Working Class Economist: Chic-Fil-A…Why a Good Short Term Move Is a Bad Long Term One

By | August 7, 2012

Last week, we talked a little bit about why Chic-Fil-A were, to put it bluntly, assholes. Why Dan Cathy runs the company more like an evangelical prosperity-preacher than a real businessman. Why their corporate culture is rotten with retrograde social prejudice (not just homophobia, but religious discrimination and telling female managers their place is in their own kitchens, not at work). But now it may be time to examine all their actions as business decisions. And, I would argue, perhaps poor ones.

In The Short Term: A savvy business decision. Chic-Fil-A are seeing record sales in their Southern locations, which are pretty much the majority of their locations. [The company is based in Atlanta and has been told it’s unwelcome to expand or build in San Francisco, Boston, and Chicago.] It’s already a billion dollar food empire, but you can expect to see even more locations get built in Bumblefuck, Arkansas or Where? Alabama as customers find that Kentucky Fried Chicken is just too liberal for their artery clogging needs. I mean, at least “Church’s Chicken” has Church literally in the title.

In fact, shit-kicking customers in the ever inferiority-complex-prone red states (whose primary import seems to be wounded feelings of being “looked down upon”) are saying that this is yet another example of Northerners thinking they’re “better than them.” Recently there were Chic-Fil-A support rallies, where customers showed up to voice their support for Chic-Fil-A against the big bad “liberal” media and the Yankee mayors of cities where gays can walk down the street holding hands without getting beat up. One woman even said “They just all think we’re a little backwards here,” and yet seemingly didn’t get that they think that because, well, her position on Gay Marriage is backwards.

In the Long Term: One thing people in the South don’t seem to get as that they’re on the losing side of every battle. Slavery? Gone. Segregation? Legally, gone. Abortions? Legal. Latino immigration? Soon to be a non-issue. And now the “fight against homosexuality” I would argue is, already, lost. It’s lost because the only way social conservatives could be happy is if every gay person on Earth disappeared or at least went back to the 1950s and gay people conducted their lives honorably by forever living in the closet. That’s not happening…and their right to marry will only continue knocking down more states like dominoes as more gay people realize that there is zero legal basis in denying them the right to marry. That the only way you could argue it is if you could make the case that they’re somehow less-than-human (all humans are guaranteed equal rights, gay or not), and since you can’t, the law can’t deny them.

All of that is taking the long way around to say that Chic-Fil-A will continue to do gangbusters business in the Southeast, for a while, winning the battle but possibly losing the war. See, their positions on social issues and their outspoken billionaire leader Dan Cathy put them at odds with the corporate culture in the territories they want to expand in. They can’t forever stay a regional chain and not eventually either expand or die, and right now its hard finding new territories that will take them. Sure, the deep West, but would you rather build in Wyoming (population: 4) or Boston? Would you rather make millions of dollars in deep South, mostly rural towns or billions in large markets like the cities on the coasts?

What’s to stop a rival chicken chain from seizing the opportunity, growing their brands in the more liberal areas (which, admittedly, don’t eat as much fried chicken) and then using their new cash coffers to eventually beat Chic-Fil-A on their own turf. In other words: long term prognosis, KFC reclaims the crown, and Chic-Fil-A gets bought out by Zaxby’s. Chic-Fil-A is stirring up controversy and dividing people at the exact wrong moment in their history, as they try to grow their brand and once-and-for all beat out KFC.

And you don’t do that by pissing off half the country. Quiet brands are powerful brands, they grow because people aren’t reading editorials about them everyday in the newspaper.

As time begins to shift and the sands of change stir under Chic-Fil-A’s feet, they’ll find out one very hard lesson: that companies who adapt to changing times survive (like all the good-ole-boy companies that had to do a 180 on segregation in the late 60’s), and companies that don’t believe in evolution, typically go the way of the dinosaurs.

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