Chick-Fil-A: Bird of a Different Feather

Case Study: Chick-fil-A: Bird of a Different Feather

Shamyra Kennedy-Jones

Case Study: Chick-fil-A: Bird of a Different Feather

Introduction

        Chick-fil-A has been a successful business since the early 1960s when Samuel Truett Cathy developed a special seasoning that was added to the chicken breasts and placed between buns (Hitt & Hoskisson, 2013).  Thus, began the foundation of the business we know today.  

        Facing many challenges of quality, management and marketing issues, Truett stepped out of the traditional business strategy to focus on the people first.  The focus on individuals is still a core competency today and continues to drive the actions of the firm.

Analysis

Strategic Leadership.  Chick-fil-A is a values-based company and has built the entire foundation of the business based on being a family run operation.  In the case of Chick-fil-A, the founder’s personal life had a profound effect on the enterprise. The founder Samuel Truett Cathy was a devout Southern Baptist. Cathy’s religion remained a primary aspect of his core business strategy and his life.  Cathy carried his religious beliefs into the business life by only selecting married parties are to run the business, thus keeping up the core premise of Chick-fil-A being a family run business (Chick-fil-A Website, 2013).  

Cathy’s leadership structure is an example of internal innovation or facilitating integration and innovation through shared values and effective leadership. (Hitt & Hoskisson, 2013)  Individuals selected to out of thousands of applicants are required to participate in a grueling training regiment.  The selection process along with the training is designed to select and maintain only those franchisees who have the same values that Samuel Cathy implemented, and that the family is still carrying out today (Hitt & Hoskisson, 2013).

Challenges. Managerial succession is one of the biggest concerns for the business.  Cathy passed away in 2013 and built the company on “family values” and the fact is that times are not the same.  It is extremely unusual that there have been no divorces in the family.  However, how long can that last?  Even the best families have some divorces, IE; Prince Charles and Lady Diana is an example. Other potential issues are the limited menu, higher prices, and the increased costs of food.

Business level strategy.  The focused differentiation or niche strategy was employed by the founder and blended Cathy’s fundamental religious values with the corporate level strategy of using joint ventures to expand versus franchising. One major strength is the limited diversity of the products that Chick-fil-A offers while maintaining competitive although slightly higher prices to other similar competitors.

Target Market. Chick-fil-A employs contemporary trend of trading in burgers for a healthier menu.  Based on this philosophy the business is now number 2 in market share in the chicken industry (Unknown, 2016). The target market group is millennials that typically focus on a healthier lifestyle.  Millennials typically view marketing as “less authentic and less easy to connect with” (Schoultz, 2012). The target market has now reportedly surpassed the Baby Boomer population  (Fry, 2016).

Solution

        Chick-Fil-A follows the trend of offering the sandwich as a healthier option than a Big Mac or a Whopper while similarly priced. While the chicken sandwich is considered a healthier option Chick-fil-A has to continue to expand the target market while expanding on the “perceived” healthier option menu (Hitt & Hoskisson, 2013).

Expanding the initial market segment is a primary issue for Chick-fil-A’s continued success.  Chick-fil-A’s market is a fanatical millennial customer base typically between 18 and 35. The company has opted to increase the millennial market by launching a new service aimed at millennial moms (Saef, 2015). The new service called “Mom’s Valet.” The service enables parents to order their meal in a traditional drive-thru.  Once the customers come inside, the table is already prepared, the order was submitted, allowing the service to be quicker. The quicker service allows the parents to spend less time with kids that are impatient inside the facility.   Creating this new service was the idea of a parent that works for the company noticing how hectic ordering could be for millennial parents of young children (Saef, 2015).

The increase in the target market of the millennials was based on the premise of attempting to make life easier for parents and winning them over from some restaurants which are known for quicker service. Further steps have been taken to integrate the products into the millennials market by the launch of mobile apps and payments in 2014 (Lawrence, 2014).

Focus differentiation strategy. While maintaining the original strategy of the focused differentiation strategy the company has made eight major changes during 2013.   One of those changes was replacing the limited traditional menu with healthier options, such as replacing French fries with a kale salad, which creates value based on internal innovation (Hitt & Hoskisson, 2013). The change enables the company to compete with KFC and McDonalds by creating value based on internal innovation (Lawrence, 2014).

Globalization.  Expanding into an international market would allow Chick-fil-A to increase the market size, by taking advantage of the increasing trend of consuming healthier foods Estimates are that the growing trends in healthier lifestyles, along with organic ingredients will propel the market to $50 billion (Unknown 2010).

        Another benefit of international expansion was able to use resource and knowledge sharing that created synergy with others to develop economies of scale.  Expanding internationally also allowed the firm to take advantage of certain location advantages that include, reduce costs in labor and access to additional suppliers.  

However, the strategy of maintaining family first could be one of the reasons why the company has hesitated and has been slow to develop globally.  As of 2012, there were only four Chick-fill-A restaurants in Canada, three in the United Kingdom and one in France supporting the theory that “like cultures,” and religions are still important to maintain the corporate image.

Justification

Chick-fil-A can target each new generation while keeping their older generations of consumers due to their market (brand) name. According to the textbook, there is a 30% chance of retention of success during the second generation a, 12% success of retention by the 3rd generation, and a success rate of 3% by the 4th generation (page 82).  The strategy enabled Cathy and the company to continue with the essential premise of “principles before profits” (Lawrence, 2014).  To prevent any issues, the second generation stakeholders gather four times a year, while the third generation stakeholders gather twice a year, and almost all family members work directly for the corporation.  Additional criteria for participation in the organization, each family member has to graduate from college and successfully work in the industry (Hitt & Hoskisson, 2013). The control is to ensure each generation has not only the birthright to the company but the leadership values, and capabilities that represent the core competencies of Chick-fil-A.