald’s could claim quality as a core competency and one of McDonald’s greatest strengths. A great deal of effort was put into finding the best beef, for example, at the best price and to have it delivered in stores so that it would always if cooked as prescribed, produce the same burger no matter where someone dined. Employees were taught friendly service, but the fact that McDonald’s is based primarily on profits shows as it has declined over the years. With independent owners, the control that corporate has over store performance is questionable and generally while people continue to eat at McDonald’s particularly if they have small children, its consistency is what still wins it customers because no matter how poor or surly the service, that Quarter Pounder does taste the same. Another pinnacle of earlier McDonald’s eras was getting a value, but that is where it truly differs from Chick-fil-A because they provide a value to customers while also operating and offering the customer values. McDonald’s does have some managers and owners that began working at McDonald’s as teens but by and large, McDonald’s has one of the highest turnover rates in the industry while Chick-fil-A’s is very low. Similarly Southwest Airlines that also concentrates on choosing the right employee for the job also has a low turnover rate and has succeeded by providing good quality service, value, and a pleasant, usually humorous experience for the customer. The company has a superior product and employees, efficient delivery and unhurried growth. If it continues to adhere to its core competencies, which cannot really be abandoned because they are supported by the values-based management, Chick-fil-A will remain at the top of the food chain because it also will continue to innovate and utilize new technology. Acting with intent and care, and glorifying God seem to be working.
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