11 Lessons From Chick-fil-A on Entrepreneurship and Marketing Strategy
Recently I attended an event where Dan Cathy, President and Chief Operating Officer for Chick-fil-A in Chicago, gave a speech (they are entering the Chicago market with stores later in 2010). During the talk Dan evangelized the values of Chick-fil-A which include treating customers and employees with respect. Dan also stated that “We distinguish our product based on the value we provide rather than price.” Though I had never stepped foot in a Chick-fil-A restaurant, that comment tripped me off to the fact that I was about to experience a story about a unique entrepreneurial enterprise known as Chick-fil-A! Over the next hour, I was treated to great samples of Chick-fil-A’s products and a store operator who traveled all the way from Houston, Texas refilled my glass of fresh-squeezed lemonade several times – right at my seat in the audience!
At the end of the evening, I was handed a copy of “How Did You Do It, Truett?” by Truett Cathy, Dan’s Father and the founder of the company. It discusses the unique entrepreneurial and marketing business strategy story of Chickl-fil-A, a nimble and fast growing chain that is playing a large role in taking away market share from Kentucky Fried Chicken (KFC). Wow that is impressive.
Let’s look at highlights of the lessons that entrepreneurs would be wise to follow based on the book:
– Ask yourself “How do we balance the pursuit of profit and personal character?”: It’s possible to take the moral high ground and run a profitable business, it has to do with conveying value, people will pay a premium for a quality product.
– Start small, perfect it and then scale: Treutt Cathy started his first restaurant in 1946 with $10,600. Way less than the $3 Million it takes to open a restaurant today, the equivalent of $250,000 back then. Test, perfect, then scale!
– There are no problems, only opportunities: The creation of a chicken sandwich came from experimentation after displeasure with the way traditional chicken was cooked and presented.
– Do your customer research: As Truett experimented with boneless chicken sandwiches, he sampled various seasonings with customers and sought their input into the final version, which has 20 ingredients, as a reference point Colonel Sanders touted eleven herbs and spices.
– Once the perfect customer offering is created, protect the quality: Truett noted, “I realized that if Chick-fil-A was going to mean anything, I had to have direct control of the product to maintain our quality.” After experimenting with selling the chicken to other stores to sell and being unhappy with the consistency of the preparation, Truett realized he needed to control the quality and decided to scale the stores.
– Smart decisions require time: New products are created slowly and tested and made distinct – the waffle fries is one prime example – when first trying them out they focused on the question “will we sell more of them, and will they strengthen the Chick-fil-A brand?”
– Be kind to your customers, it’s the key to success: Courtesy is cheap, but it pays great dividends! Smile. Say my pleasure to people when they say thank you, etc.
– Realize that the brand is not a logo, but your experience: They realized this in the early days of the business, by the way they treat their customers, the distinctness of the experience of ordering and enjoying the food and other items. Chick-fil-A has always given away be our guest cards to experience the products, both new and old. As I talk about frequently, KFC blew the Oprah Twitter event by not resourcing their stores with funding to have customers try the new product because they wasted tons of money on unnecessary old school brand marketing that did not allow a customer to try the desired experience in the role of the Gen X CMO.
– Live by your convictions: When you live by your convictions, people respect that. It’s important to be consistent in living your convictions – business, religious or personal beliefs.
– Select the right people and then reward them well: Employee tenure at Chick-fil-A is long. That is because people want to stay because of the way they are treated by Chick-fil-A, customers and for store operators, how they participate materially in store profitability. We gradually become a part of those people we associate with, whether good or bad.
– Learn to delegate decision making authority: Chick-fil-A delegates authority to a fault. Then adjusts from it. Ultimately, a delegation of decision-making, within a strong framework of training, leads to strong corporate culture, just like it did in my days at BlackRock. If you hire the right people based on culture, you can trust them to do what is right.
“In the end remember that businesses don’t succeed or fail. People do”, says Truett Cathy. In the end, Truett didn’t do it, his team did.
David Dalka is the Emerging Media Editor at the Wiglaf Journal. David also maintains a blog entitled, Online Marketing Management Business Strategy.