Chick-fil-A CEO Explains Why They Are Staying Private


I found this [Transcript] from a presentation Truett and Dan Cathy made in 2009 at the National Press Club Luncheon. Here are a few questions and answers that really stuck out to me, and I underlined the areas with special emphasis.

If the economy doesn’t rebound soon, will you be forced to lay off employees?

DAN CATHY: Well, we’re actually adding employees right now. We’ll add over 4,000 new. Most of these will be first-time entrants into the job market by way of the 85 new restaurants that we’re opening up this year. So, we’re continuing to see sales increases, primarily because, you know, customers still appreciate the great taste of food, but they really appreciate the incredible service, amenities that we’re offering in our restaurant today.

Honor, dignity, and respect is at an all-time high from a demand standpoint. But the supply is very low. So, any time you get a big gap between demand and supply, and you as a business person can stand in the gap, that represents profit opportunity. And so, we’re expecting to see a very strong year in 2010.

Have you ever considered becoming a public company? And why did you choose not to?

DAN CATHY: Well, we serve the public, but we’ve not gone public in terms of a public offering. Public money is very expensive money. Now to be honest with you, it’s a lot cheaper to borrow money from banks. Bank interest that we’re paying now is about two and a half percent, which is incredibly cheap money to borrow. But if you can finance your growth internally, it’s much safer long-term way to grow the business, because you’re-- in effect, your customers become your venture capitalists. They are the ones that are providing the capital to help you continue to grow. And so if you can discipline your appetite for growth and keep it lock-step with the votes that are coming in form of those Federal reserve notes in the register, it’s a very stable and secure way of being able to grow the business. And it keeps you very accountable, not to Wall Street, not to a bunch of stock analysts, and giving nice reports to them, but it keeps you very accountable to your customers because that’s really the bankers that are helping finance your growth. And that’s one of the reasons I carry a sleeping bag and a pup tent around with me, so I can spend as much time with my bankers, à la customers, as possible.

DAN CATHY: But I just would share with you, we’re going to continue to be closed on Sunday. We’re going to continue to be a privately held business. My brother and sister have signed a covenant of agreement that we’re committed to keeping the main thing the main thing in our business. And while we’ll have Twitter, Facebook, and all kind of things going on to stay relevant with our customers, and spicy chicken sandwich, that we are very committed to the values and the principles that have been the mainstay for this business for 63 years now. So it’ll be my challenge to make sure that we don’t mess up what he got started for us.

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