Chick-fil-A

Hatching an Empire

*From rags to riches, Chick-fil-A founder S. Truett Cathy has built a fast-food empire on personal conviction and perseverance.

words by > Pam George

Celebrating 60 years in the restaurant industry, S. Truett Cathy’s career has been a labor of love. “Th ere’s a diff erence between being a workaholic and being excited about what you’re doing,” drawls Cathy, still CEO of the private, family-run business. With 1,255 restaurants in 37 states, Chick-fi l-A is the second-largest quick-service chicken restaurant and the 25th largest restaurant chain in the country, with annual sales about to top $2 billion.

One of seven children, Cathy was born in 1921 in Eatontown, GA, and named for George W. Truett, a Baptist evangelist. His family soon moved to Atlanta and Cathy shucked corn, shelled peas and washed dishes at his mother’s boarding house. To help his parents, he also opened a Coca-Cola stand, selling Cokes for a nickel. He bought 24 Cokes for 80 cents and made a 40-cent profi t. “For me, that was big business,” he says. “Th ere’s a lesson to be learned in being brought up in poverty: the value of the dollar.”

At 12, he started a paper route for Th e Atlanta Journal. Motivated by incentives, Cathy boldly asked people to switch from the competitor, Th e Atlanta Georgian. “I told the customer I’d put the paper behind the screened door to keep the dog from chewing it up, or I’d put it on the rocking chair,” he says. “I’d be there rain or shine.” He quips that he was so successful that he thinks he was responsible for Th e Atlanta Georgian folding in 1939 (aft er a takeover).

Discharged from the Army in 1945, Cathy pooled his funds with brother Ben to build a restaurant in Hapeville, an Atlanta suburb. Constructed and outfi tted for $10,600, the Dwarf Grill, named for its size, opened in 1946—and, aft er being renamed the Dwarf House, is still in operation.

Th e restaurant was busy 24 hours a day, six days a week. It was closed Sundays—a tradition born of Cathy’s religious beliefs and still standing. “It was the best business decision I ever made,” Cathy says. “Not only is it honoring God, but it also helped us attract the caliber of people who appreciate Sunday off , whether they worship or not.”

It also gave the brothers a break. Cathy once worked 36 hours straight. “I was totally committed to the restaurant,” he says. “Th ere was no way I could fail—no way I could aff ord to fail.” He remained committed even aft er losing both his brothers in a 1948 plane crash. Th at year, Cathy married Jeannette, who helped out as a waitress. “I jokingly tell people that I started going to our little family restaurant about nine months before I was born,” says son Dan Cathy, now president and chief operating offi cer of Chick-fi l-A.

A second Dwarf House opened in 1951. Cathy, however, had not established the proper model for duplication. But “the Lord took care of that when it burned down to the ground,” says Cathy of the 1960 fi re that burned down the original.

Meanwhile, Cathy wanted to fi gure out a good way to serve chicken. By cooking a de-boned chicken breast in a pressure fryer, he cut the cooking time in half. Customers wondered if it was quail—“they’d never seen chicken with no bones in it,” Cathy says.

Chicken sandwich sales soon eclipsed hamburgers, and in 1967, the fi rst Chick-fi l-A opened in a 384-square-foot space in the Greenbriar Shopping Mall in Atlanta. Malls were ideal, because most were closed Sundays. Chick-fi lA sales fi gures helped change developers’ assumptions about fast food. So did hungry shoppers. Chick-fi l-A quickly expanded to other malls.

In malls “there’s a lower rent, and it’s less risky than a freestanding unit,” says Darren Tristano, executive vice president of Technomic, a consulting fi rm for the food industry. “Th ere’s also more opportunity to build brand awareness.” Gradually, malls introduced Sunday hours.

Chick-fi l-A, however, remained closed. Th e company still won’t sign a lease unless it has that right. “It hasn’t hurt their sales,” Tristano says.

Beginning in 1986, Chick-fi l-A turned to freestanding units. Mall construction had waned, and Chick-fi l-A saw the value of drive-throughs, which now garner 50% of sales.

As the ‘80s unfolded, health-conscious consumers demanded chicken options, and hamburger restaurants happily obliged. Th e price of chicken breasts soared. Th at was bad news for Chick-fi l-A, but despite the increased competition, the company has stayed true to its original product. Now, there are chicken salads, wraps and nuggets, but still no hamburgers, subs, turkey sandwiches or roast beef in sight.

“When you think of McDonald’s, you don’t think of burgers anymore; you think salads and chicken,” Tristano says. “But Chick-fi l-A has had success sticking with chicken.”

Th e company also has retained its Southern fl air. Menu staples include lemonade, sweetened iced tea, coleslaw and breakfast biscuits. As Dan Cathy says, “Unless you’re unique in a meaningful way, then chances for success are short-lived. You can compete on price, but that doesn’t last.”

To mark 50 years in business, Cathy recently launched Truett’s Grill, a restaurant with a retro, nostalgic 1946 decor. He has no plans for retiring anytime soon. “Why would I want to retire from something I enjoy doing?” he says. “I’m only 85, so you see I’ve got a lot of good years left .”

S. Truett Cathy, founder of Chick-fil-A, is a consummate entrepreneur. He’s also an accomplished raconteur, whose success tips inspire prospective and existing businesses. Here are five.

1. CULTIVATE THE DESIRE TO SUCCEED.

A 19 year old can outperform a Harvard graduate simply because he or she wants to. “You’ve got to want to,” says Cathy, who started his career at age eight selling Coca-Cola for a nickel. “If you don’t want to, nothing else works.”

2. INVEST IN YOUR EMPLOYEES.

“We grow people early,” Cathy says. “We have a solid base to build our business on.” Indeed, 65% of Chick-fil-A franchisees, known as operators, worked for Chick-fil-A in high school or college—and Chick-fil-A provides $1,000 college scholarships to qualified employees.

Chick-fil-A regularly invites employees interested in a Chick-fil-A franchise on an all-expenses-paid trip to corporate headquarters in Atlanta so “everyone can get acquainted.” The employees need not be managers to participate in such career-enhancing activities.

In order to make franchises affordable, Chick-fil-A owns the property; the operator runs the restaurant, and all profits are shared. Typically, franchises are $5,000. Each year, the 3,000 operators, along with their spouses, attend a company seminar held at a resort hotel, so “they can relax.”

“You build your business on the quality of the people,” Cathy says. “The quality of the people helps attract quality customers.” The strategy clearly works. The annual turnover rate for full-time corporate and restaurant employees at Chick-fil-A is a tellingly low 3.5%.

3. BE POLITE.

“People are forever telling me that our employees are kind and considerate.” Instead of saying, “You’re welcome,” employees look customers in the eye and say, “My pleasure.” “People like that,” he says.

4. BE CONSISTENT.

“You can build a business on bad coffee if you’re consistent about it,” Cathy says. “Don’t put out a good cup and then a bad cup. You’ll disappoint the customer who got accustomed to bad coffee. That’s the kind they like.”

5. GO THE EXTRA MILE.

Take advantage of the unexpected to win customers. Chick-fil-A employees give dog bones to drive-through customers with pooches. At each new restaurant, the first 100 adults receive coupons to get a free combo meal every week for a year, and on opening day, customers waiting for the prize often receive free refreshments. “Customers are our cheerleaders. They are selling our products and business to others,” Cathy says.