What I Learned from Truett Cathy

Posted On October 17, 2014
Categories Thought Leadership

Ken Bernhardt

An Op-Ed from the Atlanta Business Chronicle

Sept. 10 was Truett Cathy’s funeral. It was a wonderful celebration of the life of the founder of Chick-fil-A and brought back many memories for me personally.

I have been blessed by having the opportunity to do marketing consulting for Chick-fil-A for the past 34 years. When I started, there were only 35 employees in the corporate office and the company had just over $77 million in sales (vs. $5 billion in 2013).

Here are some of the things I observed and learned from Truett over these years:

The importance of knowing your customers. Truett described the Chick-fil-A sandwich as a simple concept. Yet, it took four years to develop. He knew his customers, many of whom worked across the street at the Ford assembly plant or at the nearby Delta headquarters, had a limited amount of time to eat. So he tried a number of different ways to prepare chicken quickly before settling on pressure frying a boneless, skinless chicken breast.

He frequently offered samples to his customers at his restaurant, the Dwarf House, and asked them how they liked it and what would make it better. After trying many different seasoning combinations, he found the right 20 ingredients that would wow customers and make it difficult for competitors to copy. His customers told him the sandwich needed more zest, and that is how the sandwich ended up with two dill pickles on it.

As he moved from owning one restaurant to more than 1,800 Chick-fil-A restaurants, he relied on consumer research to keep the focus on what customers wanted. The consumer always had a seat at the table when major corporate decisions were made.

As an example, in 1982, when an “Operator” (what Chick-fil-A calls franchisees) came up with an idea for cutting a chicken breast into pieces and selling them as hors d’oeuvres for company holiday parties, he proposed selling them in five- and 10-pound quantities for $5.99 per pound. Consumer research revealed that while people knew how many people they were hosting and roughly how many pieces they would need per person, they had no idea how many pounds to order. In addition, they said they would not pay $5.99 per pound. Finally, consumers said they often were on a diet and didn’t eat the bun so would like to buy the pieces for regular eating instead of a chicken sandwich. Thus, Chick-fil-A nuggets were born – – at $1.69 for the same amount of chicken as in a sandwich, which equaled over $7 per pound! (and also became available in five dozen and 10 dozen quantities). Had they just introduced the product without conducting consumer research, it would have failed.

Why did the company begin building free standing units in 1986 – – because consumer research indicated that the one thing that would induce people to eat at Chick-fil-A more often was if it was available near their home or office.

The importance of a passion for quality. After developing the Chick-fil-A sandwich in 1964, Truett put the “A” in the name of the sandwich to signal Grade A quality. He licensed the product to a number of other restaurants but was so disappointed in their commitment to quality that he found a way to get out of the contracts. He started over with a different distribution method, one where he could control quality and ensure everyone had the same passion for quality food and service that he did.

Truett believed that the best way to deliver high quality was to hire the best quality people. Thus early on he hired professional managers to run key functions like operations, marketing and finance. When his executive team began focusing on how to grow the company rapidly, Truett stated, “If we get better, we will get bigger.” This refocused the discussion on how to get better, and as they did, the company grew rapidly.

The importance of hospitality. Great customer service was always a passion of Truett’s. When he declared several years ago that every team member would begin responding to a customer’s “thank you” by saying “my pleasure,” many of Chick-fil-A’s Operators thought he had lost his mind. When he was consistent in mandating it, Operators got the message that this was something important, and it became locked into the corporate culture when the fruits of the increased hospitality began to appear in increased sales.

The importance of clear goals and goal alignment throughout the organization. Chick-fil-A’s corporate purpose is “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.” It is one of the few companies where virtually every employee in the company and every independent restaurant Operator can quote the company’s purpose or mission verbatim. The corporate purpose is used as a filter when all major decisions are made. Like most retailers, at Chick-fil-A there is a focus on same store sales.

Truett believed in rewards for effective performance and, as one example, initiated a “Symbol of Success” program that rewarded Operators who achieved a sales increase of 40 percent or $200,000 with a new car for a year. If they repeated it the next year, they got the title to the car.

Truett placed a great emphasis on profitability at the individual restaurant level. Chick-fil-A builds the restaurants and then leases them to Operators, whose only financial investment is a deposit of $5,000, which is refunded if they ever leave. The Operators run their own business and pay Chick-fil-A a 15 percent fee and half the profits. The Operator’s compensation is the other half of the profits, thus ensuring alignment between the company and the Operators. In addition, most of the executives at the home office have a significant portion of their total compensation tied to Operators’ compensation.

How does one balance the pursuit of profits and personal character? Truett found that balance by applying Biblical principles, seeing no conflict between Biblical principles and good business practices. His decision to close on Sundays is the perfect example. Although some would say the company could make many millions in incremental profits, Truett believed that the company obtained better employees because of this policy and was rewarded by people who respected this policy going out of their way to eat there the other six days.

The importance of a good name and building the brand. Truett often quoted Proverbs 22:1, “A good name is rather to be chosen than great riches….” He was a man of the highest personal integrity and always modeled the kind of behavior he wanted his employees and Operators to live. The criteria he used for selecting staff and Operators is a) competence, b) chemistry, and c) character. Many companies use the first two but don’t spend nearly the effort that Chick-fil-A does to probe an
applicant’s character.

In the early days at the Dwarf House restaurant, he didn’t have very much money to advertise the brand. He came up with a clever idea and separately invited the editors of the two fiercely rival local newspapers to come to his restaurant with their photographers. When they arrived and were surprised to see the other one there, he told them he would buy a full page ad in each of their newspapers if they would be photographed shaking hands, with the caption stating “We disagree on many things but this is one thing we agree on – – this is the best chicken sandwich that we’ve ever eaten.” The resulting buzz generated significantly increased sales.

In 1995, Truett approved the cow advertising that once again created substantial buzz and propelled the company’s sales. He believed the best way to grow sales was to get the products into consumers’ mouths.

For many years he asked Operators to every day personally distribute to potential new customers 40 “Be Our Guest” cards good for a free chicken sandwich, knowing that once they tried it they would love it for good. Truett never went anywhere without a big stack of these cards and a shopping bag full of plush cows to give away.

The importance of giving back. In 2011 Truett wrote a book titled Wealth, Is It Worth It?. The answer was if you earn it honestly, spend it wisely, and share it generously. He certainly did all of these himself. Perhaps the best evidence is the number of scholarships he has given. Several years ago that numbered over 25,000.

Truett was an amazing man and will be sorely missed by me, and the many thousands of others who he came in contact with and on which he had a positive influence.