Chick-fil-A: Will the controversy hurt chain’s expansion plans?

Chick-fil-A used to be known for chicken sandwiches and waffle fries. Now, say marketing and branding experts, it will be known for the COO’s comments on gay marriage. For how long is the question.

By MARK GUARINO | Staff Writer The Christian Science Monitor

posted August 3, 2012 at 3:57 pm EDT

CHICAGO – Weeks after fast food chain Chick-fil-A suddenly found itself in the middle of a national shouting match involving gay marriage and the First Amendment, the company now finds itself facing risks to its expansion plans and its overall brand.

The Atlanta-based chain isn’t the first company to find itself in a tight spot due to politics. Unlike other corporate flaps, however, this one could endure long past the summer, hurting expansion or even staffing, marketing and branding experts say.

“It opened a Pandora’s box,” says Michal Ann Strahilevitz, a marketing professor at Golden Gate University in San Francisco. “Chick-fil-A is going to be linked to this issue for quite some time. It’s not a sandwich anymore, it’s a sandwich with political associations.”

The latest round in this fight was slated to come Friday, when gay-rights activists planned to hold “kiss-ins” at restaurant locations around the country.

The controversy started last month with comments by company president and COO Dan Cathy, suggesting that he opposed gay marriage.

Once the comments went viral, an alliance of mayors in places like Boston and San Francisco issued defiant statements saying the restaurants were not welcome in their backyard. Those statements in turn ignited a firestorm of activism that crossed political boundaries, with religious leaders and stars of both political parties arguing for First Amendment rights

The clash intensified Wednesday when supporters, including former Republican presidential candidate Mike Huckabee, organized “Chick-fil-A Appreciation Day,” which resulted in long lines outside chain locations and derision from opponents, both online and onsite.

While the company insisted Mr. Cathy’s comments did not contradict the company’s tradition “to treat every person with honor, dignity and respect – regardless of their belief, race, creed, sexual orientation or gender,” it soon became clear the company had become a lightning rod for one of the most polarizing issues of the day.

Chick-fil-A is known for its chicken-filet-on-a-white bun sandwiches. It also however made a name promoting Christian principles in its charity work through separate company foundations that sponsor marriage retreats for couples in crisis or conduct overseas mission work. The company also maintains a long-standing policy of staying closed Sundays, both its corporate offices and all of its more than 1,600 franchises.

The Christian component of Chick-fil-A’s foundation work has “always been part of that company’s culture,” says Eric Giandelone, director of food service research at Mintel International, a market research firm based in Chicago. “It’s never been anything they’ve used to drive up business. It’s something they’ve done because they’re sincere about it.”

Most corporations pledge charitable works and align themselves to causes to foster good will among consumers. Chick-fil-A’s allegiance to its Christian values, however, makes it vulnerable to conflicts like the one this month, says Tim Calkins, a marketing professor at the Kellogg School of Management at Northwestern University.

“Most brands really stay out of a lot of the big issues that polarize people. So when you see companies take a stand on certain things, they usually do so for causes that are broadly acceptable, such as Starbucks and job creation or Patagonia and the environment,” Mr. Calkins says. “So what’s really unique about this situation is that Chick-fil-A has gotten itself right in the middle of one of the controversial issues of the country.”

While the company and its supporters have characterized Cathy’s comments as personal and not necessarily reflective of corporate policy itself, Calkins says his comments are considered more intimately connected to company values because Cathy is the son of company founder S. Truett Cathy.

“The brand was founded by the Cathy family. They still own, they still control all of it, so the viewpoint of one individual really does have an impact on the total brand,” Calkins says.

Diners who share the principles voiced by Cathy will continue to support the company, but there remains a potential threat to building in new locations and working with new franchise operators, as well as staffing or even sales. The company’s stores are located primarily in the South, though they’ve made a push to expand in the Midwest.

It’s unclear what the short-term impact of the controversy has been on Chick-fil-A’s bottom line. The privately-held company does not release quarterly sales figures. Last year, however, the company said its revenues reached $4.1 billion, a 13 percent increase over the previous year. The company on Thursday announced that the “appreciation day” organized by Mr. Huckabee┬áset a one-day sales record on Wednesday, though it declined to give specific numbers.

“They’re a company on a growth trajectory right now,” Mr. Giandelone says.

If the company was concerned about the impact of the controversy, it could distance itself by, for example, purchasing Google ads that target keywords associated with the boycott, says Melissa Agnes, a social media crisis manager and consultant based in Montreal. That way users would be redirected to company sites that offer their side of the story. Or they could say they won’t support or donate money to organizations perceived as anti-gay.

“It just depends on how much they care about the other half of the market in the long term. If they want to expand the franchise into other areas of the country that perhaps aren’t overwhelmingly on their side of the controversy, they may see long-term repercussions,” Ms. Agnes says.

Saying or doing nothing, however, makes the brand vulnerable to being defined by others outside the company, be it Huckabee or gay rights advocates.

“Their risk is that they’re no longer in control of their brand at this point,” Giandelone says. “Nobody is talking about the food.”

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