Will Chick-fil-A Pay a Price for Its Anti-Gay Marriage Stance?

"Guilty as charged." Well, he probably could have phrased it better.

Interviewed in this week's issue of Baptist Press, that's how Chick-fil-A President Dan Cathy responded to an interviewer asking whether his company supported "the traditional family" (or as it's being rephrased in the press now, "opposed gay marriage"). And as you can imagine, the position has quickly generated a firestorm of criticism for the company.

Why? In the past, Chick-fil-A has tended to hedge its position on the issue rather than risk offending patrons of its 1,600 fast-food chicken restaurants. Previously, Cathy himself had always exercised caution in keeping the company he runs separate from the personal beliefs he holds "in the Biblical definition of marriage."

That's become more difficult now.

Stepping Up the Opposition

For years, lesbian, gay, bisexual, and transgender advocates have criticized Chick-fil-A's practice of making donations to pro-traditional marriage organizations, calling it an attack on the LGBT community. Making the leap from what Cathy said this week to what they think he meant (although he didn't actually say that), these groups moved quickly to call for a boycott of the company.

But does a single comment by the company president necessitate a full-fledged boycott of his business?

Reasonable minds can differ, but before making up your mind about whether the world would be better off without Chick-fil-A in it, here are a few points worth considering:

Defining 'Doing God's Work'

Whatever else you think about Chick-fil-A, at least the company practices what it preaches. This is not some fast-food version of Goldman Sachs (GS), where CEO Lloyd Blankfein goes out and tells The Times of London that he's "doing God's work" on one hand, while back at headquarters, his traders are calling their clients "muppets" and hatching plans to "rip their clients' faces off."

To the contrary, Chick-fil-A has codified a corporate purpose: "To glorify God by being a faithful steward of all that is entrusted to us, and to have a positive influence on all who come in contact with Chick-fil-A." In many ways, it's doing just that.
  • In an industry dominated by high-caloric, deep-fried, transfat-saturated food-like substances, Chick-fil-A pioneered the sale of unfried, chargrilled chicken to promote healthy eating habits. (For breakfast, the company recently began offering the option of a nice bowl of multigrain oatmeal -- albeit much to children's chagrin.)
  • Furthering its "positive influence" philosophy, at most Chick-fil-A establishments in America, kids can take a break from their snacking to burn off some calories at the in-house jungle gym.
  • And since healthy minds go well with healthy bodies, open a Chick-fil-A kid's meal takeout bag, and what you find inside (in addition to some mighty tasty chicken) is not a plastic-molded Teenage Mutant Madagascar Giraffe with Kung-Fu Grip action figure, but more often an educational toy, CD, or even -- better sit down for this -- a book.

It's also worth noting that in an American culture that often seems to worship at the altar of the Almighty Dollar, Chick-fil-A -- almost alone among American restaurants -- takes a break from capitalism for one day every week, year in and year out. That's right: Chick-fil-A sticks to its principles and adheres to the Fourth Commandment, keeping the Sabbath, and guaranteeing all its employees their Sundays off.

Chick-fil-A: Love It or Leave It

In the final analysis, it doesn't really matter much what Chick-fil-A's president said, or didn't say.
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Customers will always have every right to take their business elsewhere, for any reason, individually or in organized groups. They've got just as much right, in fact, as Chick-fil-A's Chick-in-Chief has to voice -- however intemperately -- his opinion on subjects public and private, controversial and not.

Meanwhile, the greater the brouhaha that LGBT activists raise against Cathy's statement, the more likely the boycott is to backfire ... as the company's fans flock to fill up the seats vacated by its critics. Because whatever your religious views, the 11th Commandment of American business still reads: "There's no such thing as bad publicity."

Expert Cooks Up Recipe For Burger King as Newly Public Company
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Will Chick-fil-A Pay a Price for Its Anti-Gay Marriage Stance?

Burger King (BKW) might still be home of the Whopper, but it's far from ruling the burger industry these days.

The fast-food restaurant ranks third among the hamburger giants: Last year, Wendy's (WEN) unseated the chain for the No. 2 spot, and it has never been in range of McDonald's (MCD), the undisputed leader, according to consulting firm Technomic.

Burger King's new status as a public company could give the place to "Have it your way" a fresh start, and energize its recent efforts to woo back shoppers, Steven West, an analyst with ITG Investment Research, tells DailyFinance.

The company returned to the New York Stock Exchange last week, its home from 2006 until 2010, when it was acquired by private investment firm 3G Capital.

3G's revival strategy for Burger King included its biggest menu expansion ever last year -- adding items from premium salads and frappe drinks to bacon sundaes -- and a star-studded national ad campaign that ditched its (arguably creepy) "King" mascot for celebrities like soccer star David Beckham and Jay Leno.

Fast-food lovers seemed to respond: For its most recent quarter, Burger King posted its best comp-store sales performance in more than two years.

But there's still work to be done at the No. 3 burger chain if it's going to take a bigger bite out of the fast-food market, West says.

In the battle for burger supremacy, McDonald's has been eating the competition's lunch for the past eight years, West says.

"They're on their second remodeling effort in the U.S., and they have definitely raised the bar when it comes to consumer expectations," he says.

Meanwhile, Burger King "has been trying for a decade to replicate the McDonald's playbook and has failed to do so."

But the IPO could mean a reversal of fortunes for Burger King. "Their new restructuring plan, the use of joint ventures and the procurement of financing through the IPO could spell good times ahead for the 'king of the Whopper,'" West says.

First, Burger King will use its newly public status to get its financial house in order, West says.

"In this case, the proceeds will be used to pay down debt, thus lowering interest expense, and helping with net earnings."

Then comes reinvesting in the business and stepping up expansion -- especially overseas. "Over the next few months, Burger King will see accelerated re-franchising of company-owned stores ... then accelerate unit growth both domestically and internationally, though about 80% to 90% of unit growth will likely be international," he predicts.

Burger King will "continue to bolster their menu offerings in the U.S." -- but new items must be "innovative" if the chain wants to win over more fast-foodies, West says.

That push should go hand-in-hand with beefing up customer service, he says. Indeed, new and more complex menu items, like smoothies, frappes and wraps, have slowed down its service because they reflect "new ingredients, new processes, etc., and thus take [workers'] time to become efficient at making them fast-enough for a drive through operation."

McDonald's has fancied up its units with store remodels that include new half-moon-shaped booths, wooden blinds and even flat-screen TVs, which have changed the popular idea of how a fast-food chain should look these days.

Hence, Burger King needs to spruce up its digs, too. "They need to remodel the store base," West says. "As McDonald's CEO says, 'You can't sell a $6 burger out of a $3 store.' "


Motley Fool contributor Rich Smith holds no position in any company mentioned, but he'd happily hold a No. 2 meal -- Chargrilled Chicken Sandwich with Waffle Fries and a soft drink. Motley Fool newsletter services have recommended buying shares of Goldman Sachs Group.
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