The Cost of Morals - Southern Business Review


Facebook Follow

Wednesday, July 31, 2019

The Cost of Morals

Chick-fil-a has long stated it values principles ahead of profits. Well, a report from 24/7 Wall Street analyzes just how much that ethic costs the Atlanta-based chicken chain.

Douglas A. McIntyre reports that Chick-fil-A loses out on at least $1.2 billion in sales with its decision to be closed on Sundays, a tradition started by the company's founder, Truett Cathy, in 1946. Cathy, a devout Baptist, closed Chick-fil-A's doors on Sunday so that he and his employees could "set aside one day to rest and worship if they choose," according to the company's website. It's a tradition Dan Cathy — Truett's son, current CEO, president and chairman — has followed for each of Chick-fil-A's 2,400 restaurants.

McIntyre found that between the chain's 2,400 restaurants, the company brought in more than $10 billion in 2018. Although fast-food rival McDonald's doesn't publicly disclose its daily traffic, there is evidence that weekends are especially busy. McIntyre predicts that the Golden Arches could bring in up to 15% of its sales on Sunday alone. If the same is true for Chick-fil-A, then the Atlanta-based restaurant could be losing $1.2 billion in sales.

Despite only being open six days a week, Chick-fil-A has continued to see growth unparalleled in the fast-food industry — with revenues jumping from $8.97 billion in 2017 to $10.46 billion in 2018The company ranked No. 3 among fast food chain for system-wide sales behind only Starbucks Corp. (Nasdaq: SBUX) and McDonald’s Corp. (NYSE: MCD).

Chick-fil-A’s focus on customer satisfaction has contributed to the its success. Last month, the company was named America’s No. 1 fast food chain for customer satisfaction for the fourth year in a row. 

Despite its diehard following, Chick-fil-A's focus on religion has also led to controversy, most notably with Dan Cathy's June 2012 comments on same-sex marriage. The topic returned to the spotlight with a recent Texas bill dubbed the "Chick-fil-A" bill, that protects companies with religious beliefs from government discrimination, and a report from Think Progress that the company was still donating to anti-LGBT groups despite publicly promising to stop.

In March, Buffalo Niagara International in New York State and San Antonio International in Texas backed out of deals with the fast food chain citing its history of anti-LGBT behavior as the cause.