Issue No. 4: Chick-fil-A

Some brands just make you think, “Man, they must be doing something right.” For me, Chick-fil-A has always been one of those brands. It’s not like I’m not some fast food super-consumer. And I even used to work for their competition (more on that later). But I’ve always been impressed at how Chick-fil-A always seems to be busy. Something’s going on there, so I decided to look deeper. What I found was a brand so dedicated to service that it operates on a completely different level than the competition. Read on and we’ll unpack it.

Chick-fil-A isn’t the category king of chicken. It’s the king of fast food.

Before researching Chick-fil-A, my hypothesis was that it was probably a top player in the chicken-based fast-food category, and probably a decent player the the fast food category overall. But I was wrong. Chick-fil-A doesn’t just win in chicken. It wins the entire fast-food segment. At least if you judge that by sales per restaurant.

While Chick-fil-A only has a bit over 3,000 stores (far fewer than its rivals) it easily takes the top spot in sales per restaurant. As of April 2024, Chick-fil-A’s non-mall locations brought in an average of $9.3M in annual sales. Compare that to about $4M for McDonalds, $2M for Taco Bell, and only $1.3M for KFC. The graph below is the most recent comparison I could find (source), and even though it’s a few years old, it paints the same picture.

In markets where Chick-fil-A has a presence, it dominates. It’s growing faster than its rivals, too, increasing its store count by 5.6% in 2023 (by comparison, KFC decreased its store count by 3.2% over the same period).

Chick-fil-A doesn’t win on product alone. It wins on service.

But same-store sales are not the most important stat.

For nine years in a row now, Chick-fil-A has ranked number one for customer satisfaction on the American Customer Satisfaction Index. People absolutely love this place. 

And that’s what I want you to keep in mind as you read this.

Because while Chick-fil-A has great food, so do lots of restaurants. Its food happens to be great, but it doesn’t win on product alone. It wins on service. It wins by delighting people every time they come in and making them feel special for being there. This isn’t my opinion; the company’s Chairman is on the record on for saying this.

But this dedication to service isn’t an accident. As you’ll see, Chick-fil-A built service into its Point-of-View (POV) very early on – and it used that North Star to create a meaningfully different business from its competitors.

Chick-fil-A’s Purpose Came at a Time of Crisis

When you read Chick-fil-A’s purpose, you might think it’s some hokey statement that someone in marketing cooked up, with the rest of the company oblivious to its existence:

Truett Cathy, the founder, has stated that the company’s guiding principle is based on Matthew 5:41, which reads “If anyone forces you to go one mile, go with them two miles.” It means that if someone (a customer) needs help - don’t just do what’s needed. Go above and beyond.

Whether or not you share Truett Cathy’s religious views, the point is this: Chick-fil-A is a company that takes service seriously. Here’s why that’s real talk, and not just some outcome of an employer branding exercise.

Chick-fil-A’s original strategy was to open locations in shopping malls. Remember those? In the 60s and 70s, they were hot property. Shopping malls saved Chick-fil-A the cost of building a complete store from the ground up and guaranteed foot traffic.

But by the early 1980s, high interest rates caused property developers real trouble. Growth in shopping malls slowed way down, as did foot traffic in existing ones. That put Chick-fil-A’s survival at risk. But in a 1982 leadership meeting to discuss the company’s plan forward, the company’s leaders asked themselves, “Why are we here?”

The answer was the statement you read above. In an existential moment, Chick-fil-A decided that their purpose – their Point of View – was that they existed to serve others. Money would be an output, but service would be the input.

Purpose Into Strategy

You might be thinking, “A company with a service-based purpose is nice, but what’s the big deal?” After all, plenty of businesses have pleasant-sounding mission statements but unremarkable financial performance. The difference is that Chick-fil-A executes on their POV.

When you visit Chick-fil-A, you aren’t just getting food. You’re getting treated with respect and kindness. It’s a value proposition that most restaurants can’t even come near - especially at scale.

Here’s an example from my own experience:

When I took my four daughters there, they were excited because when you get a kid’s meal, you can exchange the toy it comes with for a free ice cream cone. Sweet. At a normal restaurant, I would have gotten back in line, ordered four cones, and then awkwardly tried to take them back to my table without dropping them. But not at Chick-fil-A. One of the workers, seeing that I had four kids with me, approached our table and asked if I was planning to get ice cream for the kiddos. When I responded yes, he told us to hang out in our seats while he took care of everything. He wasn’t doing that out of obligation. He was genuinely glad to help out.

Service Gives Chick-fil-A a “Brand Flywheel”

But this dedication to service doesn’t just help the company win awards. It’s created a virtuous cycle that builds the brand and makes the business stronger with every turn. While Play Bigger taught us that category kings often have a “data flywheel”, Chick-fil-A has something similar. I’ll call it a “brand flywheel.” Here’s how it works:

1. A values-based POV attracts dedicated, service-driven restaurant operators.

2. These operators are servant leaders – people who excel at attracting, developing, and retaining service-oriented employees.

3. Those employees, in turn, create an amazing customer experience.

4. An amazing customer experience drives loyalty, word-of-mouth, and strong sales for each unit.

5. These high-performing units attract top talent to become future operators, reinforcing Chick-fil-A’s competitive advantage.

Let’s break down each one of those points on the cycle…

1. Clear Values Ensure Dedicated and Aligned Operators

If you listen to stories of people who joined Chick-fil-A early on, they didn’t sign on for some exorbitant salary or lucrative equity incentive. One early executive, who left college at the top of his class, said that Chick-fil-A only offered about half the salary of competing employers. Instead, he joined because he respected the values of the founder and saw that the business would provide him with an environment where he could grow. That was decades ago, but even today Chick-fil-A says that operating a restaurant is “a hands-on, life investment for leaders looking to build a business and their community.”

2. Dedicated Operators Build a First-Class Team

Here’s the interesting thing about hiring good leaders - they tend to attract good employees. Chick-fil-A didn’t win that service award nine years in a row simply by telling its employees to be nice. It got there by attracting the kinds of leaders who could develop those skills and an attitude of service in their employees. Look at it this way. A single Chick-fil-A location has about 120 employees. You might have a few who are service-oriented just by luck of the draw. But the ability to attract and lead a service-first attitude in pretty much all of them? That takes someone special.

3. A First-Class Team Delivers an Amazing Customer Experience

The people who work at Chick-fil-A are incredibly nice. Whether it’s the retiree who asks to refill your drink, or the smiling 14-year-old taking your order, the focus on service is hard to miss. But that’s just part of the picture. Service is more about being nice. Restaurants are notoriously competitive, and you have to run a tight ship to avoid making customers upset. Run out of inventory, have employees who show up late, let the store get messy, or make customers wait too long and they aren’t coming back. Chick-fil-A’s employees know this, and they don’t let those mistakes happen.

4. An Amazing Customer Experience Drives High Unit Sales

Sure, Chick-fil-A has great food, but so do a lot of restaurants. But when you treat people well, and you run the store with excellence, customers tend to come back and tell their friends. It really shouldn’t be a surprise that Chick-fil-A’s unit sales are so high, because so many fast food joints fall short here. Were you ever impressed with the way a Taco Bell employee treated you?

5. High Unit Sales Reinforce the Ability to Attract Strong Operators

Early on, Chick-fil-A didn’t have the same financial performance it does today. It relied mainly on values and vision to attract its initial operators. But today, the pot is even sweeter, because a Chick-fil-A operator can earn around $600,000. Per store. That’s a big reason why Chick-fil-A receives more than 60,000 operator applications every year. The brand could have maximized for growth by accepting as many applications as possible. Instead, they maximize for quality. Less than 100 applicants are typically accepted each year (which makes it harder than getting into Harvard). Values are a big part of that selection process. Because they know that if they compromise on the quality of people who operate their stores, the rest of their strategy falls apart.

More Ways Chick-fil-A Executes Its POV

I’m going to risk belaboring the point here, but I thought it would be interesting to call out a few other ways that Chick-fil-A leans into its POV of service.

Closing On Sunday

Out of respect for the 4th commandment, Chick-fil-A is closed on Sundays. On the surface, that might seem like it hurts business, but the company’s leadership doesn’t believe that’s the case. There are three reasons for this.

1. For customers who align with Judeo-Christian values, it’s a way of saying, “We’re on your side.” When values align, customer loyalty increases.

2. The Scarcity Heuristic says that we assign more value to things we cannot have. With Chick-fil-A being closed for half the weekend, that dynamic is definitely at play.

3. It’s attractive for operators. Even if the role pays well, having a full day of rest is a big win in the hectic restaurant industry.

No Marketing Gimmicks

Chick-fil-A’s purpose is authentic. And if you’re going to espouse authenticity in your marketing, are you going to rely heavily on gimmicks or promotions? Probably not. The brand is best known for its “Eat Mor Chickn” campaigns, which they’ve been running for almost 30 years. It may not last forever, but there’s something to be said for consistency.

Family-Run

When values are important to your business strategy, you make sure that they stick around. One way to do that is by keeping close control of your company. Chick-fil-A is not only privately held, its current CEO is the founder’s grandson. And when you hear him talk about the company, that founding purpose comes across just as clearly as it did with his predecessors.

Bonus: Why Didn’t KFC Win?

Chick-fil-A and KFC are two brands that compete for similar customers with similar foods. They both started around the same period, by talented, highly driven founders. While KFC was the go-to brand for chicken for many years, they’ve lost that position to Chick-fil-A. Why?

The right framework for understanding this comes from Eddie Yoon. He’s the author of Superconsumers, a super sharp consultant, and someone I’ve had the chance to learn a lot from personally. Years ago, Eddie taught me the difference between two types of companies: a missionary and a mercenary.

A missionary company exists to fulfill a higher purpose. It’s a company that believes there is something worth doing beyond creating income and shareholder returns. Patagonia is a classic example. Customers tend to love missionary companies because they represent a set of values that connect with them on a deeper level.

You can probably guess the definition of a mercenary company. They exist to make money, with little consideration given to anything else. This doesn’t mean mercenary companies are bad. But they use a narrower set of considerations when making decisions, which can hurt them in the long term. You’ll often see mercenaries acting transactionally and opportunistically.

You already know by now that Chick-fil-A is a missionary. KFC may have started as one, but as time went on, my view is that it slipped into becoming a mercenary. Here are a few examples:

• While Colonel Sanders could have brought a missionary mindset to KFC, he sold the business to outside investors way back in 1964. While he remained a spokesperson for the company until his death in 1980, his influence was sharply cut back. And he wasn’t always happy with how things turned out.

• In 1986, KFC was acquired by PepsiCo, then spun off as part of Yum! Brands in 1997. When a company keeps changing hands it’s hard for its DNA to stay intact.

• KFC has relied heavily on marketing gimmicks to boost sales, which create confusion about what it stands for. Examples include the I Love You, Colonel Sanders! dating app, a gaming console, Extra Crispy Sunscreen, a logo you could see from space, and even a romance novel. I’m all for creative marketing, KFC’s gimmicks are random and don’t do much to build the brand long-term.

• When I worked with the company’s marketing department in 2008, KFC ran a big cause marketing campaign to raise money for breast cancer research… by selling more fried chicken. While there’s no proven link between fried foods and cancer, it wasn’t a good look, and they caught a lot of flack for it.

• The company invested millions in the launch of Grilled Chicken, in an attempt to play the health card. Not only was it a marketing disaster and later discontinued, but it was immediately followed by the Double Down, one of the most unhealthy options the company ever introduced. Again, going back and forth on values erodes the brand.

KFC is always on the hunt for some “big idea” that’s going to fix the business. It never does. I’ve even met several KFC franchisees personally, and the frustration with the brand’s random acts of marketing was palpable.

Wrapping Up: Service Provides Chick-fil-A With a Long-term Defensible Position

There are two things Chick-fil-A could do to ruin its business long-term. The first is true for every restaurant. It could compromise on the quality of its food by using cheaper ingredients, fillers, or smaller portion sizes. The second would be to lower the caliber of people it hires as restaurant operators or employees and compromise the customer experience.

But I don’t think it’s likely the company will do either.

The company’s leadership is very clear that its focus on service is a meaningful, hard-to-replicate competitive advantage. You can’t honestly serve people by letting your amazing food turn mediocre, or by letting people who don’t espouse your values run your stores. As long as the company stays true to this North Star, they’ll continue to do just fine.

3 Questions You Can Discuss With Your Team

1. Is your brand a missionary or a mercenary?

I’m hoping you identify with the former, but if you’re feeling like a mercenary, things don’t have to stay that way. By having a frank discussion with your team on what you really stand for and why your business needs to exist, you may be able to make the shift to a missionary.

2. Are you willing to take a stand?

One thing I didn’t have room to cover was the fact that Chick-fil-A has its share of detractors. Not everyone aligns with the conservative values of its founder. But Chick-fil-A is OK with that. Having a clear set of values means that have more than plenty of supporters. But trying to please everyone never works.

3. Are you executing on your POV?

You might have a POV that’s meaningful and distinct, but the real question is, are you executing it? If you’re not, then your customers are unlikely to know what makes you special. And they’ll either overlook you or write you off as a commodity. Discuss how you can translate your POV into action.

The One Quote to Leave You With

Random Thoughts

• I just finished re-reading Zen and the Art of Motorcycle Maintenance, but Robert Persig. It’s a hard read, but a great way to reset your thinking about values and philosophy.

• Did you know that Colorado has the largest sand dunes in the U.S.? We just took our kids there. Amazing. Check it out if you are nearby.

• I got into Formula 1 a few years ago and keep meeting fellow fans. Are you one? I’d love to hear your predictions for next year’s driver market. Let me know.