Chick-fil-A taps outside leaders as it gets set for new growth
By Maria Saporta
Published in the Atlanta Business Chronicle on June 26, 2015
Chick-fil-A is taking another step in its transition from a small but fast-growing family business into a major company.
The restaurant chain is expanding its board of directors to include external leaders who can advise Chick-fil-A Inc.’s executives on the growing number of issues facing the company.
The addition of four new high-profile outside directors marks the leadership imprint of CEO Dan Cathy and the “second generation” of the Chick-fil-A family — following the passing of founder Truett Cathy in 2014. Dan Cathy has been CEO of Chick-fil-A since 2013 after working for the company full-time since 1970.
“We wanted to strengthen our board by inviting some non-family members to address some of the issues and topics we are facing,” Dan Cathy said in an interview. “We wanted to broaden the overall acumen of the board so we would be better prepared to address national and global issues that we might face. It is about better governance.”
The expanded Chick-fil-A board will have four external directors: James H. Blanchard, retired chairman and CEO of Synovus Financial Corp.. Michael T. Duke, retired president and CEO of Wal-Mart Stores Inc. Crawford W. Loritts Jr., a nationally-known speaker, author and senior pastor of Fellowship Bible Church in Roswell, Ga.. He is a visiting professor at Trinity Evangelical Divinity School and host of “Living a Legacy,” a daily radio program that reaches about 500,000 people each week.
Steven S. Reinemund, executive in residence at Wake Forest University and its former dean of business as well as a professor of leadership and strategy. Previously, Reinemund was chairman and CEO of PepsiCo Inc., where he worked for 23 years.
The other members of the Chick-fil-A board are: Bubba Cathy, executive vice president of Chick-fil-A and president of Dwarf House Inc. Dan Cathy, chairman, president and CEO of Chick-fil-A.
James “Buck” B. McCabe, executive vice president of Chick-fil-A. He joined the company in 1978 as a corporate accounting manager and was promoted to chief financial officer in 1982. He retired as CFO in 2014, but remains a member of the company’s executive committee.
Steven A. Robinson, executive vice president of Chick-fil-A. He joined the company in 1981 and led its marketing department for nearly 35 years, until his retirement in 2014.
John W. White IV is owner and operator of the Renaissance Village and Research Triangle Chick-fil- A restaurants in Durham, N.C. As one of Truett Cathy’s grandchildren, he is part of the third generation of the family in leadership roles for the restaurant chain.
Ken Bernhardt, a retired marketing professor from Georgia State University who has done consulting work for Chick-fil-A for more than three decades, said the first step in the transition in Chick-fil-A’s governance was when the company expanded its executive committee last year–the first time in nearly two decades. The expanded board is step two. “They wisely picked people who are good cultural fits as well as people who will bring thinking beyond the internal mindset,” said Bernhardt.
“They are over $6 billion in sales this year, and they are approaching 2,000 units and nearly 75,000 employees,” Bernhardt said. “They are a large company now. Most of the leadership team has grown up within the company. This brings some outside leadership that should expand their knowledge base.”
Dan Cathy described the move to expand the board as an evolution of the business. The outside leaders will bring a broader perspective as Chick-fil-A begins to contemplate new areas of growth.
“International expansion is out there in the future,” Cathy said. “It’s not currently on the table, but we know we are preparing ourselves for expansion into Europe, South America and Asia. And we still have a lot of potential areas for growth in the United States.”
Cathy said the restaurant chain also is having to spend more time addressing several large social issues — including environmental concerns, sustainability, health and wellness. “We want to make sure we are making decisions that are responsible,” he said.
Asked if adding outside directors could be a sign the company is considering a public stock offering, Cathy responded no, adding that most companies go public when they need to raise capital. “We are debt-free as it is now. We have got the cash we need to grow.”
By remaining a private, family-owned company, Cathy said he can spend all his time running the business rather than having to pay attention to shareholders or the pressures of Wall Street. It also gives the company more flexibility to invest for the long-term without having to worry about quarterly results.
Bernhardt added that Truett Cathy’s three children — Dan, Bubba and Trudy — also pledged that they would never open the chain on Sundays because of their religious beliefs. A public company would have a harder time keeping that promise than if it is family-owned.
Cathy said he was humbled that the four outside directors — who he describes as “A-list” individuals — would agree to serve on Chick-fil-A’s board. “Quite frankly, that they would agree to serve really makes a statement about the growth potential of our business,” Cathy said.
Blanchard is well-respected in business circles. “He’s been very helpful in coaching me,” Cathy said. “Conversations with him always end too soon.”
Duke, a native of Fayette County, has close ties to the Cathy family. Duke also has strong retail and organization experience, and “he really identifies with the heritage and values of our business.”
Loritts also has had close ties to Chick-fil-A, and Cathy said the company has always “appreciated the spiritual aspects of our business.” He will bring a national perspective to the board.
And Reinemund has strong international experience, and he has addressed many of the social and business issues Chick-fil-A is now facing. That said, Cathy was quick to add, “We still have a tremendous loyalty to our good friends at Coca-Cola.”
When asked why there are no women on the board, Cathy said he knows that is something the company needs to address. “I’m sure as time goes on, we will continue to have more diversity in the senior leadership as well as the board,” he said.
“The overall governance of the company has moved beyond that of an entrepreneurial business to one that is much more stable,” Cathy said. “It points to how important it is to that we continue to build organizations that are adaptable and sustainable. We have to build mechanisms within the organization that self checks our leadership — that’s an art of leadership. I’ve got people who keep me in line.”