Chick-fil-A's Dan Cathy talks business model, philanthropy with Cobb Chamber

Dec. 14—CUMBERLAND — Chick-fil-A's signature franchise model, customer service and charity work, were some of the topics Dan Cathy, the company's chairman, discussed at a Cobb Chamber of Commerce event Monday.

While the consistency of Chick-fil-A's products are often cited as a reason for its huge popularity in the South, Cathy told the audience the company's franchise model is the heart of its success. Each Chick-fil-A store is owned by the company, with the franchisee responsible for operating it. But the operator only has to invest a $10,000 security deposit to take over a store.

"And that really is the genius, the super sauce of Chick-fil-A," Cathy said. "It's not the taste of the sandwich, it's not the taste of the lemonade. It's that entrepreneurial leadership, real close to the customer. ... The closer you can get top-caliber management to the customer, the better the business is going to be run."

There is no shortage of people lining up to operate a Chick-fil-A. Cathy said more than 80,000 people applied to do so in 2021. Those selected go through a long training process to ensure the company's corporate culture is consistent across locations.

"If you make it through the gauntlet and it is a long gauntlet, that's sometimes several years of process, you're part of the less-than-1% club," Cathy said.

Approximately 70% of operators come from within Chick-fil-A, having worked in the restaurants or the corporate staff, Cathy said. The chain has a 98% retention rate for operators. As Cathy likes to say, "success is about succession."

Cathy, 68, is the billionaire son of S. Truett Cathy, the chain's founder. He served as CEO from 2013 to November of this year, before passing the reins to a third generation of Cathys — Andrew Cathy, his 43-year-old son.

Wellstar Health System's Andrew Cox introduced Cathy, invoking the company's reputation for well-mannered service.

"As a native Georgian, I've had a front row seat as Chick-fil-A has become the standard on organizational culture and demonstrating what it truly means to be approachable, gracious and lead with a servant heart," Cox remarked.

Selling quality products also remains central to the chain's success, Cathy said.

"I love to compete with brands that are run by finance people ... any time restaurant leadership knows more about their balance sheet than the recipes, I love to play in that kind of competitive environment," Cathy said.

A family affair

Cathy shared details of the chain's story, which many Georgians will be familiar with. His parents started the Dwarf Grill, a diner, in Hapeville, Georgia, in the late 1940s. Truett Cathy developed a recipe for the chain's flagship product, the chicken sandwich, and launched Chick-fil-A in 1967. The first location was in Atlanta's Greenbriar Mall. There are now more than 2,600 locations. The company remains privately owned and family-run, despite its size — the chain had $13.7 billion in sales in 2020.

Cathy said the chain rode the shopping mall boom of the late 20th century. Now, with malls on the decline, 90% of Chick-fil-A stores are standalone locations. About 300 locations are still in malls, with others located in airports, hospitals and universities.

"It's a remarkable story and sometimes I feel like I'm in the grandstands kind of watching it," Cathy said. "Sometimes I've been on the playing field. ... It's gonna be fun to continue to watch this business continue to grow. The best days of Chick-fil-A are yet ahead."

In 2020, Cathy said the chain turned on a dime to adjust to the pandemic, retrofitting the stores to focus on drive-thru. Chick-fil-A had already invested heavily in digital interfaces, such as the chain's app and giving employees iPads to take orders in drive-thru lines.

Next year, Chick-fil-A plans to invest more than $3 billion into its restaurants, Cathy said. While the chain is opening 160 new locations, most of that money will go into updating and renovating existing stores, a process the chain calls "scrape and rebuild."

Chick-fil-A's Christian values are well-known, from benign policies, such as stores being closed on Sundays, to controversial stances, such as a history of supporting anti-LGBTQ groups, which the discussion steered clear of.

Cathy, however, touted the work of the Chick-fil-A Foundation and his recent involvement in trying to bring investment to impoverished areas in west Atlanta. Recent events have made him more conscious of societal issues, he said, such as inequities in education, healthcare and internet access. Of the immigrant communities in metro Atlanta, he said "we have to embrace these people."

"Our corporate purpose for 40 years now, is to glorify God, by being a faithful steward of all this entrusted to us, and have a positive influence on all that come into contact with Chick-fil-A," Cathy said.

In west Atlanta, Cathy said he's concerned about the high rates of foreclosure, incarceration, crime and high school dropout rates.

"How could that be, right across the street from a $1.2 billion football stadium (Mercedes-Benz Stadium) that we built in order to have, you know, more executive suites and caviar, shrimp cocktails and so forth. But the people across the street are digging through the trash can trying to find something to eat? That's a big issue."

In Cobb County, Chick-fil-A has 26 locations and more than 2,000 employees. Cathy said parents often tell him they want their teenage children to work there to learn good manners.

"They learn how to say 'My pleasure.' And we find that we do a great service to Cobb County, because we deal with a lot of heathen barbarian teenagers," Cathy joked. "And we're teaching them civility, and how to teach people respect."

Cathy said the work to fulfill the company's mission is never quite finished. But he sticks to his values and trusts in his faith.

"There's a huge sense of inadequacy that I feel, to be quite honest with you ... to be the guy I need to be, to be the husband I need to be for my wife, two sons, to be the grandparent I need to be, the business leader that I need to be with Chick-fil-A," Cathy said. "And so God says, you know, don't think you're gonna figure it all out, because you're not. But you can trust in God."