Chick-fil-A’s Dan Cathy On Exceeding Customer Expectations

Dan Cathy, Chick-fil-A
Leadership lessons from inside one of America's most beloved brands. 'Am I still a student? Am I still learning? Am I still curious?'

A lot has changed in the nearly 70-year history of Chick-fil-A, but one fundamental remains paramount: a relentless focus on exceeding customer expectations. It’s the founding principle that fueled the company’s evolution from a single restaurant into one of the nation’s largest family-owned businesses—and it’s one other companies would do well to heed amid an uncertain and volatile business environment.

From an early age, Dan Cathy, son of the company’s founder and Chick-fil-A’s chairman, dedicated much of his life to building on the vision of his father, S. Truett Cathy, to care for people with exceptional service. He and his siblings grew up donning costumes, performing for customers and doing chores at the original Chick-fil-A, then known as Dwarf House. “We had these dorky looking dwarf costumes that we would dress up in, and we’d walk up to tables and sing little songs and be left with nickels and dimes and quarters as little tips that we received,” he recounts, adding that the kids would also sweep up cigarette butts and scrape gum from tables: “You’d have a whole rainbow of Juicy Fruit, Wrigley’s Spearmint gum under the tables… so we’d be there scraping it off with a little knife or fork.”

The  family work ethic carried over into his school life at Woodward Academy, where Cathy was student body president, voted “most loyal” by his peers and competed in three sports—track, cross country and wrestling—learning a few hard lessons along the way. “The most disappointing experience in my life happened on a wrestling mat,” he recalls. “My junior year, I had an undefeated season going into the regional tournament. I was the No. 1 seed in the regional tournament, pitted against the one with the weakest record. Unfortunately, I got the flu the week of the tournament.”

Cathy tried but was unable to rally, and lost in the first round. “I remember going back to the showers, and I just stood there and cried my eyes out. It was just awful…. But to be honest, I had a lot of ego. I was prideful. I needed an attitude adjustment. I had to kind of reflect on that afterwards.” Cathy came back his senior year “with a much more sober and a much more respectful attitude toward my competition.” He went on to win the state championship.

It was a lesson about the how and why of striving for excellence that he carries with him to this day and has worked to share with Chick-fil-A’s team members. “If we’re going to be excellent at what we do, we have to be all in,” he says. “There’s an exhilaration and a joy when you know you did your absolute very, very best—this complete dedication. It’s an incredible experience.”

Don Yaeger, a contributing editor at Chief Executive and host of the Corporate Competitor podcast, sat down with Cathy to discuss leadership. Excerpts of that interview, edited for length and clarity, follow.

 

One thing that stands out in reading about your father’s approach to running the business is that you don’t benchmark against another chicken sandwich joint. When you say you’re benchmarking against the best, you’re looking at Ritz-Carlton.

Yes. When it comes to creativity and innovation to lead in any industry, the most valuable lessons we learn are going to come from other related industries, not necessarily the particular one that we’re competing in. We’re able to see innovation in technology, maybe robotics, maybe in media and branding activities, that are going on in other industries that we can import into our own sphere, our own industry. We need to find opportunities to get up close and personal with people, if you will, who are at the top of their field, in athletics and in business, or in any field.

Let’s look for opportunities to be inspired by those who are really excellent in their field. It can be very encouraging, very challenging to us. We’ll learn a lot, it’ll elevate our game, it’ll set the bar at a higher standard. It gives us something really exciting to really pursue.

Ritz-Carlton’s Horst Schulze is the legendary founder of the DNA that we see today in a five-star luxury hotel chain like the Ritz-Carlton. He was the the genesis behind the expression, “we are ladies and gentlemen serving ladies and gentlemen.” One day, 20 years ago, he said, “Dan, you may be better than McDonald’s, Wendy’s and Burger King, but you got nothing to be proud of. You’re just the best of a bad lot.”

I don’t mean to be overly critical of those other competitors that were there, but he was trying to make the point that we should all aspire to be outstanding in the next tier up. He said you need to be thinking about competing with the quality of service that you would have at a Ritz-Carlton. If you brought that level of thinking, that level of hospitality back down to a $7 or $8 price point QSR, quick service restaurant, man, you would really be differentiating yourself.

It was because of that challenge that we decided that we wanted to differentiate Chick-fil-A against our competition, sustain competitive advantage if we could build it on the uniqueness of the quality of the service that was built on a Ritz-Carlton platform. So we went to fresh flowers in all our restaurants. We put pepper grinders in all our restaurants. You’d never see that at another QSR kind of brand. And we even upgraded our service in the dining room from a janitorial service to more of a host and hostess style service.

We had to pay more, we had to train better, we had to reinstall a better language system about the expression “my pleasure” versus “yeah, uh-huh, no problem,” those sorts of things. Doing so, though, pays huge dividends. People are hungry to be treated with honor, dignity and respect. As delicious as our chicken bite sandwiches are, our fresh-squeezed lemonade and those hot waffle fries, people are in greater need of being restored and encouraged from an emotional standpoint.

I love the term restaurant. It’s a French word—it means a place of restoration. When we have these poignant conversations with thoughtful leaders that inspire and challenge, they will always take us to a place that we’ve never been before. My whole view of our business, our industry, really our ministry to society, was dramatically elevated just in that one definition, that we’re here to help restore people’s lives. They’re in difficult circumstances. They’ve got challenges going on at home, challenges going on at school, challenges going on at work. But when they come through that Chick-fil-A drive-through or walk in our restaurant, we have an opportunity to give them a word of encouragement and positive affirmation. That’s what we learn when we hang out with thought leaders, people who are really outstanding in their respective fields.

 

You’ve said that you look at Chick-fil-A as a leadership organization disguised as a restaurant, teaching leadership skills to all of those who are in your company. You don’t see yourself as what you serve, you see yourself as what you want to serve. 

Yes. In a growing organization, it’s all about leadership development, grooming and nurturing. In fact, I love this John Maxwell quote, “Success is about succession.” We have to constantly be thinking about who’s in the pipeline. Any sports team always has a farm system. The varsity team has a junior varsity. That’s part of the farm system.

Other professional sports, of course, have farm teams scattered around, where they’re nurturing and building a system of character development, skill development, leadership development. About 70 percent of our Chick-fil-A restaurant operators came from the ranks of our hourly team members. We are constantly grooming and nurturing. That’s why we have to be aligned with wonderful, inspiring people like John Maxwell, Marcus Buckingham and Jim Collins, who have been part of the academic faculty in this leadership development discussion. We’ve had these people at our annual conventions that we have to inspire us, to motivate us, to help us be aware of how important it is that we pour into the next generation, that we share stories. It’s the old campfire deal, where we sit around and we tell stories. There’s a lot of institutional knowledge that has to be very intentionally choreographed into our schedules.

We’re sharing, we’re intentionally focusing, teaching, but we’re also embodying those values. It’s not just the words that we say, but that our life is a showcase of principles built on integrity, built on honesty, compassion and a spirit of humility, a spirit of gratefulness and gratitude to those that around us. And those are the values that have to be poured out and exemplified for others.

 

Your father was principled about ideas like not being open on Sundays and not shrinking standards to raise profit margins. You didn’t just stick to those principles, you grew them. How difficult was that transition from your father, and now to your son?

I had an opportunity to interview the track coach for U.S. Track and Field out of Denver, Colorado, and he told me, “Dan, you’ve got to realize that it’s not the four fastest runners who win the relay race.” That kind of caught me by surprise. I thought, if you have the four fastest runners, they’re going to run that relay race every time. He said, “No, sir, it’s the team that gets the baton around the track first wins the race.”

So if you have a fumbling of the passing of the baton, no matter how fast the runners are, you’re not going to win that relay race against another set of competitors who may not be quite as fast, but they did do such a beautiful job of passing the baton. The really great baton exchanges, the objective is to make it a nonevent. That there is such a seamless transition, such alignment in the values and the principles from one person to the next, that it doesn’t represent a big blip on the radar screen for the organization, there’s not a big jump in the road, a dramatic change or swerve in the culture of the organization, but there’s a tremendous amount of continuity about the things that do not need to change.

We have to balance the things that we have to change to stay relevant and then the things that have to stay the same. Someone said, the main thing is to keep the main thing the main thing. There are some elements about our culture, society, human development, that will never change. And we can go back and read the classic lessons that will never change about humanity. But there also is the equal ambition to keep things very relevant, given the changing dynamics of our culture and society, driven by technology, globalization and any other factors that are there.

We have to have the courage to change the things that need to change, and also to have the strength to maintain the principles that are timeless. And we have to have a good strong grip on both of those at the same time. I love what Jim Collins said: When the rate of change exceeds the rate of internal change, disaster is imminent. So we have this dual sense of responsibility, this tension that we manage in leadership to stay very relevant but at the same time stay very grounded in the fundamentals.

At Chick-fil-A, we are very grounded on our corporate purpose, to be a purpose-driven organization. That purpose is defined in the statement that we’re here to glorify God by being a faithful steward of all that’s entrusted to us and have a positive influence on all who come in contact with Chick-fil-A. We want to impact people’s lives, we want to be a good steward of what we’ve been entrusted with. We’re not going to take any of this with us. We only have it for just a moment in time, so let’s be a good steward of it. And then, ultimately, let’s acknowledge our Creator. Let’s have a sense of humility, let’s have a teachable spirit, let’s be willing to be submissive, all of which we learn in our faith experience to honor the Lord and seek to honor him in all that we do. That’s the baton exchange for society, for culture, for a business, for an enterprise.

 

With your experience, is there a lesson you can teach us, as business leaders, about how to make sure that we are constantly thinking about internally focused succession and doing the right thing?

A very practical thing that I would say is to simply avoid situations where you’re by yourself on a learning adventure. Make sure you take people with you. A leader should never go anywhere by themselves and forfeit the opportunity of sharing the knowledge, the learning, that can be gained by being well traveled. I chatted with someone just yesterday, this is an individual who made an exploratory visit to another organization. I know it’s going to be a very rich learning opportunity, and I coached, I should say, maybe, that individual to really optimize that opportunity.

If you get excited about what you’re going to see, you could have the vocabulary of Shakespeare, and you’d never be able to replicate how powerful or dramatic that experience may have been. I learned that when I was at a conference well back in my 20s. Now I don’t even go to the airport without bringing somebody else with me that I can be constantly pouring into.

Conversations, trips, learning adventures that we can be on, let’s make sure that we’ve got a couple of other people that are part of that journey with us.

The nature of the baton is multidimensional. One baton passed has to do with the ownership of the enterprise, and the other baton relates to the operational elements of the enterprise. If you’re in a family business, for instance, you may or may not have a successor who moves into the operational leadership of the business. But if it stays privately held, it will always stay in the family—you don’t have a vote on that. If God calls you to be involved in the leadership of the business, actively involved, that’s one thing. But you really don’t have a choice about your responsibilities as an owner. We try to be very nurturing of the business acumen among our Cathy family. But then there could be a small segment of the population of the family business that actually has the skills, and the acumen, and the work ethic, and on and on, to actually serve as a leader in the business. And it’s incredibly wonderful when that happens.

I was so very fortunate that my oldest son, Andrew, had the acumen, the desire, the passion, the calling in life to succeed me in that CEO role. I love what the great human philosopher Steve Harvey says about this: Your career is what you’re paid for, but your calling is what you’re made for. Oftentimes, we are very consciously aware of our career, but we don’t pay as much attention, consciously, to being aware.

What’s my calling in life? What’s the unique thing of experiences, temperament, education, in my life’s journey, that can give me some sense of direction of how God had prepared me for what I’m to do with my life? Has my life changed, or has my purpose changed? I think it’s evolved. I really enjoyed [building]—and I feel like God has equipped me to create—environments where people can thrive. We were able to do that at Chick-fil-A. Our corporate campus, the culture that’s there, is an environment where people thrive. There’s a lot of upward mobility in Chick-fil-A. We have a 98 percent retention rate among our corporate staff and our restaurant operators. People come there, and they thrive there. Our name is the last name on their résumé. They decide to either die or retire while being at Chick-fil-A. I credit that, in some part, to the fact that we designed an incredibly beautiful place, the physical place that people operate in. There’s no delayed maintenance at Chick-fil-A. There are no potholes in our parking lots. We have up-to-date equipment and technology business systems that enable people to fly through that drive-through at astounding rates. It’s placemaking, this investment, great engineering, great design, great architecture, that goes into our enterprise.

 

You’ve identified a couple of pivot points, the conversation with Horst about not being satisfied with being a great contributor in your own space, about being better. That’s a moment that became a momentum shift for you.

Leaders have to be purpose-driven. They have to have a positive, affirming overall demeanor about life that sees life as an adventure. They have to live an exciting life, an enjoyable life; they have to live a very disciplined life in order to sustain that over a long period of time. It helps in recruiting people, and talent, to want to be a part of a growing organization. There’s a natural talent-magnet component about a growing, thriving enterprise, so make sure you keep doing the things that got you where you are.

Don’t get complacent. Don’t sit back on your laurels. Don’t take things for granted. Keep your work ethic up. Keep those personal disciplines that you’ve had in the past going, that sustain great performance. I think of those in four buckets: mentally, emotionally, physically and spiritually.

Mentally, am I still a student? Am I still learning? Am I still curious? What am I doing to maintain that sense of a positive view of life? Emotionally, am I taking care of relationships, my marriage? Am I taking care of relationships in my family that give me that strength emotionally to withstand challenges? Am I staying in shape physically?

I see a direct correlation between stepping on the scales, and how sharp I am mentally. I stepped on the scales at 152.7 this morning; 153, I’m over the mark. No dessert today for me. I know exactly where that needs to be, and I measure it. And having good measurement systems is an important part of discipline. I’m equally attentive to the spiritual health that we all have, that’s the deepest part of where we’re at. What are we doing to nurture that?

All of those are important as we think about leadership, setting the tone, setting the pace for positive momentum for the business that can be sustained over a long period of time. And that’s what you want to do. You want to keep that positive mindset; you want to have a winning record, and sustain it.

 

What advice would you give to a young leader trying to take a group of individuals and meld them into a team?

Well, let’s move to music for a moment. Think about a symphony orchestra. An orchestra is a team. Not everybody plays the same instrument. You got the trumpet section, you got the oboes, trombones, you got the string section, and so forth. When we think about teams, we think about people who have unique skill sets in respective areas where we don’t all have to be great at the same thing. When we stamp a team, we put a team together, we learn to populate it with incredibly gifted people who are outstanding in their field. But why do they work together? They work together because there’s a conductor at the front of the room who’s got a score; he’s got a baton in their hand, and they realize that if they could sync everybody up, if they can all play off the same piece of music, if they could follow the notes that have been scripted out, and so forth, they can create an incredibly beautiful experience by all of them being together. Great orchestras are reading off a score led by a conductor.

The genesis is that of a composer who wrote all the notes. It’s the composer who was the first one to hear the music between their ears. My challenge is to make sure that I never dumb down the music to fit the orchestra, but that I upgrade the orchestra, and the talent, to play the music. That I don’t go from 16th notes to quarter notes, just because of who’s sitting in the orchestra.

As leaders, be incredibly clear about the music that you want to hear. Oftentimes, we miss the mark because we’re not as crystal clear. My dad said, “I want people to hear ‘my pleasure’ when they say ‘thank you.’” He had to drill that into us for 10 years. It was crystal clear in his mind. He never wavered in that. We actually picked up the sound bites and the video clips of him saying that for 10 consecutive years. Let’s make sure we as leaders are really, really clear as to what we want that music to sound like. And let’s select great people who want to perform the performance of their lives.

 


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