Unlike many companies, Chick-fil-A is ready for succession

Truett and Dan Cathy

Truett and Dan Cathy

Note to readers: Henry Unger wrote this column in 2009.

Companies big and small don’t do succession well.

“The CEO succession process is broken in North America and is no better in many other parts of the world,” author Ram Charan wrote in Harvard Business Review.

Locally, you only have to look to Coke and Home Depot to see how two of our most important companies failed to get it right when they were replacing legendary leaders several years ago. Thankfully, they learned from their mistakes and moved on to better leaders.

It’s no picnic at smaller family-owned firms, either. The reasons are many, including ego and the loss of talented people who bolt after they lose the CEO horse race to another heavy hitter.

I decided to see if Truett and Dan Cathy at Atlanta-based Chick-fil-A had any answers. They run sort of a hybrid company — family-owned, but larger than most with $3 billion in revenue. Arguably, they straddle both parts of the business world to a degree, although they are clearly a private firm.

I thought I’d find Truett, at 88, a ceremonial chairman and CEO. Boy, was I wrong.

“I don’t have the baton yet,” said Dan, president and chief operating officer. “I’m not CEO. My dad reminds me of that regularly, which is fine with me. … He has his hand on some of the levers.”

Recently, Dan said, the executive team needed his father’s approval to hire 11 additional people for the corporate staff this year and another 25 next year.

“We were pleading with him,” Dan, 56, recalled. “He’s a study in extremes. … He’s incredibly cheap and incredibly generous.”

Truett eventually approved the hiring. And he still has the last word on other key issues, such as debt, expansion and new menu items.

“Why would I want to retire from what I enjoy doing?” Truett asked rhetorically. Whenever that retirement happens, Dan will take the reins, confident that the key executives he has worked with will be with him.

“We’ve been together as a team for 30 years,” Dan said. Aside from Truett, Dan and his brother, Bubba, the other four members of the executive team are not family members.

The Cathy clan believes in grooming execs from the inside, day in and day out. They don’t wait for a crisis. They obviously don’t believe in an age limit, like many public companies do.

And hamburgers will be on the menu before headhunters get a call to find a CEO for Chick-fil-A from the outside.

“Internal is the key,” Dan said. “You get deeper insights into the business and a good hand-off.”

But how do you guard against becoming too complacent or unresponsive to big changes swirling around your company?

Chick-fil-A has an advantage, Dan said. It operates in the super-competitive fast-food industry, as opposed to a sector with only a few dominant players.

“You’re always about continuous improvement, because of the level of competition. It’s a fractured industry,” Dan said.

Andrew Cathy

Andrew Cathy

But it’s not a fractured family. The third generation is already working at the company. Dan’s son, Andrew, is in California, recruiting owner-operators. He’ll probably wind up at headquarters by the end of next year.

But there’s no guarantee he or any other Cathy will succeed Truett and Dan in the top job.

“We need the most talented people leading the business,” Andrew said.

Is that why they’ve had 42 straight years of rising sales?

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60 comments Add your comment

mom3boys

November 17th, 2009
6:50 am

My son is at school out of state where no chick-fil-a exists. Before flying up to see him in Oct, we stopped at the original location. They packed a cooler of sandwiches for us so we could arrive w/ his favorite food! They even did it at a discount, since we brought enough for an Army…well, maybe just Army swim team, but still….thanks Chick-fil-A!!

Willie Coyote

November 17th, 2009
6:56 am

It doesn’t hurt them that they have better food and service than their competition also.

God First

November 17th, 2009
6:56 am

The reason why they have been so successful is because the CEO of this remarkable company ALWAYS put GOD first! They are the ONLY chain that is closed on their sabbath day Sunday…You will NOT find any other fast food restaurant closed. You will find some banks open on Sundays’. I love this place!

God Bless Them!

Big G

November 17th, 2009
6:56 am

The best run fast food chain/organization in America. My order has NEVER been wrong and the employees are trained to make you feel special. A wonderful organization that gives back to the community via scholarships to our youth and other ways. Other corporations can learn from Truett’s success. And they are not even opened on Sunday!

Corp Watch

November 17th, 2009
6:57 am

The secret of their success is they have managed to keep Wall Street’s hands out of Chick-fil-A’s pockets! Wall Street is nothing more than a white collar mob who steal from shareholders and it’s underling employees to front their lavish lifestyles. No different than the old italiam mobs of years past. As long as this wonderful family is at the reigns, this company will flourish. Wall Street CEO’s are not GOD but everyone looks to them as having this magical success and they simply bounce from company to company, pillaging everyone in their path!

Corp Watch

November 17th, 2009
7:02 am

One other thought! And I bet the Cathy’s don’t even have that coveted “Harvard” business school degree where white thugs are graduated every year….the ones who have run Wall Street in the ground in the first place!!!

Kudzu

November 17th, 2009
7:02 am

There always seems to be a common response from their employees when you ask for something “my pleasure”. They’re not perfect, but they strive to make the customer (feel) important.

All is true

November 17th, 2009
7:09 am

Everything written above is accurate.

Nora

November 17th, 2009
7:15 am

“Some local companies have stumbled when it comes to succession at the top. Chick-fil-A thinks it has it figured out.”

It is moronic headlines like these that hurt the credibility of the AJC. The incorrect use of “succession” sounds like something a sixth grader would write. How embarrassing to see headlines like that on the AJC website for the whole world to see.

5genATL

November 17th, 2009
7:15 am

They use words like, “my pleasure” when other companies dont even thank you as youre pulling away from the drive-thru. Their employees understand that their paychecks come from the customer, not the corporation.

It also helps that their food is fantastic.

Finally, I was at Camp Winshape when I was younger and Truett showed up, took 10 or so foster boys to the local mall in Rome, including me and a couple of others who were just along for the ride.

When we got there he told us to pick out any pair of shoes we wanted for back to school, everyone included. It was one of the surprises of my lifetime and I have never forgotten that lesson in generosity.

Chrazymac

November 17th, 2009
7:21 am

CFA is truly a remarkable company and business. I worked there in high school, met my husband working there and we have been together for 20 years. It is by far the best fast food option out there. My husband and I were out running errands last night, when we returned I asked our kids what they had for dinner? With a grin and a smirk my older daughter said “where you think”?…I laughed and said CFA…I was right. We eat it so much it is almost funny around here…but the bottom line is it never gets old and we keep going back. We love you CFA!!!!

Pat

November 17th, 2009
7:24 am

Great article, but just one thing bothered me.

And hamburgers will be on the menu before headhunters get a call to find a CEO for Chick-fil-A from the outside.

They actually sell hamburgers and the Dwarf House and Truett’s Grill.

Fred

November 17th, 2009
7:29 am

Hey Nora,

I looks to me that you might want to look inthe mirror before casting stones (to mix metaphors):

suc·ces·sion (sk-sshn)
n.
1. The act or process of following in order or sequence.
2. A group of people or things arranged or following in order; a sequence: “A succession of one-man stalls offered soft drinks” (Alec Waugh). See Synonyms at series.
3.
a. The sequence in which one person after another succeeds to a title, throne, dignity, or estate.
b. The right of a person or line of persons to so succeed.
c. The person or line having such a right.
4.
a. The act or process of succeeding to the rights or duties of another.
b. The act or process of becoming entitled as a legal beneficiary to the property of a deceased person.

Looks like maybe they did use the word properly.

I like the food and the service is impeccable. I think corp watch got it right. The Cathys don’t manage to 30-60-90 day numbers. They do what is right for the long term even if there might be some short term pain.

NABOR39

November 17th, 2009
7:38 am

THE WAITERS ARE ALWAYS DRESSED NICE AND VERY POLITE.

Pond John

November 17th, 2009
7:42 am

Does any one out there besides ME see similarities between this organization & coach Paul Johnson @ GT? PERSISTENCE, DETERMINATION & FOCUS ON FUNDAMENTALLY BASIC PRINCIPLES! No great secrets here..A steady work ethic and clear understanding that leadership is uniting others in the pursuit of a common goal….

Jack

November 17th, 2009
7:48 am

Nora,, In case you haven’t heard, the grammar police are not hiring. If that is all you got out of the article, you need to get a hobby or something.

Scott In Jax Beach

November 17th, 2009
7:51 am

I wish I could add to all of the superlative comments made above but everyone echoed my sentiments concerning this wonderful organization. I live here in Jacksonville and I always BEAM with pride when I tell everyone that this organization is from MY home town! There’s a CFA right around the corner from where I work and I try to eat there at least twice a week! However, my only suggestion is this………PLEASE BRING BACK those Peach Milkshakes!! Thank you Cathy Family!

no relationship

November 17th, 2009
7:51 am

paul johnson left his Navy football team before the bowl game for more money. he could have stayed for one more game. i don’t think the mighty Ga tech program was going to go calling elsewhere. would i call Truett Cathy a traitor to his fellow co-workers? The furthest from it. Would I call PJ a traitor for leaving young men with more heart and more determination than he will ever have? After he had promised to finish the drill with them? After he had promised he would never leave? OF course. PJ is not a man of integrity and those blinded by his outward character will soon see his real self when the real money comes a callin’.

Pond John

November 17th, 2009
7:52 am

…The purpose of life SHOULD be to see one another through not to see through one another..

Chic-Fila Dawg

November 17th, 2009
7:54 am

Pond,U r kidding right?Man there is no limit to what a Tech fan will do when their team breaks .500.Grew up on their cooking and it as good as always,great people,great company GREAT FOOD,OH AND go DAWGS!!!!!

outspoken1

November 17th, 2009
7:55 am

you always get great value for your money. You also know that your money has been well spent and well deserved.

outspoken1

November 17th, 2009
7:57 am

NORA, NORA, NORA,
It is folks like you that think I should be responsible for your healthcare…..nora, nora, nora, —notta, notta, notta,

East Point Chikin' Lover

November 17th, 2009
7:59 am

The original Dwarf House has been a favorite in my family for over 30 years. Last Thanksgiving I stopped by to pick up pies (they have the best chocolate pie) for the family. They only had two left and one had just been sliced. The manager reassembled it, brought it out to me personally and gave me his card to contact him if we were not happy with the pre-sectioned pie. That particular manager has been with the company for years and is a familiar face to those that frequent the restaurant. That is why they succeed.

Pat

November 17th, 2009
8:05 am

East Point -

That’s exactly why they’re the best.

For everyone else, please take the GT/Dawg comments and Nora bashing to another comment section. This ain’t the place for it.

barneyb

November 17th, 2009
8:06 am

Their business model is second to none. Additionally, when you put GOD first, you will be Blessed. Amen, Chick-Fil-A !!!!!!!!!!!!!

mitzymy

November 17th, 2009
8:09 am

One of the ministers at our church is a manager of CFA, and he loves working there. Occasionaly, he brings to Sunday School coupons for free sandwiches for our group. He states that they are closed on all Sundays, which is uncommon for a fast food resturant. The retail store where I work is closed on all holidays, which is wonderful, but it is open on all Sundays. They allow us to have 2 Sundays per month off. Like CFA, our company is still owned and operated by the same family that started the business in the 40’s. They slowly built 25 stores across the country, and are working on opening 2 more next year. It is not a publicly traded company, like CFA. We also work on excellent customer service to retain valued customers. That is the key.

Alan Faircloth

November 17th, 2009
8:09 am

Closed on Sundays and still they have better numbers than other companies open on Sundays. If evidence need be prevented of God’s greatness and blessings, I give you Exhibit 1 – Chick-Fil-A.

Pat

November 17th, 2009
8:12 am

You know, the funniest thing about Chick-Fil-A happened when my company sent me to Orange County, CA for six months in 2005. Wouldn’t you know it, they had a grand opening for Chick-Fil-A (one of the first in that region) and Krispy Kreme was there. Talk about curing the homesick. When I rolled down the window at the drive-thru, there were three order-takers traveling throughout the line. (Of course, even when Chick-Fil-A goes to a new region, there will be a line.) The thing is, every person I talked too had a southern accent, and said, “Now ya’ll come back now, ya here?” I just can’t tell whether that was Chick-Fil-A’s policy, or just actors practicing their craft?

True story.

irun2fast

November 17th, 2009
8:13 am

Whenever you put God first, you will always succeed! I eat CFA at least twice a week. Of course the food is good, but it’s the other things like the wearing of gloves, they don’t handle money & the food, they are dressed neat & presentable, there are no employees checking or talking on their cell phones while working behind the counter and they are always pleasant. Finally, Truett Cathy is not money hungry;the money comes as a result of his simplistic and respectful leadership. Thanks Mr. Truett

CAP

November 17th, 2009
8:15 am

There is a new Chick-Fil-A that has not been opened too long in Flowery Branch, Ga. My husband and I had an opportunity to visit it a couple of weeks ago. I thought I was back in the 50″s! The kids that were working there, were first of all helpful, and cheerful and seemed like they were just glad to be there! I cannot tell you how refreshing this was. The young man actually carried our tray to a table…..the employees were so “Different”, I can’t explain it! All I can say is that if every restaurant had these kinds of employees and acted this way toward their customers……no one would go out of business! They are a great company with the right attitude toward their customers and they also have Great Food!!! Keep up the good Work!!!

grifter

November 17th, 2009
8:16 am

Amen Nora. Jesus loves chicken. And he loves good grammer! Actually he loves everyone! All you people! Praise Jesus may he live forever in peace and lovingness and earth.

Mel

November 17th, 2009
8:31 am

I’ve never had a bad chick-fil-a experience!!!

Roekest

November 17th, 2009
8:31 am

It’s unbelievable how many people on here say God is the reason for their success AFTER they praise Chick-fil-a’s food, customer service, business model, etc. God gave us freewill to make our own choices; The Cathy’s have used their freewill responsibly in order to grow a great business; thank God for freewill. I’m sure God isn’t up in heaven personally seeing to a business’ success. Doesn’t sound like the God I know……

But I digress.

Best customer service, hands down. Best food for the best price. Strong leadership. This is what makes CFA a great company.

War Jacket

November 17th, 2009
8:35 am

CFA gets it right on many fronts, but the thing that I notice the most is the caliber of the employees. There is a CFA located across the street from my kids’ high school, and as could be imagined, many of the employees are students. You routinely see only the best and brightest working there. Heck, they even sponsor a college scholarship (not huge money, but money none the less) that is awarded to the student employee that does best in school.

Funny there are Arby’s, McD’s and a BK not far down the street. You go there, and you encounter the typical loser fast food employees, and you wonder why you didn’t go to CFA in the first place.

Michelle

November 17th, 2009
8:36 am

I am a former Chick-fil-a Dwarf House/Jonesboro employee. I started working there just after it opened and Truett’s son Bubba was there every day with us the first year. What impressed me the most was the level of excellence that was required in everything – starting with the best ingredients for their food, cleanliness and customer care was definitely number 1 priority with everyone. The management led by example and they strived to give back to their customers, community and their employees. I believe the success of this company is due to hard work, diligence and priorities being in the right order. God first, family, excellence and integrity in their business practices. Many years have passed since those days, but I still have nothing but good memories of working for the Cathy’s and Chick-fil-A. My 15 year old son plans to get a job this summer – I plan to steer him toward CFA as I believe it will instill good work habits in a first rate work environment – and he won’t have to worry about missing church on Sunday’s because he has to work – priorities! God bless the CFA organization and the Cathy family.

dgroy

November 17th, 2009
8:44 am

Corp Watch

November 17th, 2009
7:02 am
One other thought! And I bet the Cathy’s don’t even have that coveted “Harvard” business school degree where white thugs are graduated every year….the ones who have run Wall Street in the ground in the first place!!!

To Corp Watch……Someone always has to bring the Race Card to a well meaning article…..are you a “Black Thug” with a chip on your shoulder?

mborodawg

November 17th, 2009
8:47 am

One day I would love to see more Chick fil a’s than Mcdonalds but I dont know if that would be successful. I will say this though there does need to be more of them. I live in a city of around 100,000 and we only have one.

Jim

November 17th, 2009
8:47 am

The secret is in their waffle fries.

Van Jones

November 17th, 2009
8:48 am

CFA is a “Harvard” business school lesson on every visit… charge a fair price and give your customers more than they expect EVERYTIME. CFA is clearly #1 and second place is a distant second.

Jennifer

November 17th, 2009
8:48 am

Love it! The southwest chargrilled chicken salad, a small soup, and a small Diet. Dr. Pepper are ALWAYS my favorites!

Eating that salad for 2 weeks helped me lose my last 5 lbs to get into my wedding gown, LOL.

In any event, I agree with the comments above (the accurate ones). The owners “get it”. If you put God first and greed doesn’t exist, you will always flourish. A co-worker and I went to the drive through for lunch. It took FOREVER! The soup heater was on the fritz. One manager came out to tell us what was going on and asked if we wanted to wait. We did..no problem…he gave us free meal cards from his wallet. ANOTHER manager came out and gave us an update and asked us what we wanted to drink (for free). She also came out with out tickets and told us she had already refunded our money. When she finally came back with the food, we had free milkshakes, extra fries, our soup, 2 free meal cards, the managers business card, AND a personal invitation to come back another day for a free lunch.

Simply amazing.

Drexel Gal

November 17th, 2009
8:49 am

To rise to the top at Chick-Fil-A, not only must your surname be “Cathy”, but you must be bald. Perhaps their slogan could be, “If you jave someting on top, you won’t reach it.”

Brian

November 17th, 2009
8:53 am

They don’t hire the standard foulmouth getto punks that the other fast food places do.

S W

November 17th, 2009
8:57 am

@dgroy – that was as ignorant as the comment you were responding to. Why are you assuming this person is black? They didn’t mention their race, nor did they allude to it. So why the assumptions?

Patrick

November 17th, 2009
9:06 am

If I could do it all over again, my first job would have been at Chick-Fil-A. I love their food, and their associates are always very friendly and courteous. One of the best things I like is their sweet tea. Not too sweet, not too unsweet, and no lemon flavoring is added. You want lemon, they’ll throw in a real slice of lemon. Which they cut themselves. In relation to the tea, there’s no risk of going to one location, and getting good tea, but going to another location and getting bad tea. The tea’s the same no matter which location.

Their waffle fries are one of only three fast-food restaurant fries I will eat. Everyone else uses those nasty shoestring fries that don’t offer much. When I want fries, I want FRIES.

That was an awesome story, mom3boys. That shows just how much a company cares about their customers. I remember one day my car broke down, and someone gave me a ride to a nearby Chick-Fil-A. I had no money on me whatsoever to repair the car. The manager offered me a free cup of coffee and a chicken biscuit to at least help calm my nerves. Finally a tow truck arrived, towed my car to the shop, and drove me to work. I managed to borrow the money needed to repair the car and pay the tow driver.

One thing I’ve noticed about a lot of Chick-Fil-A restaurants is they’re very active in the local community. Nothing proves this more than during a local high school football team schedule. I’ve seen them offer a free sandwich or discount to team players, cheerleaders, or anyone who went to a home game, if they produce a ticket stub or program.

Another thing they’ve done recently during these tough times is “Receipt Day.” On a certain day of the month, certain locations will give you a receipt for your purchase. If you return to that location within the next 30 days after that day, and present your receipt, you can get that same item, or similar, for free. It’s things like this that show that there are some companies out there that still care about their customers as a person, and not just their money.

Dean

November 17th, 2009
9:12 am

I attended the old Walter F. George High School in the late ’60s/early 70’s. The parking lot at The Dwarf House in Hapeville was my friends and my “hang out” place. Mr. Cathy would come out and patrol the lot. As long as you had at least a Coke all was well. (Beer=Banned Forever) We loved Mr. Cathy. He treated us like we were HIS kids. But the proof-positive about what kind of person Mr. Cathy is: walking in at least 25 years later and seeing some of the same people still working there. Well, I guess I know what’s for lunch today: A Number 1 with a Coke! (And “they” said Mr. Cathy had lost it when he began opening stores in malls. Ha ha ha.)

grifter

November 17th, 2009
10:14 am

I really believe Jesus (our lord may he live forever in light and happy) will bless chick-fil-a and all its employess with a substantial dividend package. Jesus! Jesus! Jesus! AMEN!

Chick-fil-A Fan

November 17th, 2009
10:34 am

Dear CATHY FAMILY,

I would personally like thank you all very much for running such a great restaurant chain and NOT catering to Thug clientele like some of your competitors elect to do.

Whenever I visit a Chick-fil-a location, the patrons entering the parking area always use a turn signal to let other motorists know they are making a turn, none of the vehicles in the parking lot are backed in (poorly) into the parking spaces, the restaurant is always clean & well-lit, the food is usually somewhat fresh and edible (except when near closing time) and the staff behind the counter is always friendly, polite, personable, articulate, kind to ALL customers and easy to understand.

Compared to the pleasant Chick-fil-a dining experience, I feel like I am going to get shot in a drive-by when visiting a competitor’s location.

Thank you for being a beacon of light in a world of corporate darkness and customer NON-service, Cathy Family.

Corp Watch

November 17th, 2009
12:08 pm

Thank you S W. That guy seems to be the one with the chip. I’m saluting the Cathy’s in showing the rest of us that one doesn’t need a Harvard MBA to be successful. My point was some of those who have run Wall Street to the ground came from the most elite colleges in the country. And yes, I refer to them as thugs because what they have done to investors and employees IS thuglike. Chick-fil-a is refreshing. And if you call their customer service line, I’d bet my last dollar that you won’t be redirected to a call center in India!

Lloyd Braun

November 17th, 2009
1:42 pm

What has to be done to force these knockers to open on Sunday? I recognize the Sabbath on Saturday and can not get to the nearest Chicken-fil-A because I can’t use the car on the Sabbath.

Chicken-fil-A should quit their discrimination. It should be illegal!!!
Mazel tov
Brauny

Pat

November 17th, 2009
2:03 pm

Best post of the day, Brauny.