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Chick-Fil-A Gay Flap A ‘Wakeup Call’ For Companies

Filed by KOSU News in US News.
July 27, 2012

Atlanta-based Chick-fil-A has long stood by its Bible-based roots, keeping stores closed on Sundays and donating millions to Christian causes. But when its president, Dan Cathy, went public to defend his company’s stance against gay marriage, he set off a considerable controversy that has everyone from politicians to puppets weighing in.

First telling the Baptist Press his company supported the “biblical definition of the family unit,” Cathy then told the radio program The Ken Coleman Show, “I pray God’s mercy on our generation that has such a prideful, arrogant attitude to think that we would have the audacity to try to redefine what marriage is all about.”

The backlash spread swiftly. Boston’s mayor pledged to block the chicken sandwich stores from opening in Beantown, a Chicago alderman said he’ll try to stop a franchise from opening in his ward and the Jim Henson Co. cutoff its Chick-fil-A collaboration. Because it’s a private company, it will be difficult to measure the bottom-line impact of all the attention.

Social Media Spread

Americus Reed, a marketing professor at University of Pennsylvania’s Wharton School who studies brand loyalty, says Cathy underestimated what might happen once his comments to a niche religious publication and a syndicated radio show spread to a wider audience. “I think this is part of the wake-up call for companies to understand that social media makes these decisions very, very risky,” Reed said, “because it’s much easier now for these messages to get out to consumers and consumers to virtually organize.”

Support For Gay Rights

But other companies see the risks of going public on controversial issues differently. This year, a handful of big brands have made headlines for taking the opposite side — supporting same-sex rights and benefits.

“From time to time we are going to make a decision that we think is consistent with the heritage and the tradition of the company that perhaps may be inconsistent with one group’s view of the world,” Howard Schultz, Starbucks CEO, said at a shareholder meeting in March.

He explained the coffee giant’s pro-gay positions were about making its employees proud — and aligning with its corporate values.

“Since we made that decision there has not been any dilution whatsoever in our business, and as you can see, shareholder value has increased significantly,” Schultz said, citing revenue growth in the face of efforts like DumpStarbucks.com, led by pro-family organizations.

The lure of dollars from a lesbian, gay, bisexual and transgender market is another likely motivator for taking certain social stands. Marketing firm Witeck-Combs estimated the LGBT market’s buying power at $800 billion last year.

“I think it’s a sign of the times to try and speak to other groups that potentially one has not had a connection with, and that’s just part and parcel with trying to grow your market,” Reed said.

But beyond the big bucks, corporate reputation specialist Sekou Bermiss says companies may be motivated to contribute to community good.

“More and more, you see firms that are trying to or feel obliged to certain issues in society, [to] do some greater good in society,” Bermiss said.

Boycotts And Bottom Lines

Starbucks, Target and General Mills all stepped into the same-sex marriage issue by supporting gay marriage legislation in their home states. Each face ongoing boycotts led by the American Family Association and the National Organization for Marriage for doing so. The National Organization for Marriage said it’s uncertain whether its boycotts are having an impact on businesses.

And after JC Penney hired Ellen DeGeneres as its spokesperson, the socially conservative group One Million Moms called for her firing.

“They wanted to get me fired and I’m proud and happy to say that JC Penney stuck by their decision to make me their spokesperson,” DeGeneres said on her show. The retailer also started running Mother’s Day and Father’s Day ads featuring same-sex couples.

But Reed says companies that make a social argument for business gain should be prepared to change course if an outcry leads to longer term losses.

“Most brands are keeping their heads down because these are very controversial sorts of strategies. And it probably makes sense — good business sense — to not weigh in on these issues,” Reed said.

That’s a lesson Chick-fil-A seems to be learning quickly.

It declined requests for an interview, but in a statement said, “Going forward, our intent is to leave the policy debate to the political arena.” [Copyright 2012 National Public Radio]

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