Consider how politics informed corporate decision-making at Chick-fil-A.
The company began with a single location in Georgia in 1946, and most of its early growth was in its home and neighboring states. It should come as no surprise that a company that openly espoused religious precepts would find no difficulties expanding in its own backyard in the Bible Belt.
By 2006, sales had topped $2 billion. But the company also had a major obstacle, largely of its own making. In 2012, Dan Cathy, son of the company’s legendary founder, Truett Cathy, told a Baptist newspaper that he and his company “operate on biblical principles” and “are very much supportive of the family — the biblical definition of the family unit.” That led to some controversy, and a closer look at the company’s charitable donations. As it turned out, some of the recipients of those company donations were anti-LGBTQ groups. Protests erupted.
But if you want to be a national brand, you have to sell wherever people are, including the coasts and the cities, areas that tend to be much less conservative and religious. The company’s chief executive officer had two options: either tone down the controversial public political commentary, or scale back the company’s expansion goals. He decided on the former.
In 2015, the first Chick-fil-A opened in New York, to modest protests and long lines. There are now more than 2,100 restaurants across the country, and the fast-food restaurant outfit has gone on to surpass KFC as the nation’s largest chicken chain.
There is a message here for corporate executives: They must consider who their customers are now, and who they might be in the future. I do not believe this reflects the rise of what some have taken to calling woke capital, but rather, pragmatic business decisions made by people whose bottom line is, well, the bottom line. Expansion plans, revenue targets and profits appear to drive a lot of these decisions.
Although there are risks when executives choose sides in any national political debate, most CEOs are smart enough not to alienate customers or potential customers. But opportunities exist for companies to become more aligned with the broad public opinion on rapidly changing social issues.
There are, of course, risks for those corporate managers who misread the way the political winds are blowing. Recall Papa John’s break with the NFL: On the very next day, Pizza Hut became the NFL’s official pizza sponsor.
Investing and politics clearly don't mix, as I keep telling readers. There is no such rule of thumb for business and politics. Companies can take political stands; the results can yield benefits or prove costly. Either way, we’re likely to see more of it in the future. How it plays out depend on whether the decision expands the base of future customers without alienating those who are content with the status quo.
This column was provided by Bloomberg News.