case study
Clashing Values, Firm Identity, and Changing
By Cynthia Deale and Donald G. Schoffstall
Learning Objectives
public, for many, Cathy has just crossed the thin line which separates
To discuss the implications of adhering to the business’ vision/
mission/purpose statement in the face of changing social
the comment served to bring the Cathy family’s moral values to light,
To examine the response to an image crisis for a restaurant
chain organization and the effects of sudden publicity on re
To consider how a company’s expansion into new markets may
To understand how a focus on product and service quality may
household, Cathy combined his desire to work hard with an entre
preneurial spirit to open his first restaurant, the Dwarf House, in
Introduction
on Sundays, to reflect biblical principles and allow time for attending
breakthrough came from the creation of a fried chicken sandwich,
and family all think highly of the popular quick service restaurant chain,
runaway success with restaurants lining up to purchase the license to
sell Cathy’s unique concept, however Cathy worried about the lack of
was raised in a household with two fathers, and is a huge supporter of
were able to retain their high standards while still making their deli
want to disappoint his son and his friends, however he is uncertain if he
The origins of Dave’s dilemma stem from events that occurred a
a seemingly routine interview on The Ken Coleman Radio Show, Dan
we are inviting God’s judgment on our nation when we shake our
fist at him and say, ‘We know better than you as to what constitutes a
ful, arrogant attitude to think we have the audacity to define what
attempting to solidify the company’s perception in the eyes of the
Originally opened exclusively in shopping mall food courts, the
Cathy’s initial plans to expand were deliberately conservative as he
regarding franchising the company lay in losing control of standards
When a new location is determined to be viable, the company seeks
put through an intensive training program before being allowed to
being operations, as well as agreeing to have no other active busi
then considered a relationship between the parent company and the
Manisha Singal, Matthew Krawczyk and Jeremy Beal are all affiliated with
Virginia Tech.
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Company Culture
It is easy to see the Christian values that were instilled into the
greatly to the development of teenagers who work in our restaurants,
creating a wholesome atmosphere in which to work and modeling
Our Operators consider themselves to be mentors to the next genera
To maintain Truett Cathy’s Four Tenets, the strategic direction of
subscribe to the Christian faith in order to stay with the company, and
of leadership prepares to hand over the reins to their children, the core
There seem to be no conflicts when we tell people of various faiths how
ing members of the Cathy family are required to spend multiple years
Scriptures we learn how to handle our businesses, how to give custom
Advancement through the corporate ladder is earned in the same fashion
less parties involved in decision making compared to a publicly traded
allows the chain to remain true to Truett Cathy’s original Four Tenets, cre
porate giving program is supporting youth, family and educational
children, as well as a number of organizations which offer marriage
encourages quality interaction between Operators, team members and
However, some of the company’s charitable efforts are not uni
Positioning the company primarily in shopping malls took ad
vantage of a timely niche opening in the fast food marketplace as
$5 million plus to groups that support the conversion of homosexual
men and women into what most Christians believe is a healthier,
money has been donated to Christian marriage counseling organiza
shopping malls, however, the emphasis on corporate control of where
tions that have stated they do not support the notion of marriage by
cized by organizations such as the Gay and Lesbian Alliance Against
By financing all new locations internally, Cathy guaranteed own
ership would remain in his hands and that the company would be able
Defamation, the National Gay and Lesbian Task Force, and the Human
Dan Cathy Reacts
that quality control might become unmanageable due to too fast a
the one hand, the response was startling; the social media era was
Journal of Hospitality & Tourism Cases
39
ing on his comments, thousands of tweets, blogs and Facebook posts
San Francisco echoed the sentiments of both the Mayor of Boston and
year and politicians of both parties were quick to express their opinion
doesn’t share San Francisco’s values and strong commitment to equality
raise up the Cathy family as champions of their cause, lengthening
University passed a resolution in the student senate to cancel plans for a
tively hardline stance on a political issue such as gay marriage were
and acceptance of LGBT rights, as well as the ability for a message to
be instantaneously transmitted to millions of social media users, ne
Two weeks after Dan Cathy’s interview on The Ken Coleman Radio
In response to the Baptist Press interview, the Jim Henson Company,
Show, he accepted an interview with the Baptist Press, a news ser
announced that it would cease business relations with the fast food
month earlier, delegates at the annual meeting of the Southern Baptist
company and donate the planned payment for the brand to the Gay
Negative effects were not only felt in the public arena, but also
Shortly after opening the interview, Cathy was asked outright whether
price for Tyson showed that the largest drop as well as the highest vol
the timeframe immediately following the comments made by Cathy
The Public Reacts
Public opinion in response to Cathy’s statements ranged from
wholehearted support to disgust with the reactions and counter reac
based market research firm based in the United Kingdom, did a study
on the effects of the comments by Dan Cathy on the brand’s image
and found that in the span of two days the brand’s image had fallen
the BrandIndex scale, which is measured by National QSR Restaurant
After Cathy’s interviews with the Baptist Press went public, Thomas
Menino, the Mayor of Boston stated that he would not allow the com
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and respects its LGBT neighbors and rejects rhetoric like Dan Cathy’s
In the present day, the continued financial growth and resiliency
Dan Cathy, and the widespread negative response from the strong
contingent of gay rights support groups came down in full force and
recognized, have been found to produce customers who become loyal
to the organization, in turn producing favorable financial outcomes
to counter a boycott of the restaurant launched by the company’s op
wins awards in the quick service category from notable organizations
top honors from Sandelman & Associates’ QSR Awards of Excellence,
restaurants experienced a show of public support across the nation
where scores obtained from consumers were significantly higher than
strong competitors such as Chipotle and Five Guys Burgers & Fries
levels of quality, the restaurant chain occupies a very unique space
campaign, proud declarations of their scholarships, incredible atten
there was considerable backlash stemming from the comments by Dan
Cathy, the bottom line financial performance remained positive, due in
The effects of Dan Cathy’s statements may have brought an up
Eat Mor Chikin…?
swing in sales temporarily due to strong support from certain quarters,
for chains that served chicken as its primary meal, overtaking the spot
Journal of Hospitality & Tourism Cases
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support for the majority of the controversial organizations associated
identified as hate groups have dwindled to almost nothing, with the
for expansion into the heavily populated Northeast cities, has been
foundation responsible for the funds, the Winshape Foundation, fad
predicted to launch the firm into a top five competitor for the quick
previous entities which were seen in a negative light by LGBT political
law regarding the religious freedom of a business effectively allowed
a business to discriminate against LGBT patrons by citing that the res
banks, public schools and assisting impoverished youths, the founda
tion remains relatively neutral in its funding and provides an outlet for
amendment closed the loophole, however not before bringing the
More recently, Dan Cathy has expressed regret for his remarks,
commenting that in the future, he would leave social issues to politi
of sexual orientation is only protected against where explicitly stated;
values with regards to the institution of marriage remain unchanged,
Dan recognized that the debate is better suited outside of the restau
kind and welcome host, than the exclusion of any individuals would
Dan Cathy’s remarks may have reflected his personal beliefs,
rant chain and serves to alienate market segments from the company
been answered with consternation from other Christian groups, who
however these values have the potential to conflict with both internal
had championed the chain as a rallying cry in the debate over gay
ing population and legal protection of LGBT individuals and families
beliefs remains strong to this day, with politicians in many major
hostility from local politicians, who are concerned that the message
such as Marriott and Hilton have been very forward about embracing
allow for comfort and an acknowledgement of an alternative lifestyle,
the hotel chains are recognizing the business potential for this market
Government Association of Johns Hopkins University voted to deny a
larly, Marriott’s diversity and inclusion policies show a commitment
ditional lifestyles may also run counter to the equitable treatment of
ganization committed to auditing organizations in relation to a firm’s
differentiating a firm from its competition, as well as giving customers
substantially higher scores from competitors such as McDonalds and
a reflection of this concept, creating a relatively clear definition of how
Moving Forward
identity, in this case, supporters of LGBT values and rights, are hoped to
A still enjoys, that the negative publicity resulting from Dan Cathy’s
have been shown to drive customer retention, yet in the face of a chang
comments still served to drive loyal customers to support their chosen
ing society, it remains to be seen how far quality can carry a company
some concessions in response to the event, withdrawing their financial
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For now, a few key questions remain to be answered by the man
commitment to the ideals upon which they were founded represent
grows into new markets, how will the perceptions of potential custom
realized, or will the negative perceptions of the Cathy family’s personal
Discussion Questions
As gay marriage legalization and acceptance grows, do you be
lieve the negative results of Dan Cathy’s remarks will continue
you believe the Cathy family’s response to the negative public
was attributed to a competitor such as McDonald’s, do you
Pick a hotel or restaurant that you are a fan of and find the
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