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Gay Rights: Does Taking a Stand Affect Business?

When a company takes a stand on a hot-button issue like gay rights, does it affect the bottom line?

AP

Fast-food chain Chick-fil-A inadvertently hit the button to find out when President Dan Cathy publicly came out against same-sex marriage.

“Guilty as charged!” Cathy told a Baptist news journal when asked about his company’s financial support of groups that campaign against same-sex marriage. “We are very much supportive of the family — the biblical definition of the family unit.”

The remarks were instantly polarizing.

Pro-gay marriage groups called for a boycott of the chain, and the mayors of Boston and Chicago sent letters to the chain saying that it was not welcome in their cities. The Jim Henson Company, creators of “Sesame Street” and “The Muppets," said it would no longer supply toys or other merchandise to Chick-fil-A. Meanwhile, prominent conservative politicians including Rick Santorum, Sarah Palin and Mike Huckabee came out in support of the chain and what Huckabee called its “Christian principles.”

Some public opposition might have been expected, but when it came to customers, Chick-fil-A’s brand perception among fast-food eaters took a significant hit in most regions of the country following Cathy’s remarks, according to market-research firm YouGov.

In fact, the chain’s overall brand perception among consumers dropped to its lowest level since August 2010 and is now below the average among other fast-food chains, according to the YouGov BrandIndex, which tracks more than 1,100 brands daily.

On the flip side, JCPenney actually got a boost by being associated with gay rights, YouGov said. The retail chain named openly gay comedian Ellen DeGeneres as its spokesperson, a move that sparked protests from the anti-gay marriage group One Million Moms. Every time the group issued a statement complaining about JCPenney's support of the gay community, YouGov's data showed "positive jolts in JCPenney’s consumer perception with mothers."

Adults 18+ Who Have Eaten Fast Food In The Past Month
Adults 18+ Who Have Eaten Fast Food In The Past Month

When Target contributed to a conservative group that is against gay rights, the brand took a beating from the public, YouGov said.

And when a brand's public perception starts to take a hit, it can take a month or more to recover, according to the research firm.

Taking a stand for or against a hot-button issue such as gay rights will not necessarily hurt business, but it means the pool of potential customers is smaller — limited to only those who are not offended by what you say, said Americus Reed, a marketing professor at theWharton Schoolat the University of Pennsylvania.

“Whether you are pro- or anti- on a particular issue, infusing those values is not a necessary ingredient for business success,” Reed said.

What’s more, the gay and lesbian community has an estimated consumer spending power of more than $900 billion, Reed said.

So, from a dollars-and-cents perspective, “Why send messages that may alienate that market?” he said.

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