Chick-fil-A wings in new direction | Business
Bruce Horovitz, USA TODAY
ATLANTA — Chick-fil-A is finally crossing the road.
The iconic chicken chain, as well-known for its conservative heritage as its savory eats, is recalibrating its moral and culinary compass. It wants to go from old school to almost cool. It wants to evolve from a place where gays once picketed to a place where they'll feel comfortable going to eat. It wants to broaden the brand as it expands nationally and plows into the Millennial-driven urban arena. Above all: it wants to be a serious player on fast-food's biggest stage.
USA TODAY was exclusively invited inside to visit the company's sprawling, wooded campus, get the first look at its new test kitchen, tour its store-of-the-future development facility and interview Chick-fil-A's controversial CEO Dan Cathy. Cathy, whose comments condemning gay marriage in 2012 set off store picketing and a social media firestorm, has now fully backed away from such public pronouncements that mix personal opinion on social issues with corporate policy.
"All of us become more wise as time goes by," he says, apologetically, in a rare, one-hour sit-down interview. "We sincerely care about all people."
About two years ago, Cathy made headlines after conceding to being "guilty as charged," in confirming Chick-fil-A's support of the traditional family. Both ardent supporters and angry picketers showed up at stores. While Cathy's comments didn't hurt short-term business — and even helped it — Chick-fil-A executives recognize that the comments may have done longer-term damage to the brand's image at the very time it was eyeing major growth outside its friendly Southern market.
The national growth is about to go into overdrive — and it has a huge, new product platform behind it. Its biggest-ever new product roll-out will be announced Tuesday: a Millennial-targeting grilled chicken line for which the company has spent the past 12 years testing more than 1,000 grilled chicken recipes and developing such super-secret grilling equipment that executives won't let it be photographed.
Chick-fil-A's food, long-regarded as extra savory but nutritionally naughty, is going through an industry unprecedented "cleaning" cycle, with an ultimate aim of improving its brand image with trend-setting Millennials. Last month, it announced plans to sell only antibiotic-free chicken within five years. It's testing the removal of high fructose corn syrup from all dressings and sauces and artificial ingredients from its bun. Designers are trying to figure out how to remove fast-food's tell-tale plastic from Chick-fil-A stores — even from its serving trays.
The once-tiny, regional chain just surpassed giant KFC to become the nation's largest chicken chain in domestic sales. But along with this sales and geographical growth comes a new social consciousness. That's not by accident, says Christopher Muller, professor of hospitality at Boston University. "The politics of their Southern Baptist values will not transcend their core markets," he says.
Chick-fil-A's socially conservative agenda, which formally led the company to donate millions to charitable groups opposed to gay marriage, has been tempered. This, just as the company aims to quickly expand into Chicago, New York and Los Angeles. Southern hospitality must give way to urban reality as the 1,800 store chain moves to compete with big city success stories like McDonald's, Panera Bread and Chipotle.
If nothing else, Cathy has listened. In 2012, Cathy not only heard from some unhappy consumers about his comments against gay marriage, but also from some store operators and employees. Now, he says, "I'm going to leave it to politicians and others to discuss social issues."
That's precisely what experts are advising. "He should put this as far behind him as fast as he possibly can," says Gary Stibel, CEO of New England Consulting Group.
One past critic has even become an unlikely fan. "Dan and I have an ongoing friendship," says Shane Windmeyer, executive director of the gay rights advocacy group Campus Pride. "I am appreciative for the common ground we have established in treating all people with dignity and respect — including LGBT people."
Which means Chick-fil-A can focus on what matters most: the food and growth. The privately-held company, whose sales last year reached $5.1 billion — up 9.3%, reports the research firm Technomic — may rank among the most intriguing growth stories in fast food. Imagine this: A typical Chick-fil-A racked up annual sales of about $3.3 million last year, while a typical McDonald's posted sales of about $2.5 million. Never mind that Chick-fil-A is closed Sundays.
"The next big thing is urbanization," says Cathy, 61, who tools around on his Harley-Davidson in his spare time. "That's where the future is heading."
So, the company that has spent 68 years building its stores inside suburban malls and near big-box retailers is mostly tossing out those plans. Now it wants to focus on big cities and big-city dwellers.
It's working. There were lines out the door when it first entered the Chicago market about three years ago, and business is still strong, says Bob Goldin, executive vice president at Technomic. "They have a cult following no matter where they go," he says. Sure, big city real estate is more expensive and the competition will leave battle wounds, "but Chick-fil-A is a proven winner."
"The challenge in business is to stay ahead of the curve," Cathy says. For Boomers, fast food was all about taste and price, he says. But for Millennials, he notes, it's also about local sourcing, product quality and worker rights. For them, he says, "it's not just a product story any more — but the whole story."
Which is why Chick-fil-A removed yellow dye from its chicken soup late last year. And it's why the chain has just begun testing a line of fruit smoothies made with spinach and carrots.
This is the same company whose chief spokesman is a cartoon cow whose singular message for almost two decades has never changed: "Eat Mor Chikin." And it's the company in which 93-year-old founder, S. Truett Cathy, Dan's father, still keeps an expansive office, replete with photos of himself with George H.W. Bush, George W. Bush, Billy Graham and Pat Boone.
But if Chick-fil-A could frame a new photo of who matters most to the company, it might be someone such as 23-year-old Kelli Means-Cheeley. The Atlanta resident and recent college graduate stopped by a bustling Chick-fil-A near Atlanta's airport and offered a thumbs-up after sampling the new grilled chicken. Healthy food ingredients are critical to Means-Cheeley, but, she says, "what's also important to me is taste."
Chick-fil-A gets that. That's why the company just plopped down $10 million to open the test kitchen. "I think of it as a revenue generator," says David Farmer, vice president of product strategy and development. "How long will it take to generate $1 billion in sales out of here?" he asks.
Perhaps not too long. A new line of iceberg lettuce-less salads, developed right before the company opened its new test kitchen, boosted annual salad sales by 50% to $250 million, Farmer says.
Until now, the key rule for new products was that they had to be "cravable," Farmer says. While they still have to be cravable, he says, there's an increasing emphasis on them also being healthy.
"People aren't just worried about calories, but about clean ingredients, too," he says. "Our customers are asking questions they never asked before."
That, says Cathy, has prodded Chick-fil-A to be "more transparent." Last year it began offering "back stage tours" of its restaurants — where regular customers can request tours of the kitchens.
Ultimately, the chain plans to make that new transparency more literal.
That's the task of the chain's new design innovation center, known internally as The Hatch. It's only been open about 18 months, but it's filled with designers trying to mold new Chick-fil-A prototypes from styrofoam blocks. Among their chief goals: to open up the kitchens. They want consumers to be able to watch dough being rolled into biscuits and salads being freshly chopped.
Chick-fil-A will open 108 restaurants this year — most of them urban and a good chunk of them in New York City, says Woody Faulk, vice president of design and innovation. "If we can't do it in New York, we have no business going anywhere else."
The new urban locations will have much more natural wood. And some of the urban chefs are even replacing their old uniforms with snazzy chefs coats.
This new Chick-fil-A is striving to be very different from what was. "We're one foot out of fast food," Faulk says.
In its rush to grow up, perhaps the biggest challenge for Chick-fil-A will be crossing the road — without tripping over its own feet.