Wendy’s International, Inc.

views updated May 21 2018

Wendy’s International, Inc.

4288 West Dublin-Granville Rd.
Dublin, Ohio 43107-0256
U.S.A.
(614) 764-3100
Fax: (614) 764-6894

Public Company
Incorporated: 1975
Employees: 42,000
Sales: $3.61 billion
Stock Exchanges: Boston Midwest New York Pittsburgh
SICs: 6794 Patent Owners & Lessors; 5812 Eating Places

Wendy’s International, Inc. is one of the top three restaurant chains in the world. The chain has been touted as America’s favorite hamburger place for 14 years by Restaurants & Institution’s “Choice in Chains” annual consumer survey. Wendy’s hallmark square hamburgers and homey atmosphere were introduced in Columbus, Ohio, in 1969, and the company has enjoyed phenomenal growth in the quarter-century since that time.

The restaurant was created by R. David Thomas, an adoptee who has credited part of his success to his challenging youth. Thomas was born during the depths of the Great Depression in Atlantic City, New Jersey. His early life was punctuated by tragedy. Abandoned at birth, he was adopted by a Michigan couple, Rex and Auleva Thomas. Auleva died when David was five years old, and his father was forced to move from state to state seeking work as a handyman. Rex remarried three times and moved his family ten times over the next eight years.

David himself entered the world of work at the age of 12 delivering groceries in Knoxville, Tennessee. He lied about his age to circumvent child labor laws, and worked 12-hour shifts to keep his job.

Thomas’ adulthood began early. When he was 15, his family moved to Fort Wayne, Indiana, and he started work as a busboy at a local restaurant, the Hobby House. When his family announced another move, Thomas elected to set out on his own, taking a room at the local YMCA. As his work began to demand more time than his education, Thomas gave up on the latter, leaving school after the tenth grade and later enlisting in the army. Trained as a cook in the military, he returned to a job behind the grill of the Hobby House, where he met Lorraine, a waitress—and his future wife.

Thomas entered the restaurant business in earnest in 1956 in partnership with Phil Clauss. Just a few years later, Thomas and Clauss met Colonel Harland Sanders, who offered them Kentucky Fried Chicken (KFC) franchises. Clauss purchased one for Fort Wayne, and the pair broke into the chicken business.

By 1962 Clauss was deep into KFC—he owned four unprofitable franchises in Columbus, Ohio, and needed someone to turn them around. If Thomas could turn the stores’ $200,000 deficit into a profit, Clauss promised him a 45 percent share of the Columbus franchises. Against the advice of Colonel Sanders, who had become a mentor, Thomas took the challenge. He cut the menu from 100 items down to just a few—Thomas urged the Colonel to concentrate on chicken alone—improved the chicken “bucket,” bartered radio advertising with buckets of chicken, invented KFC’s spinning bucket sign, and built four additional locations in less than six years. His earnest, imaginative work paid off—Thomas was promoted to regional operations director of KFC and sold his stake in the Columbus restaurants for $1.5 million in 1968, thereby reaching millionaire status by the age of 35.

Thomas parlayed his windfall into a new venture named after his eight-year-old daughter Melinda Lou, or Wendy, as her brothers and sisters nicknamed her. The first restaurant was located on Broad Street in downtown Columbus, Ohio. Its menu featured made-to-order hamburgers, “secret recipe” chili, french fries, soft drinks and the Frosty frozen dessert. Thomas kept the menu simple to save labor costs, remembering his KFC experience. The Wendy’s Old Fashioned Hamburgers decor differed from other fast food joints that abounded with easyclean vinyl and tiled surfaces. Instead, Thomas put in tiffany-style lamps, bentwood chairs, carpeting, and tabletops embellished with vintage newspaper advertisements. Although his ideas were refreshingly original, some industry experts criticized Thomas’ use of expensive fresh beef and noted that the fast food industry seemed overcrowded. With all the criticism, Thomas hoped only for a local chain that would provide his children with summer jobs.

Against all predictions, the business took off immediately. Thomas opened a second location just one year later, and began franchising his idea in 1972. Wendy’s soon enlisted franchisees at the rate of ten per month. Thomas added a new wrinkle to the franchising concept, giving geographic licenses, rather than single-store rights. Wendy’s also commenced its first advertising campaign that year with locally broadcast “C’mon to Wendy’s” spots. The 30-second, animated ads stressed Wendy’s superiority through the “Quality is Our Recipe” slogan and featured a red-haired, pig-tailed “Wendy” with dancing hamburgers.

The 1970s heralded phenomenal, and somewhat reckless, growth at Wendy’s. By the end of 1974 the chain’s net income topped $1 million, and total sales reached almost $25 million. In mid-1975 the business celebrated the opening of its 100th restaurant, and that fall Wendy’s opened its first international restaurant, located in Canada. Wendy’s went public in 1976 with an offering of one million common shares valued at $28 per share. By the end of the year, shareholders understood that their money fueled growth—Wendy’s opened its 500th shop.

The chain’s rapid expansion was supported by Wendy’s first national advertising campaign in 1977. The effort earned Wendy’s another entry in the history books—it became the first chain with less than 1000 restaurants to launch network television commercials.“Hot ‘n Juicy” ran for three years and won a Clio Award for creativity, setting the pace for future Wendy’s advertising.

Before the decade’s end, the restaurant chain set even more records. In 1978, the 1000th Wendy’s opened in Springfield, Tennessee, not far from the site of Thomas’ first job. By the next year the number of shops had increased by half, and the first European Wendy’s opened in Munich, West Germany. In November of 1979 Wendy’s celebrated its tenth birthday with many “firsts” to flaunt. Wendy’s was the first in its industry to surpass $1 billion in annual sales within its initial ten years, in addition to reaching the 1,000th restaurant opening faster than any of its competitors. It boasted 1,767 sites in the United States, Canada, Puerto Rico, and Europe, and had opened more than 750 restaurants from February 1978 to November 1979, averaging nearly one and one-half each day.

In the early 1980s, growth slowed slightly from that hectic pace, but Wendy’s was distinguished from its competitors through celebrated advertising and winning menu additions. “Wendy’s Has the Taste,” the first ad of the decade, depicted customers and employees singing a catchy jingle. The ad emphasized Wendy’s new chicken sandwich and all-you-can-eat salad bar. The chain had introduced its “Garden Spot” in 1979 over Thomas’s protestations, becoming the first national restaurant chain to offer salad bars nationwide.

Founder Dave Thomas made his first appearance as Wendy’s spokesperson in 1981 in a controversial ad titled, “Ain’t No Reason (to go anyplace else).” Customers’ use of the idiomatic double negative “ain’t no” in the ads generated national attention for the chain, though not all of it favorable. Thomas left his position as chief executive in 1982, taking the title of senior chairman. After working for more than 30 years, Thomas felt that he had earned a break, and was confident that he had hired capable managers to carry on his work.

A recession in the early 1980s, combined with high beef prices and Wendy’s explosive—as well as threatening—growth incited the “burger wars.” Wendy’s moved into the number three spot behind McDonald’s and Burger King Corp., fueled by its introduction of a chainwide salad bar, chicken breast sandwiches, and baked potatoes. Burger King and McDonald’s responded with unsuccessful menu extensions of their own, then moved to a hard-nosed ad campaign. Burger King fired the first shot, but Wendy’s responded with a string of hard-hitting, well-known commercials.

In 1983 Wendy’s depicted victims of other hamburger restaurants with “Step Aside,” “Park It,” and “Frozen Stiff.” The ads humorously bemoaned the long waits endured in indoor and drive-up lines for frozen hamburger patties. In 1984 Wendy’s agency, Dancer Fitzgerald Sample, teamed up with celebrated commercial director Joe Sedelmaier on a campaign that registered the highest consumer awareness levels in the advertising industry’s history, in addition to captivating judges at the 1984 Clio Awards and winning three of the industry’s highest honors. “Where’s the Beef?” consisted of four network television spots starring senior citizen Clara Peller. It was voted the most popular commercial in America in 1984. One of the ads, “Parts is Parts,” pointed out the difference between the competition’s pressed chicken patties and Wendy’s chicken breast filet sandwiches.

“Parts” focused on Wendy’s true money-makers at that point—hamburger sales actually only comprised 40 percent of the chain’s revenues. Much of Wendy’s sales growth could be credited to such menu extensions as the grilled chicken sandwich, Garden Spot, and stuffed baked potatoes. These new products and the phenomenal success of the “Where’s the Beef?” campaign catapulted Wendy’s to a record $76.2 million earnings in 1985.

As one unnamed Wendy’s executive confessed in Barron’ s, the management started to believe that everything they touched would “turn to gold.” Unfortunately, 1985 marked a summit from which Wendy’s quickly plummeted. In 1986 the chain introduced sit-down breakfasts featuring omelettes and French toast. The new breakfasts involved a huge investment of capital and labor, and could not be served quickly enough to fit in with the fast food format. At the same time, McDonald’s, Burger King, and Hardee’s assaulted Wendy’s on the hamburger front.

A kind of domino effect plunged the company toward a $4.9 million loss in 1986. Some of the chain’s original franchisees sold their stores to new owners who flouted Wendy’s high standards. Others became absentee managers, leaving the day-to-day supervision to employees. As the chain’s standards of cleanliness, quality, and service slipped, sales dropped. In response to the falling income, store labor was cut, while the morale of those left plunged, and turnover rates began to explode. By the end of the year, 20 percent of Wendy’s restaurants were nearing failure, and franchisees presented the chain’s management a vote of no confidence.

The desperate situation brought Dave Thomas out of semi-retirement, and challenged one of Wendy’s most successful franchisees to revive the failing business. James W. Near had been one of Dave Thomas’s competitors in the late 1960s when they both operated restaurants in Columbus. Practically raised in his father’s White Castle hamburger chain, Near built a 50-unit Burger Boy Food-A-Rama chain of his own by the end of the decade. Near had become a Wendy’s franchisee in 1974, opening 39 successful restaurants in West Virginia and Florida within four years. In 1978, he sold the restaurants back to Wendy’s and established Sisters Chicken & Biscuits as an expansion vehicle for the hamburger chain. Sisters became a subsidiary of Wendy’s in 1981 and was sold to its largest franchise owner in 1987.

James Near agreed to take the position of president and chief operating officer on the condition that Dave Thomas would sustain an active role in the company as a spokesman and traveling mentor. Thomas agreed—his new business card read, “Founder and Jim’s Right Hand Man.” Near’s turnaround strategy started with an internal reorganization. Weak stores were eliminated and a new building design lowered the initial franchise investment. Near cut 700 administrative positions and revamped field operations. New programs gave the remaining employees a vested interest in the chain’s success—base pay, benefits, and bonuses were raised; an employee stock option called “We Share” made workers shareholders; and standardized training gave all employees a new perspective on their jobs. By 1991, turnover rates had decreased sharply.

With renewed chainwide standards for cleanliness and customer service, Near turned his attention to the menu. Changes were based on several industry trends, including discount pricing, consumer health concerns, and premium menu items. Spurred by the recession of the late 1980s and early 1990s, many fast food chains established discount pricing to appeal to more frugal customers. Wendy’s introduced its Super Value Menu in 1989. The daily feature includes seven 99-cent items, allowing it to appeal to thrifty consumers without issuing profit-eating coupons. An expanded salad bar and skinless chicken breast sandwich catered to more health conscious consumers, while the Big Classic, Dave’s Deluxe, and Chicken Cordon Bleu specialty sandwiches appealed to Wendy’s traditional hearty eaters.

As Near worked to cover all of the menu bases, Dave Thomas returned to the television studio for the promotional push. In 1989 Thomas reappeared in commercials offering customers a special moneyback guarantee if they didn’t concur that Wendy’s had the best-tasting hamburgers in the industry. The ad was supported by one of the largest testimonial advertising campaigns in television history. Local residents in about 100 U.S. markets pronounced Wendy’s burgers best.

“Old Fashioned Guy,” the next series of TV spots, featured Thomas declaring, “Our hamburgers are the best in the business, or I wouldn’t have named the place after my daughter.” The hamburgers might have been the best, but Thomas’ performances earned poor ratings from the experts at Advertising Age, who said he looked like “a steer in a half-sleeved shirt.” Thomas himself admitted that he wasn’t an ideal subject—he joked that it took two hours to get the expression “muchas gracias” right for one commercial. Unlike the critics, however, consumers gave Thomas an enthusiastic reception—his promotions have earned Wendy’s highest advertising awareness figures since “Where’s the Beef?” and have been credited with boosting the chain’s turnaround. They have even earned him the designation, “the Colonel Sanders of Wendy’s,” in reference to the promotional efforts of Thomas’ early mentor.

The success of Wendy’s revitalization has shown in sales, rejuvenated expansion, and widespread recognition of the accomplishment. Although the chain has not yet achieved the profits it reaped in 1985, sales and earnings increased steadily in the early 1990s to $3.61 billion and $64.7 million respectively for 1992. Despite a lingering recession, Wendy’s had outperformed the industry with 24 consecutive months of same-store sales gains. Plans for the future targeted international growth, where opportunities for expansion were infinitely better than those in the saturated American market. The company opened its 4,000th restaurant in 1992, and projected another 1,000 openings by mid-decade.

Near and Thomas have accumulated numerous awards in recognition of the dramatic turnaround at Wendy’s. In 1989, Near was given the title of chief executive officer at Wendy’s, and he was named chairman and CEO two years later. Near was honored by his colleagues in the restaurant industry when he was named Operator of the Year by Nation’s Restaurant News and Executive of the Year by Restaurants & Institutions. Restaurant Business acknowledged both men’s entrepreneurial efforts with its annual Leadership Awards. Thomas also received the Horatio Alger Award, named for the author who popularized the concept of the “self-made man.”

Thomas’ national celebrity has given him an avenue for the promotion of his favorite cause, adoption. The circumstances of his youth inspired him to create the Dave Thomas Foundation for Adoption in 1992 and made him a natural spokesperson for President George Bush’s national initiative, “Adoption Works … For Everyone.” Thomas published his autobiography, Dave’s Way, in 1991, and pledged all proceeds from its sale to national adoption awareness programs.

As Wendy’s “ambassador,” Thomas spends most of his time traveling to book promotions, public appearances, and franchises. His promotional work complemented Near’s continuing efforts to “grow the company.” A new corporate theme,“Do It Right! Performance Pays!” related customer-responsiveness to sales and profits for worker-shareholders. Wendy’s goals for the future focus on maintaining the momentum the company has generated in the early 1990s with an emphasis on street-level operations, marketing, and efficient administration.

Principal Subsidiaries

Wendy’s Restaurants of Canada, Inc. (Canada); The New Bakery Co. of Ohio, Inc.

Wendy’s International, Inc.

views updated Jun 27 2018

Wendy’s International, Inc.

4288 West Dublin-Granville Road
Dublin, Ohio 43107-0256
U.S.A.
(614) 764-3100
Fax: (614) 764-6894
Web site: http://www.wendys.com

Public Company
Incorporated: 1975
Employees: 42,000
Sales: $1.9 billion (1996)
Stock Exchanges: Boston Midwest New York Pittsburgh
SICs: 6794 Patent Owners & Lessors; 5812 Eating Places

With $1.9 billion in sales and 5,100 restaurants worldwide, Wendy’s International, Inc., is one of the top three restaurant chains in the world. Wendy’s hallmark square hamburgers and homey atmosphere were introduced in Columbus, Ohio, in 1969, and the company has enjoyed phenomenal growth in the three decades since that time.

Dave Thomas Enters the Restaurant Business

The restaurant was created by R. David Thomas, who has credited part of his success to his challenging youth. Thomas was born during the depths of the Great Depression in Atlantic City, New Jersey. His early life was punctuated by tragedy. Abandoned at birth, he was adopted by a Michigan couple, Rex and Auleva Thomas. Auleva died when David was five years old, and his father was forced to move from state to state seeking work as a handyman. Rex remarried three times and moved his family ten times over the next eight years.

David himself entered the world of work at the age of 12, delivering groceries in Knoxville, Tennessee. He lied about his age to circumvent child labor laws, and worked 12-hour shifts to keep his job. Thomas’ adulthood began early. When he was 15, his family moved to Fort Wayne, Indiana, and he started work as a busboy at a local restaurant, the Hobby House. When his family announced another move, Thomas elected to set out on his own, taking a room at the local YMCA. As his work began to demand more time than his education, Thomas gave up on the latter, leaving school after the tenth grade and later enlisting in the army. Trained as a cook in the military, he returned to a job behind the grill of the Hobby House, where he met Lorraine, a waitress—and his future wife.

Thomas entered the restaurant business in earnest in 1956 in partnership with Phil Clauss. Just a few years later, Thomas and Clauss met Colonel Harland Sanders, who offered them Kentucky Fried Chicken (KFC) franchises. Clauss purchased one for Fort Wayne, and the pair broke into the chicken business.

By 1962 Clauss was deep into KFC—he owned four unprofitable franchises in Columbus, Ohio, and needed someone to turn them around. If Thomas could turn the stores’ $200,000 deficit into a profit, Clauss promised him a 45 percent share of the Columbus franchises. Against the advice of Colonel Sanders, who had become a mentor, Thomas took the challenge. He cut the menu from 100 items down to just a few—Thomas urged the Colonel to concentrate on chicken alone—improved the chicken “bucket,” bartered radio advertising with buckets of chicken, invented KFC’s spinning bucket sign, and built four additional locations in less than six years. His earnest, imaginative work paid off; Thomas was promoted to regional operations director of KFC and sold his stake in the Columbus restaurants for $1.5 million in 1968, thereby reaching millionaire status by the age of 35.

Wendy’s is Born in the 1970s

Thomas parlayed his windfall into a new venture named after his eight-year-old daughter Melinda Lou, or Wendy, as her brothers and sisters nicknamed her. The first restaurant was located on Broad Street in downtown Columbus, Ohio. Its menu featured made-to-order hamburgers, “secret recipe” chili, french fries, soft drinks, and the Frosty frozen dessert. Thomas kept the menu simple to save labor costs, remembering his KFC experience. The Wendy’s Old Fashioned Hamburgers decor differed from other fast food joints that abounded with easy-clean vinyl and tiled surfaces. Instead, Thomas put in tiffanystyle lamps, bentwood chairs, carpeting, and tabletops embellished with vintage newspaper advertisements. Although his ideas were refreshingly original, some industry experts criticized Thomas’ use of expensive fresh beef and noted that the fast food industry seemed overcrowded. With all the criticism, Thomas hoped only for a local chain that would provide his children with summer jobs.

Against all predictions, the business took off immediately. Thomas opened a second location just one year later and began franchising his idea in 1972. Wendy’s soon enlisted franchisees at the rate of ten per month. Thomas added a new wrinkle to the franchising concept, giving geographic licenses, rather than single-store rights. Wendy’s also commenced its first advertising campaign that year with locally broadcast “C’mon to Wendy’s” spots. The 30-second, animated ads stressed Wendy’s superiority through the “Quality Is Our Recipe” slogan and featured a red-haired, pig-tailed “Wendy” with dancing hamburgers.

The 1970s heralded phenomenal, and somewhat reckless, growth at Wendy’s. By the end of 1974 the chain’s net income topped $1 million, and total sales reached almost $25 million. In mid-1975 the business celebrated the opening of its 100th restaurant, and that fall Wendy’s opened its first international restaurant, located in Canada. Wendy’s went public in 1976 with an offering of one million common shares valued at $28 per share. By the end of the year, shareholders understood that their money fueled growth; Wendy’s opened its 500th shop.

The chain’s rapid expansion was supported by Wendy’s first national advertising campaign in 1977. The effort earned Wendy’s another entry in the history books: it became the first chain with less than 1,000 restaurants to launch network television commercials. The “Hot ’n Juicy” campaign ran for three years and won a Clio Award for creativity, setting the pace for future Wendy’s advertising.

Before the decade’s end, the restaurant chain set even more records. In 1978, the 1,000th Wendy’s opened, in Springfield, Tennessee, not far from the site of Thomas’ first job. By the next year the number of shops had increased by half, and the first European Wendy’s opened in Munich, West Germany. In November 1979 Wendy’s celebrated its tenth birthday with many “firsts” to flaunt. Wendy’s was the first in its industry to surpass $1 billion in annual sales within its initial ten years, in addition to reaching the 1,000th restaurant opening faster than any of its competitors. It boasted 1,767 sites in the United States, Canada, Puerto Rico, and Europe, and had opened more than 750 restaurants from February 1978 to November 1979, averaging nearly 1.5 each day.

In the early 1980s, growth slowed slightly from that hectic pace, but Wendy’s was distinguished from its competitors through celebrated advertising and winning menu additions. “Wendy’s Has the Taste,” the first ad of the decade, depicted customers and employees singing a catchy jingle. The ad emphasized Wendy’s new chicken sandwich and all-you-can-eat salad bar. The chain had introduced its “Garden Spot” in 1979 over Thomas’s protestations, becoming the first national restaurant chain to offer salad bars nationwide.

Founder Dave Thomas made his first appearance as Wendy’s spokesperson in 1981 in a controversial ad titled, “Ain’t No Reason (to go anyplace else).” Customers’ use of the idiomatic double negative “ain’t no” in the ads generated national attention for the chain, though not all of it favorable. Thomas left his position as CEO in 1982, taking the title of senior chairman. After working for more than 30 years, Thomas felt that he had earned a break, and was confident that he had hired capable managers to carry on his work.

Mixed Results in the 1980s

A recession in the early 1980s, combined with high beef prices and Wendy’s explosive—as well as threatening—growth incited the “burger wars.” Wendy’s moved into the number three spot behind McDonald’s and Burger King Corp., fueled by its introduction of a chainwide salad bar, chicken breast sandwiches, and baked potatoes. Burger King and McDonald’s responded with moderately successful menu extensions of their own, then moved to a hard-nosed ad campaign. Burger King fired the first shot, but Wendy’s responded with a string of hard-hitting, well-known commercials.

In 1983 Wendy’s ads depicted “victims” of other hamburger restaurants, humorously bemoaning the long waits endured in indoor and drive-up lines for frozen hamburger patties. In 1984 Wendy’s agency, Dancer Fitzgerald Sample, teamed up with celebrated commercial director Joe Sedelmaier on a campaign that registered the highest consumer awareness levels in the advertising industry’s history, in addition to captivating judges at the 1984 Clio Awards and winning three of the industry’s highest honors. Moreover, the “Where’s the Beef?” campaign consisted of four network television spots starring senior citizen Clara Peller. It was voted the most popular commercial in America in 1984. One of the ads, “Parts Is Parts,” pointed out the difference between the competition’s pressed chicken patties and Wendy’s chicken breast filet sandwiches.

“Parts” focused on Wendy’s true money-makers at that point; hamburger sales actually only accounted for 40 percent of the chain’s revenues. Much of Wendy’s sales growth could be credited to such menu extensions as the grilled chicken sandwich, Garden Spot salad bar, and stuffed baked potatoes. These new products and the phenomenal success of the “Where’s the Beef?” campaign catapulted Wendy’s to a record $76.2 million earnings in 1985.

As one unnamed Wendy’s executive confessed in Barron’s, management started to believe that everything they touched would “turn to gold.” Unfortunately, 1985 marked a summit from which Wendy’s quickly plummeted. In 1986 the chain introduced sit-down breakfasts featuring omelettes and French toast. The new breakfasts involved a huge investment of capital and labor, and could not be served quickly enough to fit in with the fast food format. At the same time, McDonald’s, Burger King, and Hardee’s assaulted Wendy’s on the hamburger front.

A kind of domino effect plunged the company toward a $4.9 million loss in 1986. Some of the chain’s original franchisees sold their stores to new owners who flouted Wendy’s high standards. Others became absentee managers, leaving the day-to-day supervision to employees. As standards of cleanliness, quality, and service slipped at some Wendy’s locations, sales dropped. In response to the falling income, store labor was cut, the morale of those who remained plunged, and turnover rates began to explode. By the end of the year, 20 percent of Wendy’s restaurants were nearing failure, and franchisees presented the chain’s management a vote of no confidence.

The desperate situation brought Dave Thomas out of semi-retirement and challenged one of Wendy’s most successful franchisees to revive the failing business. James W. Near had been one of Dave Thomas’s competitors in the late 1960s when they both operated restaurants in Columbus. Practically raised in his father’s White Castle hamburger chain, Near built a 50-unit Burger Boy Food-A-Rama chain of his own by the end of the decade. Near had become a Wendy’s franchisee in 1974, opening 39 successful restaurants in West Virginia and Florida within four years. In 1978, he sold the restaurants back to Wendy’s and established Sisters Chicken & Biscuits as an expansion vehicle for the hamburger chain. Sisters became a subsidiary of Wendy’s in 1981 and was sold to its largest franchise owner in 1987.

New Leadership Rejuvenates Wendy’s in the Late 1980s

James Near agreed to take the position of president and chief operating officer on the condition that Dave Thomas would sustain an active role in the company as a spokesman and traveling mentor. Thomas agreed. His new business card read “Founder and Jim’s Right Hand Man.” Near’s turnaround strategy started with an internal reorganization. Weak stores were eliminated and a new building design lowered the initial franchise investment. Near fired four top managers, cut 700 administrative positions, and revamped field operations. New programs gave the remaining employees a vested interest in the chain’s success: base pay, benefits, and bonuses were raised; an employee stock option called “We Share” made workers shareholders; and standardized training gave all employees a new perspective on their jobs. When Near took over, Wendy’s was replacing employees at a rate of 55 percent a year; six years later, turnover stood at 20 percent.

With renewed chainwide standards for cleanliness and customer service, Near turned his attention to the menu. Changes were based on several industry trends, including discount pricing, consumer health concerns, and premium menu items. Spurred by the recession of the late 1980s and early 1990s, many fast food chains established discount pricing to appeal to more frugal customers. Wendy’s introduced its Super Value Menu in 1989. The daily feature included seven 99-cent items, allowing it to appeal to thrifty consumers without issuing profit-eating coupons. An expanded salad bar and skinless chicken breast sandwich catered to more health conscious consumers, while the Big Classic, Dave’s Deluxe, and Chicken Cordon Bleu specialty sandwiches appealed to Wendy’s traditional hearty eaters.

As Near worked to cover all of the menu bases, Dave Thomas returned to the television studio for the promotional push. In 1989 Thomas reappeared in commercials offering customers a special money-back guarantee if they didn’t concur that Wendy’s had the best-tasting hamburgers in the industry. The ad was supported by one of the largest testimonial advertising campaigns in television history. Local residents in about 100 U.S. markets pronounced Wendy’s burgers best.

“Old Fashioned Guy,” the next series of TV spots, featured Thomas declaring, “Our hamburgers are the best in the business, or I wouldn’t have named the place after my daughter.” The hamburgers might have been the best, but Thomas’ performances in these spots earned some poor ratings from some critics at Advertising Age, one of whom commented that he looked like “a steer in a half-sleeved shirt.” Thomas himself admitted that he wasn’t an ideal subject—he joked that it took two hours to get the expression “muchas gracias” right for one commercial. Unlike the critics, however, consumers gave Thomas an enthusiastic reception—his promotions have earned Wendy’s highest advertising awareness figures since the “Where’s the Beef?” campaign and have been credited with boosting the chain’s turnaround. In fact, such campaigns have even helped earn Thomas the designation, “the Colonel Sanders of Wendy’s,” in reference to the promotional efforts of Thomas’s early mentor.

The success of Wendy’s revitalization showed in sales, rejuvenated expansion, and widespread recognition of the accomplishment. Despite a lingering recession, in 1991 and 1992 Wendy’s had outperformed the industry with 24 consecutive months of same-store sales gains. Earnings increased steadily in the early 1990s to $78 million in 1993, the fourth consecutive year of 20 percent earnings growth. Wendy’s five-year average earnings-per-share growth hit 58 percent, more than four times that of MacDonalds for the same period. Representing an irrefutable confirmation of Wendy’s successful turnaround, 1995 earnings rose above the company’s 1985 high of $.82 a share to reach $.94 per share.

The 1990s and Beyond

In the early 1990s expansion picked up once again. The company opened its 4,000th restaurant in 1992, and projected another 1,000 openings by mid-decade. Within the United States, the company planned to be opening approximately 400 stores a year by 1996. However, Wendy’s plans also targeted international growth, where opportunities for expansion were infinitely better than those in the saturated American market.

Near and Thomas accumulated numerous awards in recognition of the dramatic turnaround at Wendy’s. In 1989, Near was given the title of CEO and was named chairman two years later. Moreover, he was honored by his colleagues in the restaurant industry when he was named Operator of the Year by Nation’s Restaurant News and Executive of the Year by Restaurants & Institutions. Restaurant Business acknowledged both men’s entrepreneurial efforts with its annual Leadership Awards. Thomas also received the Horatio Alger Award, named for the author who popularized the concept of the “self-made man.”

As Wendy’s “ambassador,” Thomas began spending most of his time traveling to and from book promotions, public appearances, and franchise openings. His promotional work complemented Near’s continuing efforts to “grow the company.” A new corporate theme, “Do It Right! Performance Pays!” related customer-responsiveness to sales and profits for worker-shareholders.

Wendy’s recovery seemed well-established in the mid-1990s, judged not just by the numbers but by public opinion as well. Consumer polls in 1994 judged Wendy’s to have the best food in the fast food burger business, the best menu variety, and the most pleasant atmosphere. Restaurants and Institutions gave Wendy’s its overall top rating from 1988 to 1994, putting it ahead of eight other burger chains. Montgomery Securities analyst Michael Mueller told Financial World in 1995, “They’re doing everything one should in the fast-food industry.”

Having brought Wendy’s to this high point, Near decided to step down in late 1994. He was replaced by Gordon Teter, who had served Wendy’s as senior vice-president for three years and chief operating officer for four. Before joining Wendy’s, Teter had accumulated 25 years of experience at the restaurant chains Arthur Treacher’s, Casa Lupita, and Red Robin. His strengths were regarded by many as exactly what Wendy’s needed to go the next step, that of stealing market share from the big guys. A firm believer in sticking to the basics, Teter was expected to apply his talents for cost control and well-regulated operations. “Once you have success, as we have been having here, people can get distracted,” Teter explained to Financial World in 1995. “The biggest thing we have to do is maintain a sense of discipline,” he noted.

Teter had a tough act to follow. Wendy’s phenomenal growth slowed somewhat in the mid-1990s. In 1994 same-store sales dropped to 2.7 percent in first nine months of that year, compared to the quarter-to-quarter rate of five percent for the previous few years. Because fast-food profits were much higher overseas, Wendy’s saw foreign expansion as a way to keep growth and profitability up.

In 1995, Wendy’s aggressive foreign expansion plan called for the company to open at least 150 new restaurants a year around the world. Most store openings, however, were planned for Latin America, the Far East, and Canada. Wendy’s previous attempt to expand overseas, in the early to mid-1980s, was a flop. Wendy’s changed its decor and food to suit local tastes, but in less than a decade many of its foreign sites were floundering. Teter told Financial World in 1995 that after making every mistake you can make, Wendy’s would stick to basics: “We just can’t get diverted to things that sound sexy and look attractive.”

As part of its expansion plan, Wendy’s acquired the privately owned Canadian restaurant chain Tim Horton’s. Canada’s largest coffee and baked goods chain exchanged all outstanding shares of its stock for 16.2 million shares of Wendy’s stock and the assumption of its $125 million in debt. The acquisition strengthened Wendy’s presence in Canada, bringing the total number of its restaurants in that country to 1,186. Wendy’s had been experimenting with sites that combined Wendy’s and Tim Horton’s restaurants since 1992. Their success led Wendy’s to plan on opening 30 more such sites a year after the merger. In addition, in 1996, Wendy’s bought out Hardee’s restaurants in the northern tier of states, strengthening the company’s position there as well.

Wendy’s also continued to invest in its successful, homespun ads featuring Dave Thomas. The “Letters to Dave” campaign, focusing on the restaurant’s Super Value Menu and featuring customers’ letters to the restaurateur, paired Thomas with soap opera star Susan Lucci. In another series, Dave joined Olympic gold medalist Kristi Yamaguchi to participate in such winter sports as pairs figure skating and ski jumping. Although long-known for its popular ad campaigns, Wendy’s spent only $80 million on advertising in 1994, one-fifth what MacDonalds spent. Still, Wendy’s brand recognition trailed that of Mac-Donalds by only a few points.

As Wendy’s moved into the late 1990s, management focused on maintaining the momentum the company had generated in the early 1990s, with an emphasis on street-level operations, marketing, and efficient administration. Continued expansion remained a priority as well. Wendy’s numbered 5,100 stores in 1997, up from 4,500 in 1994. Teter said to Financial World that he and Dave Thomas saw 8,000 restaurants doing $10 billion in sales by the year 2002: “That’s our goal.”

Principal Subsidiaries

Wendy’s Restaurants of Canada, Inc.; The New Bakery Co. of Ohio, Inc.

Wendy’s International, Inc.

views updated May 23 2018

Wendy’s International, Inc.

4288 West Dublin-Granville Road
Post Office Box 256
Dublin, Ohio 43017-0256
U.S.A.
Telephone: (614) 764-3100
Fax: (614) 764-3330
Web site: http://www.wendys.com

Public Company
Incorporated: 1975
Employees: 44,000
Sales: $2.39 billion (2001)
Stock Exchanges: New York
Ticker Symbol: WEN
NAIC: 722211 Limited-Service Restaurants; 533110 Lessors of Nonfinancial Intangible Assets (Except Copyrighted Works)

Wendy’s International, Inc. is the operator, developer, and franchiser of the Wendy’s restaurant chain, which is the number three hamburger chain in the United States (with a market share of 12.7 percent in 2000), trailing McDonald’s (43.1 percent) and Burger King (18.8 percent). At the end of 2001, there were more than 6,000 Wendy’s restaurants around the world; about 5,300 of these were located in the United States with the balance located in 26 other countries and territories. About 1,200 of the units were company operated, while the remainder were run by franchisees. Systemwide sales for the Wendy’s chain totaled $6.84 billion in 2001. Wendy’s hallmark square hamburgers and homey atmosphere were introduced in Columbus, Ohio, in 1969, and since that time the company has enjoyed phenomenal growth.

Since December 1995 Wendy’s International has also owned Tim Hortons, Canada’s second largest restaurant chain. Tim Hortons outlets feature coffee and fresh-baked goods, and some units also sell sandwiches and soups. There were more than 2,000 Tim Hortons open in Canada at the end of 2001 and 140 in the United States, most of which were operated by franchisees; fewer than 100 of the Tim Hortons were company operated. Systemwide sales for Tim Hortons amounted to $1.46 billion in 2001. Seeking new avenues for growth, Wendy’s International in early 2002 acquired a 45 percent stake in Café Express, an “upscale bistro” that was part of the emerging fastcasual segment of the restaurant industry. There were 13 Café Express outlets in Houston, Dallas, and Phoenix at the time of the investment.

Dave Thomas Enters the Restaurant Business: 1956

The Wendy’s chain was created by R. David “Dave” Thomas, who credited part of his success to his challenging youth. Thomas was born during the depths of the Great Depression in Atlantic City, New Jersey. His early life was punctuated by tragedy. Abandoned at birth, he was adopted by a Michigan couple, Rex and Auleva Thomas. Auleva died when Dave was five years old, and his father was forced to move from state to state seeking work as a handyman. Rex remarried three times and moved his family ten times over the next eight years.

Dave Thomas entered the world of work at the age of 12, delivering groceries in Knoxville, Tennessee. He lied about his age to circumvent child labor laws, and worked 12-hour shifts to keep his job. Thomas’s adulthood began early. When he was 15, his family moved to Fort Wayne, Indiana, and he started work as a busboy at a local restaurant, the Hobby House. When his family announced another move, Thomas elected to set out on his own, taking a room at the local YMCA. As his work began to demand more time than his education, Thomas gave up on the latter, leaving school after the tenth grade and later enlisting in the army. (Decades later, Thomas would return to high school, receiving his GED in 1993.) Trained as a cook in the military, he returned to a job behind the grill of the Hobby House, where he met Lorraine, a waitress—and his future wife.

Thomas entered the restaurant business in earnest in 1956 in partnership with Phil Clauss. Just a few years later, Thomas and Clauss met Colonel Harland Sanders, who offered them Kentucky Fried Chicken (KFC) franchises. Clauss purchased one for Fort Wayne, and the pair broke into the chicken business.

By 1962 Clauss was deep into KFC—he owned four unprofitable franchises in Columbus, Ohio, and needed someone to turn them around. If Thomas could turn the stores’ $200,000 deficit into a profit, Clauss promised him a 45 percent share of the Columbus franchises. Against the advice of Colonel Sanders, who had become a mentor, Thomas took the challenge. He cut the menu from 100 items down to just a few—Thomas urged the Colonel to concentrate on chicken alone—improved the chicken “bucket,” bartered radio advertising with buckets of chicken, invented KFC’s spinning bucket sign, and built four additional locations in less than six years. His earnest, imaginative work paid off; Thomas was promoted to regional operations director of KFC and sold his stake in the Columbus restaurants for $1.5 million in 1968, thereby reaching millionaire status by the age of 35.

Wendy’s Born in 1969

Thomas parlayed his windfall into a new venture named after his eight-year-old daughter Melinda Lou, or Wendy, as her brothers and sisters nicknamed her. The first restaurant, which opened on November 15, 1969, was located on Broad Street in downtown Columbus, Ohio. Its menu featured made-to-order hamburgers, “secret recipe” chili, french fries, soft drinks, and the Frosty frozen dessert. Thomas kept the menu simple to save labor costs, remembering his KFC experience. The Wendy’s Old Fashioned Hamburgers decor differed from other fast-food joints that abounded with easy-clean vinyl and tiled surfaces. Instead, Thomas put in tiffany-style lamps, bentwood chairs, carpeting, and tabletops embellished with vintage newspaper advertisements. Although his ideas were refreshingly original, some industry experts criticized Thomas’s use of expensive fresh beef and noted that the fast-food industry seemed overcrowded. With all the criticism, Thomas hoped only for a local chain that would provide his children with summer jobs.

Against all predictions, the business took off immediately. Thomas opened a second location just one year later and began franchising his idea in 1972. Wendy’s soon enlisted franchisees at the rate of ten per month. Thomas added a new wrinkle to the franchising concept, giving geographic licenses, rather than single-store rights. Wendy’s also commenced its first advertising campaign that year with locally broadcast “C’mon to Wendy’s” spots. The 30-second, animated ads stressed Wendy’s superiority through the “Quality Is Our Recipe” slogan and featured a red-haired, pig-tailed “Wendy” with dancing hamburgers.

The 1970s heralded phenomenal, and somewhat reckless, growth at Wendy’s. By the end of 1974 the chain’s net income topped $1 million, and total sales reached almost $25 million. In mid-1975 the business celebrated the opening of its 100th restaurant, and that fall Wendy’s opened its first international restaurant, located in Canada. Wendy’s went public in 1976 with an offering of one million common shares valued at $28 per share. By the end of the year, shareholders understood that their money fueled growth; Wendy’s opened its 500th shop.

The chain’s rapid expansion was supported by Wendy’s first national advertising campaign in 1977. The effort earned Wendy’s another entry in the history books: it became the first chain with less than 1,000 restaurants to launch network television commercials. The “Hot ’n Juicy” campaign ran for three years and won a Clio Award for creativity, setting the pace for future Wendy’s advertising.

Before the decade’s end, the restaurant chain set even more records. In 1978, the 1,000th Wendy’s opened, in Springfield, Tennessee, not far from the site of Thomas’s first job. By the next year the number of shops had increased by half, and the first European Wendy’s opened in Munich, West Germany. In November 1979 Wendy’s celebrated its tenth birthday with many “firsts” to flaunt. Wendy’s was the first in its industry to surpass $1 billion in annual sales within its initial ten years, in addition to reaching the 1,000th restaurant opening faster than any of its competitors. It boasted 1,767 sites in the United States, Canada, Puerto Rico, and Europe, and had opened more than 750 restaurants from February 1978 to November 1979, averaging nearly 1.5 each day.

In the early 1980s, growth slowed slightly from that hectic pace, but Wendy’s was distinguished from its competitors through celebrated advertising and winning menu additions. “Wendy’s Has the Taste,” the first ad of the decade, depicted customers and employees singing a catchy jingle. The ad emphasized Wendy’s new chicken sandwich and all-you-can-eat salad bar. The chain had introduced its “Garden Spot” in 1979 over Thomas’s protestations, becoming the first national restaurant chain to offer salad bars nationwide.

Company Perspectives:

Our guiding mission is to deliver superior quality products and services for our customers and communities through leadership, innovation and partnerships.

Our vision is to be the quality leader in everything we do.

Our organization has a strategic vision focused on these core values: Quality: Freshly-made products and superior service are our passion; consistent excellence is our goal. Integrity: We keep our promises. All actions are guided by absolute honesty, fairness and respect for every individual. Leadership: We lead by example and encourage leadership qualities at all levels. Everyone has a role to play. People Focus: We believe our people are key to our success. We value all members of our diverse family for their individual contributions and their team achievements. Customer Satisfaction: Satisfying internal and external customers is the focus of everything we do. Continuous Improvement: Continuous improvement is how we think; innovative change provides competitive opportunities. Community Involvement: Giving back is our heritage. We actively participate and invest in the communities where we do business. Commitment to Stakeholders: We serve all stakeholders and, through balancing our responsibilities to all, we maximize value to each of them.

Founder Dave Thomas made his first appearance as Wendy’s spokesperson in 1981 in a controversial ad titled, “Ain’t No Reason (to go anyplace else).” Customers’ use of the idiomatic double negative “ain’t no” in the ads generated national attention for the chain, though not all of it favorable. Thomas left his position as CEO in 1982, taking the title of senior chairman. After working for more than 30 years, Thomas felt that he had earned a break, and was confident that he had hired capable managers to carry on his work.

Mixed Results in the 1980s

A recession in the early 1980s, combined with high beef prices and Wendy’s explosive—as well as threatening—growth incited the “burger wars.” Wendy’s moved into the number three spot behind McDonald’s and Burger King, fueled by its introduction of a chainwide salad bar, chicken breast sandwiches, and baked potatoes. Burger King and McDonald’s responded with moderately successful menu extensions of their own, then moved to a hard-nosed ad campaign. Burger King fired the first shot, but Wendy’s responded with a string of hardhitting, well-known commercials.

In 1983 Wendy’s ads depicted “victims” of other hamburger restaurants, humorously bemoaning the long waits endured in indoor and drive-up lines for frozen hamburger patties. In 1984 Wendy’s agency, Dancer Fitzgerald Sample, teamed up with celebrated commercial director Joe Sedelmaier on a campaign that registered the highest consumer awareness levels in the advertising industry’s history, in addition to captivating judges at the 1984 Clio Awards and winning three of the industry’s highest honors. Moreover, the “Where’s the Beef?” campaign consisted of four network television spots starring senior citizen Clara Peller. It was voted the most popular commercial in the United States in 1984. One of the ads, “Parts Is Parts,” pointed out the difference between the competition’s pressed chicken patties and Wendy’s chicken breast filet sandwiches.

“Parts” focused on Wendy’s true moneymakers at that point; hamburger sales actually accounted for only 40 percent of the chain’s revenues. Much of Wendy’s sales growth could be credited to such menu extensions as the grilled chicken sandwich, Garden Spot salad bar, and stuffed baked potatoes. These new products and the phenomenal success of the “Where’s the Beef?” campaign catapulted Wendy’s to a record $76.2 million in earnings in 1985.

As one unnamed Wendy’s executive confessed in Barron’s, management started to believe that everything they touched would “turn to gold.” Unfortunately, 1985 marked a summit from which Wendy’s quickly plummeted. In 1986 the chain introduced sit-down breakfasts featuring omelettes and French toast. The new breakfasts involved a huge investment of capital and labor, and could not be served quickly enough to fit in with the fast-food format. Eventually, the breakfast menu was scuttled. At the same time, McDonald’s, Burger King, and Hardee’s assaulted Wendy’s on the hamburger front.

A kind of domino effect plunged the company toward a $4.9 million loss in 1986. Some of the chain’s original franchisees sold their stores to new owners who flouted Wendy’s high standards. Others became absentee managers, leaving the day-to-day supervision to employees. As standards of cleanliness, quality, and service slipped at some Wendy’s locations, sales dropped. In response to the falling income, store labor was cut, the morale of those who remained plunged, and turnover rates began to explode. By the end of the year, 20 percent of Wendy’s restaurants were nearing failure, and franchisees presented the chain’s management a vote of no confidence.

The desperate situation brought Dave Thomas out of semiretirement and challenged one of Wendy’s most successful franchisees to revive the failing business. James W. Near had been one of Dave Thomas’s competitors in the late 1960s when they both operated restaurants in Columbus. Practically raised in his father’s White Castle hamburger chain, Near built a 50-unit Burger Boy Food-A-Rama chain of his own by the end of the decade. Near had become a Wendy’s franchisee in 1974, opening 39 successful restaurants in West Virginia and Florida within four years. In 1978 he sold the restaurants back to Wendy’s and established Sisters Chicken & Biscuits as an expansion vehicle for the hamburger chain. Sisters became a subsidiary of Wendy’s in 1981 and was sold to its largest franchise owner in 1987.

Key Dates:

1969:: Dave Thomas opens the first Wendy’s restaurant in downtown Columbus, Ohio.
1972:: Wendy’s franchising begins.
1975:: First international restaurant opens in Canada.
1976:: Wendy’s International, Inc. goes public.
1977:: Company begins national television advertising.
1978:: The 1,000th Wendy’s opens in Springfield, Tennessee.
1979:: Salad bars are added to Wendy’s restaurants.
1981:: Thomas makes his first appearance as Wendy’s advertising spokesperson.
1984:: Famous and award-winning “Where’s the Beef?” ad campaign is run.
1986:: James W. Near becomes president and COO and launches a major reorganization.
1989:: Thomas begins another stint as advertising spokesperson; the Super Value Menu debuts.
1995:: Wendy’s International acquires Tim Hortons, a Canadian coffee and baked goods chain.
1997:: The 5,000th Wendy’s restaurant opens in Columbus, Ohio.
2002:: Dave Thomas dies; Wendy’s International acquires a 45 percent stake in CaféExpress.

New Leadership Rejuvenates Wendy’s in the Late 1980s

Near agreed to take the position of president and chief operating officer on the condition that Thomas would sustain an active role in the company as a spokesperson and traveling mentor. Thomas agreed. His new business card read “Founder and Jim’s Right Hand Man.” Near’s turnaround strategy started with an internal reorganization. Weak stores were eliminated and a new building design lowered the initial franchise investment. Near fired four top managers, cut 700 administrative positions, and revamped field operations. New programs gave the remaining employees a vested interest in the chain’s success: base pay, benefits, and bonuses were raised; an employee stock option called “We Share” made workers shareholders; and standardized training gave all employees a new perspective on their jobs. When Near took over, Wendy’s was replacing employees at a rate of 55 percent a year; six years later, turnover stood at 20 percent.

With renewed chainwide standards for cleanliness and customer service, Near turned his attention to the menu. Changes were based on several industry trends, including discount pricing, consumer health concerns, and premium menu items. Spurred by the recession of the late 1980s and early 1990s, many fast-food chains established discount pricing to appeal to more frugal customers. Wendy’s introduced its Super Value Menu in 1989. The daily feature included seven 99-cent items, allowing it to appeal to thrifty consumers without issuing profiteating coupons. An expanded salad bar and skinless chicken breast sandwich catered to more health-conscious consumers, while the Big Classic, Dave’s Deluxe, and Chicken Cordon Bleu specialty sandwiches appealed to Wendy’s traditional hearty eaters.

As Near worked to cover all of the menu bases, Thomas returned to the television studio for the promotional push. In 1989 Thomas reappeared in commercials offering customers a special money-back guarantee if they did not concur that Wendy’s had the best-tasting hamburgers in the industry. The ad was supported by one of the largest testimonial advertising campaigns in television history. Local residents in about 100 U.S. markets pronounced Wendy’s burgers best.

“Old Fashioned Guy,” the next series of TV spots, featured Thomas declaring, “Our hamburgers are the best in the business, or I wouldn’t have named the place after my daughter.” The hamburgers might have been the best, but Thomas’s performances in these spots earned some poor ratings from some critics at Advertising Age, one of whom commented that he looked like “a steer in a half-sleeved shirt.” Thomas himself admitted that he was not an ideal subject—he joked that it took two hours to get the expression “muchas gracias” right for one commercial. Unlike the critics, however, consumers gave Thomas an enthusiastic reception—his promotions earned Wendy’s highest advertising awareness figures since the “Where’s the Beef?” campaign and were credited with boosting the chain’s turnaround. In fact, such campaigns even helped earn Thomas the designation, “the Colonel Sanders of Wendy’s,” in reference to the promotional efforts of Thomas’s early mentor.

The success of Wendy’s revitalization showed in sales, rejuvenated expansion, and widespread recognition of the accomplishment. Despite a lingering recession, in 1991 and 1992 Wendy’s had outperformed the industry with 24 consecutive months of same-store sales gains. Earnings increased steadily in the early 1990s to $78 million in 1993, the fourth consecutive year of 20 percent earnings growth. Wendy’s five-year average earnings-per-share growth hit 58 percent, more than four times that of McDonald’s for the same period. Representing an irrefutable confirmation of Wendy’s successful turnaround, 1995 earnings rose above the company’s 1985 high of $.82 a share to reach $.94 per share.

Expanding Again in the Early 1990s

In the early 1990s expansion picked up once again. The company opened its 4,000th restaurant in 1992, and projected another 1,000 openings by mid-decade. Within the United States, the company planned to be opening approximately 400 stores a year by 1996. Wendy’s plans, however, also targeted international growth, where opportunities for expansion were infinitely better than those in the saturated American market.

Near and Thomas accumulated numerous awards in recognition of the dramatic turnaround at Wendy’s. In 1989 Near was given the title of CEO and was named chairman two years later. Moreover, he was honored by his colleagues in the restaurant industry when he was named Operator of the Year by Nation’s Restaurant News and Executive of the Year by Restaurants and Institutions. Restaurant Business acknowledged both men’s entrepreneurial efforts with its annual Leadership Awards. Thomas also received the Horatio Alger Award, named for the author who popularized the concept of the “self-made man.”

As Wendy’s “ambassador,” Thomas began spending most of his time traveling to and from book promotions, public appearances, and franchise openings. His promotional work complemented Near’s continuing efforts to “grow the company.” A new corporate theme, “Do It Right! Performance Pays!,” related customer-responsiveness to sales and profits for worker-shareholders.

Wendy’s recovery seemed well-established in the mid-1990s, judged not just by the numbers but by public opinion as well. Consumer polls in 1994 judged Wendy’s to have the best food in the fast-food burger business, the best menu variety, and the most pleasant atmosphere. Restaurants and Institutions gave Wendy’s its overall top rating from 1988 to 1994, putting it ahead of eight other burger chains. Montgomery Securities analyst Michael Mueller told Financial World in 1995, “They’re doing everything one should in the fast-food industry.”

Having brought Wendy’s to this high point, Near decided to step down from the CEO position in late 1994 (while remaining chairman). He was replaced by Gordon Teter, who had served Wendy’s as senior vice-president for three years and chief operating officer for four. Before joining Wendy’s, Teter had accumulated 25 years of experience at the restaurant chains Arthur Treacher’s, Casa Lupita, and Red Robin. His strengths were regarded by many as exactly what Wendy’s needed to go the next step, that of stealing market share from the big guys. A firm believer in sticking to the basics, Teter was expected to apply his talents for cost control and well-regulated operations. “Once you have success, as we have been having here, people can get distracted,” Teter explained to Financial World in 1995. “The biggest thing we have to do is maintain a sense of discipline,” he noted.

Teter had a tough act to follow. Wendy’s phenomenal growth slowed somewhat in the mid-1990s. In 1994 same-store sales dropped to 2.7 percent in the first nine months ofthat year, compared to the quarter-to-quarter rate of 5 percent for the previous few years. Because fast-food profits were much higher overseas, Wendy’s saw foreign expansion as a way to keep growth and profitability up.

In 1995, Wendy’s aggressive foreign expansion plan called for the company to open at least 150 new restaurants a year around the world. Most store openings, however, were planned for Latin America, the Far East, and Canada. Wendy’s previous attempt to expand overseas, in the early to mid-1980s, was a flop. Wendy’s changed its decor and food to suit local tastes, but in less than a decade many of its foreign sites were floundering. Teter told Financial World in 1995 that after making every mistake you can make, Wendy’s would stick to basics: “We just can’t get diverted to things that sound sexy and look attractive.”

Late 1990s and into the New Millennium: Growing Beyond the Wendy’s Chain

As part of its expansion plan, Wendy’s acquired the privately owned Canadian restaurant chain Tim Hortons. Canada’s largest coffee and baked goods chain exchanged all outstanding shares of its stock for 16.2 million shares of Wendy’s stock and the assumption of its $125 million in debt. The acquisition strengthened Wendy’s presence in Canada, bringing the total number of its restaurants in that country to 1,186. Wendy’s had been experimenting with sites that combined Wendy’s and Tim Hortons restaurants since 1992. The logic behind such “combo” sites was that they enabled Wendy’s outlets to add a breakfast menu, and indeed Tim Hortons units in Canada typically tallied 60 to 65 percent of their sales before 10 a.m. The success of the combo units led Wendy’s to plan on opening 30 more such sites a year after the merger. In addition, in 1996, Wendy’s bought out Hardee’s restaurants in the northern tier of states, strengthening the company’s position there as well.

Wendy’s also continued to invest in its successful, homespun ads featuring Dave Thomas. The “Letters to Dave” campaign, focusing on the restaurant’s Super Value Menu and featuring customers’ letters to the restaurateur, paired Thomas with soap opera star Susan Lucci. In another series, Dave joined Olympic gold medalist Kristi Yamaguchi to participate in such winter sports as pairs figure skating and ski jumping. Although long-known for its popular ad campaigns, Wendy’s spent only $80 million on advertising in 1994, one-fifth what McDonald’s spent. Still, Wendy’s brand recognition trailed that of McDonald’s by only a few points.

As Wendy’s moved into the late 1990s, management focused on maintaining the momentum the company had generated in the early 1990s, with an emphasis on street-level operations, marketing, and efficient administration. Continued expansion remained a priority as well. The 5,000th Wendy’s restaurant opened in Columbus, Ohio, in March 1997. By the end of that year, there were more than 5,200 Wendy’s units, up from 4,400 in 1994. Following Near’s death in July 1997, president and CEO Teter became chairman of Wendy’s International as well. Also in 1997 Wendy’s introduced a line of pita sandwiches.

After net income fell in 1997, in part because of the effects of the Asian economic crisis and in part because of disappointing results at Tim Hortons outlets in the United States, Teter responded by closing more than 60 underperforming restaurants in 1998 and by slowing down the pace of expansion. The total number of units—including both Wendy’s and Tim Hortons—increased by only 215 in 1998, reaching the 7,000 mark, while the unit gain in 1999 was 344. The Wendy’s chain also continued to build on its reputation as having a more healthful and diverse menu than its rivals, and it concentrated on such improvements as cutting the time that a customer spent in the drive-through line by 25 percent. Another key initiative in the late 1990s was the extension of the hours of operation at Wendy’s outlets to include late-night dining. First introduced in 1996, the late-night service helped the chain gain market share at the expense of its two main rivals. Backed by heavy advertising, after-10 p.m. sales grew to 10 percent of overall sales by 1999, and that year sales during that part of the day increased 30 percent. Overall, profits began increasing again in 1999, reaching $167 million on Wendy’s International revenues of $2.07 billion. Systemwide sales for the Wendy’s chain that year were just under $6 billion, while Tim Hortons saw its systemwide sales exceed $1 billion for the first time.

Overseas, the Wendy’s chain continued to have difficulty getting established—it simply could not compete with the deeper-pocketed McDonald’s and Burger King chains. Thus, Wendy’s pulled out of South Korea in 1998, closed most of its outlets in the United Kingdom in 1999, and then exited from both Argentina and Hong Kong in 2000. With the closures of company-operated outlets in Argentina, Wendy’s had eliminated nearly all of its international company-operated restaurants, with the exception of those in Canada. The focus overseas would now be almost exclusively on franchise possibilities. The announcement in 2000 of plans to open 100 (franchised) restaurants in Mexico over a ten-year period showed that the company had not completely given up on international growth—and highlighted the concentration on the Latin American market. (The 6,000th Wendy’s restaurant, in fact, opened in Tijuana, Mexico, in October 2001.)

In December 1999 Teter died suddenly at age 56. John T. “Jack” Schuessler was named president and CEO of Wendy’s International in early 2000. Schuessler had a long association with the company. He became a manager trainee for a Wendy’s franchisee in Atlanta in 1974. He joined Wendy’s International when the company bought the franchised outlet he worked at in 1976. He then worked his way up the ladder through regional and national posts, eventually becoming president and COO of the U.S. operations of the Wendy’s chain in 1997. After Schuessler’s appointment as president and CEO, Wendy’s International operated for a time without a chairman, but Schuessler was named chairman as well in May 2001.

With its financial results improving again, Schuessler quickened the pace of expansion, and 535 new restaurants were opened systemwide in 2001. That year the company formed a joint venture with IAWS Group/Cuisine de France, an Irish baking conglomerate, to build a baking facility in Canada to supply the Tim Hortons chain with baguettes and breads. Always seeking to enhance the menu, the Wendy’s chain tested a new Garden Sensations salad line, which featured a variety of prepackaged salads that customers could customize by selecting among various toppings and dressings. Following positive test results, the new line was rolled out nationally in early 2002 backed by the biggest ad campaign in company history.

Schuessler was also looking for new avenues for company growth as concerns increased about the limited growth prospects for the Wendy’s chain in the core U.S. market. In addition to a new effort to expand the Tim Hortons chain in the United States, Schuessler announced in February 2001 that Wendy’s International was looking to further diversify its restaurant lineup and had as much as $500 million at its disposal to pursue acquisitions, mergers, and joint ventures. The first such move came in February 2002, when the company announced that it had spent $10 million for a 45 percent stake in Café Express, a pioneer in the burgeoning fast-casual sector. Fast-casual restaurants combined the casual dining of a Chili’s or Ruby Tuesday with the self-service, walk-up service of a typical fast-food outlet. Founded in Houston in 1984, Café Express was an “upscale bistro” featuring pastas, salads, sandwiches, roasted chicken, soups, side dishes, and an “Oasis Bar” where customers could customize their food with a variety of condiments. By early 2002 Café Express was a 13-unit chain operating in Houston, Dallas, and Phoenix. With the infusion of capital from Wendy’s International, the chain hoped to expand to 50 units by 2005.

Early 2002 also brought an end to an era at Wendy’s International with the death of Dave Thomas on January 8 as a result of complications from liver cancer. Thomas had become an American icon, having starred in more than 800 commercials from 1989 to 2002 in what had been the longest-running advertising campaign in history featuring a company founder. Would Wendy’s continue to thrive without its famous pitchman? Company managers believed that the Wendy’s brand had become established enough to overcome Thomas’s absence, and in fact plans had already been made for a smooth advertising transition in the event of his death. It seemed certain, however, that the next Wendy’s advertising campaign was going to be a particularly important one.

Principal Subsidiaries

Wendy’s Old Fashioned Hamburgers of New York, Inc.; Wendy’s Capital Corporation; Wendy Restaurant, Inc.; Wendy’s of Denver, Inc.; The New Bakery Co. of Ohio, Inc.; Delavest, Inc.; Wentexas, Inc.; Restaurant Finance Corporation; Wendy’s of N.E. Florida, Inc.; Wendcreek Venture; WendServe, Inc.; Wenark, Inc.; Delcan, Inc.; Alberta (Delaware) Inc.; Tim Donut U.S. Limited, Inc.; T.H.D. Donut (Delaware), Inc.; Markdel, Inc.; Findei Corp.; Domark Investments, Inc.; Wendy’s Financing I; THD Nevada, Inc.; The THD Group; BDJ 71112, LLC; Scioto Insurance Co.; Oldemark LLC; Nattlan I (Argentina); Nautilus Land S.A. (Argentina); Wendy’s Old Fashioned Hamburger Restaurants Pty. Ltd. (Australia); Ranew Development Ltd. (Bahamas); Barhav Developments Limited (Canada); Delcan Finance No. 1, Inc. (Canada); Delcan Finance No. 2, Inc. (Canada); Delcan Finance No. 3, Inc. (Canada); Delcan Finance No. 4, Inc. (Canada); The TDL Group Ltd. (Canada); The TDL Group (Canada); The TDL Group No. 2 (Canada); The TDL Group Co. (Canada); THD RE No. 1 Co. (Canada); TH N.S. Finance No. 1 Co. (Canada); TH N.S. Finance No. 2 Co. (Canada); TIMWEN Partnership (Canada); Wendy’s Restaurants of Canada Inc.; WENTIM, LTD. (Canada); Wendy’s Old Fashioned Hamburgers of Guam, L.L.C.; Wendy’s Restaurants (Ireland) Limited; Wendy’s Restaurants (NZ) Limited (New Zealand); Time weald Limited (U.K.).

Principal Competitors

McDonald’s Corporation; Burger King Corporation; CKE Restaurants, Inc.; Jack in the Box Inc.; Sonic Corp.; Checkers Drive-In Restaurants, Inc.; White Castle System, Inc.; Whataburger, Inc.; TRICON Global Restaurants, Inc.; Doctor’s Associates Inc. (Subway).

Wendy’s International, Inc.

Wendy’s International, Inc.

Principal Subsidiaries

Further Reading

Wendy’s International, Inc.

Wendy’s International, Inc.

Dave Thomas Enters the Restaurant Business

Wendy’s is Born in the 1970s

Mixed Results in the 1980s

New Leadership Rejuvenates Wendy’s in the Late 1980s

The 1990s and Beyond

Principal Subsidiaries

Further Reading

Wendy’s International, Inc.

Wendy’s International, Inc.

Dave Thomas Enters the Restaurant Business: 1956

Wendy’s Born in 1969

Company Perspectives:

Mixed Results in the 1980s

Key Dates:

New Leadership Rejuvenates Wendy’s in the Late 1980s

Expanding Again in the Early 1990s

Late 1990s and into the New Millennium: Growing Beyond the Wendy’s Chain

Principal Subsidiaries

Principal Competitors

Further Reading

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Wendys International Inc

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