I admit it -- I am a sucker for a clever marketing campaign. And privately held restauranteur Chick-fil-A's gimmick of three cows holding placards reading "Eat Mor Chikin" has kept me chuckling for over a decade. The ads apparently work for other consumers, too, judging from the company's ability to increase sales at an annualized rate of 23.1% over the past three years, according to Hoover's Online.
So, the recent news that mad cow disease had struck in Washington State posed Chick-fil-A with an interesting dilemma. At the time the news broke, Chick-fil-A was in the middle of preparing its latest iteration of the chain's famous tagline. They could have gone ahead with the plan. They could even have accelerated the campaign to take full advantage of consumer fears of eating possibly tainted beef.
But they didn't. Rather, on Friday, this stand-up company announced that they were "withdrawing or delaying" their advertising campaign.
Now at first, when I read the news, I thought to myself "Good for them" and moved right on to reading about Dilbert's latest misfortune. But then I got to thinking -- sure, this is a nice thing to do, not kicking the cattle industry when it's down , but what is the cost to Chick-fil-A?
After all, advertising campaigns are not designed in a day. They take weeks and months of preparation. Contracts are signed. Printers are hired. Bills come due. Putting the brakes on an advertising campaign must incur considerable costs for a company. Presumably, your paper suppliers, your printers, your delivery guys, they all want to be paid according to the terms and timeframe you agreed on months back.
A move like the one Chick-fil-A is making is going to hurt their cash flow, as they have to pay bills for services they requested, while voluntarily delaying receipt of those services and the hoped for sales increases that the services would result in. Fortunately for Chick-fil-A, the company remains private and can therefore act as its conscience dictates, up to the limits that its owners' wallets can finance. This gives the company latitude to, for example, stay true to its founders' principles and keep its stores closed on Sunday. Or to delay an ad campaign so as not to take advantage of its competitors' misfortune.
Rich Smith is a Fool of simple tastes. He is partial to the Chick-fil-A® Chargrilled Chicken Sandwich but has no ownership interest in privately held Chick-fil-A . The Fool has a disclosure policy .
