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Updated: 9:27 a.m. Friday, Nov. 8, 2013 | Posted: 1:10 p.m. Thursday, Nov. 7, 2013

Truett Cathy steps down as CEO of Chick-fil-A

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By Christopher Seward and Leon Stafford

The Atlanta Journal-Constitution

More than 50 years after creating a boneless chicken sandwich that would one day feed millions, Truett Cathy, the small-town Georgia cook and entrepreneur who created a multi-billion-dollar restaurant chain, is calling it quits.

The long-time head and face of Chick-fil-A, who is almost as well known as the spelling-challenged bovine mascots that helped put the company on the map, is stepping aside as chairman and chief executive officer.

Cathy’s empire started with a small Hapeville diner. Along the way, he revolutionized the fast-food industry by setting a higher service level based on Biblical principles,and he re-energized a college bowl game held annually in Atlanta.

He also earned a fortune: His net worth is about $6 billion, according to a September 2013 listing of Forbes 400 Richest Americans.

Cathy did it all by staying true to one of his core beliefs: closing stores on Sunday to keep the Sabbath holy. That left billions of dollars in sales on the table, experts have said.

“He is truly a giant in the world today,” said Spurgeon Richardson, former president of the Atlanta Convention and Visitors Bureau, adding Cathy’s philanthropic activities to his list of accomplishments. “Truett Cathy is one of the guys that I admire most.”

Chick-fil-A employees were notified Wednesday that Cathy, 92, was stepping down and would be replaced by his son, Dan Cathy, the company’s chief operating officer and president. The company emphasized that the transition is a result of a long-planned succession and that Truett Cathy’s health is good.

Truett Cathy will become chairman emeritus and focus on Truett’s Luau, his newest restaurant concept, which opens in Fayetteville next month.

The news of Truett Cathy’s retirement Thursday, a story that was first reported by The Atlanta Journal-Constitution, was greeted with praise for his business acumen and the company’s commitment to its founding Christian principles, from community leaders to Chick-fil-A patrons, who have made the chain a part of their dining routine for decades.

“I used to come here when it was a little old house” back in the 1960s, said James Prescott, 81, as he ate at the Dwarf House, the original Chick-fil-A restaurant, in Hapeville on Thursday.

Prescott said in those years, “you could get the steak plate for $1.10.”

Prescott’s wife, Linda, said, “To start out in a little place like that (Dwarf House) and to have what you have now, that’s great. It says a lot about who (Truett Cathy) is.”

Ken Bernhardt, a marketing professor at Georgia State University, who has advised the company for years, said, “With Truett turning over the reins to Dan while he’s still alive, he will continue to be a mentor and a sounding board to Dan. All in all, it makes a lot of sense to do it at this point. As the founder and builder of the company, Truett had to be the one to decide the time was right.”

While the company generally receives positive reviews, there have been missteps during its history. Its expansion overseas in the 1990s into South Africa failed and it has been the subject of lawsuits alleging that it discriminates against pregnant women and non-Christians seeking to be franchisees.

Most recently, Dan Cathy’s comments in 2012 and again this year declaring his opposition to gay marriage touched off a firestorm that forced the company to spend months trying to separate his opinions from the company’s employment and business practices. The brouhaha came at a time when the chain, which has blanketed the south and west, has been trying to move into northern and Midwestern cities such as Chicago and Boston.

Anthony Martinez, executive director for gay equality group The Civil Rights Agenda, said Dan Cathy’s perspective on gay and lesbian rights can be bad for business.

“No matter what his personal views may be, he need to get with the times,” Martinez said, pointing out that Illinois is on the verge of being the 15th state to allow same sex unions.

For Truett Cathy, the focus has always been on the business.

S. Truett Cathy (the S is for Samuel) has always had a penchant for making money, an entrepreneurial spirit nurtured during the family’s financial struggles in Atlanta in the early 1920s.

As an 8-year-old, he opened a Coca-Cola stand in his front yard in 1929 to help his father, a struggling insurance salesman, and his mother, who took on boarders, make ends meet. When the family moved to Atlanta’s Techwood Homes, the country’s first federally funded housing project, in 1935, Truett delivered The Atlanta Journal to continue helping the family financially.

According to a Chick-fil-A biography, Cathy developed his knack for customer service while delivering papers to Techwood residents.

Within a decade, he and brother Ben would open their first restaurant, The Dwarf Grill, in 1946. The decor was inspired by the Seven Dwarfs and the menu featured Hot Brown, a kind of chicken potpie, Southern-style vegetables and burgers. Their first-day sales totaled $58.20.

Several years later, a second Dwarf House, the new name for the budding restaurant chain, opened in Forest Park, followed by another in south Atlanta.

The watershed moment for Cathy, however, came years later in 1961, when he invented his signature boneless breast of chicken sandwich, calling it a “Chick-fil-A.” The “A” represents “top quality” for a chicken fillet, the company said.

The company said it took Cathy four years to perfect the fillet recipe. A spokesman once told the AJC that Cathy tried licensing the recipe to other companies and food service vendors but stopped after worrying about the quality.

Cathy trademarked the Chick-fil-A name in 1963 and the first of many in-mall restaurants bearing the new company name opened in Atlanta’s Greenbriar Mall in 1967.

It wasn’t until 1986 that the first free-standing Chick-fil-A restaurant opened, on North Druid Hills Road in Atlanta. The company began a marketing campaign using cows to sell chicken in 1995, along with its familiar “Eat Mor Chikin” slogan.

By 2001, the 8-year-old who had sold Cokes and delivered newspapers to help his family put food on the table was feeding millions with 1,000 Chick-fil-A locations that were bringing in sales that exceeded $1.2 billion. Last year, sales exceeded $4.6 billion. As of March of this year, there are more than 1, 700 Chick-fil-A restaurants in 39 states and Washington, D.C.

The company said its success can be traced to its customer service, which stresses listening to customers, focusing on getting better before trying to get bigger and emphasizing quality.

Much of the success, however, also is tied to the company’s relationship with its thousands of franchisees, or “operators,” as the company calls them. The operators pay just $5,000 up front and split profits 50-50 with the company.

During a 2009 appearance with his son, Dan, before the National Press Club in Washington, D.C., Truett Cathy described store operators typically as “family men” with track records of responsibility and good decision-making.

“We’re seeking people with character rather than experience, ” Cathy said. “If you can’t manage your own life, how do you expect to manage a business?”

A connection to family and development of character are two hallmarks that continue to guide Cathy and his company. The Sunday school teacher’s restaurants still close on Sundays and has no plans to change the tradition.

“I’d like to be remembered as one who kept my priorities in the right order,” Cathy says on his website. “We live in a changing world, but we need to be reminded that the important things have not changed, and the important things will not change if we keep our priorities in proper order.”

His work ethic and outlook on life are reflected in the titles of books he’s written or co-written, including “It’s Easier to Succeed Than to Fail” (1989); “Eat Mor Chikin Inspire More People” (2002); and “It’s Better to Build Boys Than Mend Men” (2004).

Cathy routinely lands on Forbes’ annual list of the world’s billionaires, coming in at No. 308 on this year’s list at $4.2 billion. He has awarded millions of dollars for philanthropic and educational causes.

Cathy created the WinShape Foundation in 1984 to “shape winners” out of young people. The foundation funds foster care homes, and camps and retreats for families. He and his wife, Jeannette, have taken in more than 150 foster children over the years.

The company also awarded $1.65 million in scholarships last year to qualifying employees, and $30 million since 1973. The company provides $4,000 scholarships to students at Berry College in Floyd County.

In “Eat Mor Chikin”, Cathy writes: “Nearly every moment of every day we have the opportunity to give something to someone else - our time, our love, our resources. I have always found more joy in giving when I did not expect anything in return.”

Truett often shows up to industry gatherings, pulling in crowds who want to hear his often homespun words of wisdom.

Said Don Sniegowski, editor of franchise news site Blue MauMau: “Truett is really a pretty amazing individual. You look at what he has accomplished in his life. His commitment to his beliefs and religion really stands out. It’s a quieter belief.”

Staff writers Arielle Kass and Kelly Yamanouchi contributed to this story.


COMING SUNDAY

What the future holds for Chick-fil-A and its new CEO with founder Truett Cathy stepping down.

Truett Cathy

The founder, chairman and chief executive officer of Chick-fil-A has stepped down.

Age: 92

Childhood: Atlanta native

Restaurants: First opened the Dwarf Grill (later renamed Dwarf House), in 1946 with brother Ben. First day’s sales $58.20.

Opened the first Chick-fil-A in Greenbriar Mall in 1967. First free-standing location opens in 1986 on North Druid Hills Road in Atlanta. Today, there are more than 1, 700 Chick-fil-A restaurants in 39 states and Washington, D.C. Sales exceeded $4.6 billion last year.

Philanthropy: Created WinShape Foundation in 1984; company also provides millions in scholarships to Chick-fil-A employees and Berry College students.

Family: Wife, Jeannette; two sons, Dan and Don, both top Chick-fil-A executives; daughter, Trudy Cathy White.

Source: Staff research

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