Chick-fil-A founder S. Truett Cathy built a $1.5 billion empire by remaining steadfast to biblical principles Featured

7:00pm EDT March 16, 2004

Truett Cathy had just finished visiting with a kindergarten class and promised to send the students one of his books, signed, of course, by the author -- with his trademark addition of a biblical proverb.

"'I'm not going to tell you what it is,'" he told the children. "'You've got to look it up in the Bible.' The teacher said, 'I'm sorry to tell you we're not permitted to have a Bible in our schools'

"That's hard for me to understand."

And for Cathy, founder and CEO of fast food icon Chick-fil-A, it was harder to accept. The 83-year-old Georgia native had recently returned from the National Prayer breakfast in Washington, D.C., an event attended by President George Bush, Vice President Dick Cheney, their wives and a religious figures representing various denominations. And while the separation of church and state prevents public schools from promoting any religion and forbids school from using public money to acquire religious materials, that wasn't going to stop Cathy.

He purchased a Bible for every public school in Georgia.

"We got the support of the governor as well as the school superintendent to notify that these bibles were not bought by state funds but by Chick-fil-A, which is permissible," Cathy says. "It's one of the significant things I'm very proud of."

Cathy's belief is strong -- he became a Christian at age 12 - and he reflects on his faith when making business decisions.

"I see no conflict whatsoever in biblical principles and good business practice, whether you're Christian or not," Cathy says. "Biblical principles do work. So, I do try to base my business decisions, as well as my relationship to our people and to the public, on biblical principles, because it very well states, treat a person like you'd like to be treated. That's a message we try to get over to our young people as well as the adults."

In a business with many young and part-time employees notorious for their short tenure, Cathy makes sure his employees are treated well. Those who work 20 hours per week for two years are offered a $1,000 scholarship to the school of their choice. To date, the company has provided nearly $20 million in scholarships.

Operators who meet certain year-over-year revenue increases are awarded the use of a new Ford vehicle for a year. Following one particularly successful year, Chick-fil-A awarded 46 Lincolns. The company only had 250 units at the time, and the expense nearly bankrupted the business, Cathy recalls, with a small laugh.

It's hard to argue with Cathy's results. There are 1,125 Chick-fil-A restaurants in 37 states and Washington, D.C. The company posted revenue exceeding $1.5 billion last year. And from Day One, Cathy has refused to open his restaurants on Sundays.

"We're noted as the place that always closes on Sunday," Cathy says. "We've been doing that for 57 years, so we dare not vary from it. We find that people can spend all the money they've got in six days; it really doesn't take seven.

"It helps us attract a caliber of people that appreciate having Sunday off. Whether they go to church or not, it's the most desirable day to be off."

An entrepreneur's entrepreneur

Perhaps the only thing that preceded Cathy's devotion to the church was his entrepreneurial spirit, which first showed itself in a few bottles of soda pop.

He started his business career during the Depression as an 8-year-old buying six-packs of Coca-Cola for 25 cents and reselling them for a nickel a bottle.

"When I sold out, I'd run back and get six more and six more and six more," he says. "Finally, I accumulated the resources that permitted me to flag down the Coke truck and buy a full case of Coca-Cola -- 24 cokes for 80 cents. When you sell 24 Cokes for five cents apiece -- you made 40 cents. That, to me, was big business."

Born in 1921, Cathy was deeply influenced by the Depression. Through those formative years, he learned the value of hard work, but whatever he may have expected from life, Cathy says, he has received so much more.

"We're very grateful for the progress that we've been able to make at Chick-fil-A," Cathy says. "We hope we've proven success has several meanings, materially as well as other things. It's very important that we keep our priorities in proper order and consider what's important."

That is the approach Cathy adopted from the beginning, when he and his brother, Ben, opened their first restaurant, The Dwarf Grill, when the two returned to Atlanta following military duty after World War II.

"It was a very small place," says Cathy, explaining the origin of the name. "It had 10 stools at the counter and four tables and chairs. Back in those days, we had to work very hard. I was brought up to think the harder you worked, the more successful you would be.

"Some people say, 'The more successful you are, the luckier you are.' I say, 'Well, the harder you work, the more lucky you'll be.'

The two pooled their financial resources and, with a $6,600 loan, invested $10,600 into that first operation. That money purchased the property, building and equipment. The restaurant was open 24 hours a day, six days a week. The brothers alternated 12-hour shifts.

Though the pair did have some experience managing restaurants, owning one was altogether more difficult.

"Everything I had and everything I expected to have was at stake," Cathy says. "I didn't mind paying a temporary price to achieve those things, sometimes later to enjoy. I was single at the time. I was married to that business. I oftentimes spent 36 hours at a stretch without even sitting down, to eat or anything else, because I had to work on a very slim budget there as far as help was concerned."

In 1949, three years after they opened their restaurant, Ben was killed in a private airplane crash. Ben's widow received his share of the operation, which Truett purchased a year later.

In 1951, he opened a second restaurant.

Apprehensive expansion

Cathy was somewhat of a reluctant restaurateur.

"I didn't really want a chain of restaurants," he says. "I had two at one time, and I realized I had one too many then. But the Lord took care of that. One burned to the ground. It gave me the option to do something different."

The something different was a self-serve fast food restaurant. The restaurant was not as popular as the Dwarf Grill, so Cathy tapped the wisdom of Ted Davis, an experienced restaurant owner, who suggested he change the format to a Kentucky Fried Chicken. But for Cathy's insistence on not being open on Sundays -- something owning a KFC would require -- the world might never have known Chick-fil-A. Cathy leased the site to Davis and continued to operate the original Dwarf Gill.

It was around this time that he was experimenting with a fried chicken sandwich. The new menu item slowly started outselling his burgers. It was the birth of the Chick-fil-A sandwich. He licensed the product to other restaurants but quickly realized that he was unable to control the quality.

In 1967, 21 years after he opened his first restaurant, Cathy opened a 384-square-foot restaurant in the Greenbriar Mall in Atlanta. The menu was simple, just five items: potato fries, coleslaw, lemon pie, lemonade and, of course, the Chick-fil-A sandwich. The store was a success, and within four years, Cathy boasted seven restaurants, all in malls.

Cathy does not franchise his restaurants, and an operator needs just $5,000 to get started with the company -- money that is returned if the relationship is severed.

"A franchisee invests his own money and carries the whole financial risk in his business," he says. "There is not capital risk involved (in operating a Chick-fil-A restaurant), which gives him security. He must divorce himself from all other business interests to come aboard Chick-fil-A. It's not a part-time job at all. We expect that strong commitment.

"It's working real well. We have very little turnover among our operators, 4 percent. That's very, very small when you get up to the number of units that we have."

After nearly 60 years in the restaurant business, Cathy still enjoys his work.

"I'm here in my office every day I'm in town, says Cathy. "I still maintain the title CEO, but that doesn't mean I call all the shots. (There are) a lot of things they did that I wasn't aware of that proved good that I didn't think so in the beginning. I'm learning to rely on the decisions of other people for my business.

"I think the Lord has blessed me bountifully more than I ever deserve, and I think I maintain a reasonably good reputation. I don't have any regrets."

On those Sundays when Cathy isn't in the office, he can be found teaching Sunday school, something he has been doing for 49 years. It reflects his commitment to his faith and his family.

"I believe in the Ten Commandments; I think they were written for a purpose for us," he says. "I think it's strange that America was founded on biblical principles -- the freedom to worship as you choose -- and now it seems like you don't mention the name God unless it's in a negative way. The family was very important to individuals. But now, it's talked about very loosely. The quality of our homes is very important to a human being. You need a family.

"We're all created with an idea that we want to accomplish something that might be noteworthy in our lifetime. And we have that as a gift from God -- that we are created with the purpose of giving, the purpose of achieving and winning. I see nothing wrong with being successful and pleasing the Lord. I think He intends for us all to be successful. Sometimes we do it our own way rather than the Lord's way, but I think He has a plan for each and every life that He's created."

HOW TO REACH: Chick-fil-A, (866) CFA-2040 or www.chickfila.com