Why Chick-fil-A's prospects in Canada look bright, despite controversy
However you feel about Chick-fil-A, it has a good chance of succeeding in the Canadian market, according to brand and industry experts.
The U.S. fast-food chicken chain is planning to open 15 stores across Canada over the next five years, and chose Toronto for its first international location. The grand opening last week was met with protests and counter protests over the company’s record of donating millions to anti-LGBTQ organizations and the owner’s past comments opposing same-sex marriage.
But the backlash may not be enough to stop its expansion. It may even have the opposite intended effect.
“The publicity might actually help Chick-fil-A build awareness of its launch more quickly along with curiosity — something that would otherwise take a longer time and more marketing dollars,” Robert Levy, president at brand research and consulting firm BrandSpark International, told BNN Bloomberg in an e-mail.
Further, while the controversy has certainly been polarizing and galvanizing, it’s likely to fizzle out.
“Toronto is one of the most tolerant and diverse cities in the world so the issues that have been raised by protesters are likely to receive a sympathetic ear,” Levy said.
“However, other brands have also faced controversies — including Papa Johns, Martha Stewart and Joe Fresh — and all of these brands have continued to thrive as the controversies simply fade over time, especially with the constant stream of news.”
It’s not just short attention spans at play. Any potential fallout also depends on how relevant the controversy is to the service the company provides and who the brand caters to, according to another brand expert.
“Chick-fil-A is a brand that’s based on people buying things that are delicious and not that expensive,” Mark Satov, brand strategist and founder of Satov Consultants Inc., told BNN Bloomberg in a phone interview. “Chick-fil-A is about cheap, gross chicken. It’s not about whether you’re gay or straight. The value proposition doesn’t hinge on that.”
Satov cited the controversy over Lululemon Athletica Inc. founder Chip Wilson — who in 2013 said “some women’s bodies just actually don’t work for” the company’s yoga pants — as an example of when an executive blunder invited negative attention and forced a change at the company.
“That was pretty fundamental because Lululemon is more of a female brand, or certainly was at the time, and he was disrespecting a very large percentage of the group that shopped there,” Satov said. “So by making those comments, he was actually taking down one of the aspects of the brand and therefore putting it at great risk.”
Wilson stepped down as chairman one month after he made the comments and ultimately resigned from the company in 2015.
Chick-fil-A, for its part, is thriving in its domestic market even in the face of public scrutiny. It’s the third-largest restaurant chain in the U.S. in terms of sales volumes, behind only Starbucks Corp. and McDonald’s Corp., according to analysis from Nation’s Restaurant News.
“It’s unfortunate that there are these issues, but the fundamentals are very strong,” Robert Carter, industry analyst at NPD Group, told BNN Bloomberg in a phone interview.
“At the end of the day, it’s the food and the customer service and the price point, which are three key pillars of almost any restaurant. So they seem to have all that mapped out. So I think once people actually try the restaurant and sample their customer service, they’ll win market share,” Carter added.
But risks for the company remain as it contends with market conditions unique to the Canadian market.
“The biggest threat of the current controversy is that it may weaken Chick-fil-A’s brand appeal vis-à-vis its competition,” Levy said.
“There are some very strong competitors in Canada that Chick-fil-A would not have encountered in the [U.S.], including Canada’s own Harvey’s and Swiss Chalet chains, along with other regional players like White Spot in [Western Canada] and St-Hubert in Quebec, which play in the same, quick service, casual dining space,” Levy said.
“If these chains can develop chicken sandwiches and menu items that can compete with Chick-fil-A, they may have an opportunity to swing customers who would prefer to steer clear of any of the controversies.”