Canadian Case Study – Re-Positioning Strategy
1. Wendy’s Restaurants
Corporate Profile
Wendy’s is the third largest quick-serve hamburger chain in the world, with more than 6,600 restaurants (80% of
them franchised). It claims to serve the best hamburgers in the business made with fresh beef hot-off-the-grill and
a choice of toppings. They also serve chicken sandwiches, fries, Frostys, soft drinks, and a variety of fresh healthful
foods—salads, grilled chicken sandwiches, baked potatoes and chili.
Wendy’s International is a subsidiary of Wendy’s/Arby’s Group. The majority of its franchises are located in North
America. In the past year, the company had $12 billion (USD) in total sales. While Wendy’s sets standards for
exterior store appearance, food quality and menu, individual owners have control over hours of operation, interior
décor, pricing and staff uniforms and wages.
Canadian Market and Market Share
Depending on how the quick-serve restaurant market is segmented, Wendy’s market share can be expressed
several ways. Among hamburger chains in Canada, McDonald’s is the clear leader with a 50% market share. Both
A&W and Wendy’s are tied for second at 12% market share. The revival of the Papa Burger and other menu items
from the past has helped rejuvenate A&W in Canada. Burger King follows with about 10% market share.
Not considered in these market share figures are competitors in other segments of the quick serve restaurant
market. In this category are chains such as Cara Operations (Swiss Chalet and Harvey’s), Priszm Income Fund (KFC,
Pizza Hut and Taco Bell), and Subway, all of which have more market share than Wendy’s. If these chains are
included Wendy’s share of market drops to about 5.5% of the overall market.
Presently, Wendy’s is rated highly as a popular place to get fast food. Generally speaking Wendy’s was first to offer
healthier food items which were particularly popular with female customers and they were the first company to
offer a value menu (1988). A quarter of Canadians (26%) list McDonald’s as the place they frequent most often for
a fast-food fix, followed by Wendy’s at 12% and Subway at 10%. Canadians consider Wendy’s and Subway to be the
healthiest quick-serve restaurants.
Present Situation
Wendy’s has always differentiated their brand on the basis of quality. Ever since the company was started by Dave
Thomas in 1969 their hamburgers have been made with the freshest ingredients and served the way the customers
want them. To Dave, quality was so important he made the phrase “Quality is our Recipe®” part of the logo.
Form a product viewpoint Wendy’s has been hurt by rivals that have finally achieved menu parity. Wendy’s has
long been perceived as the chain with the “healthiest” offerings among the hamburger chains but McDonald’s and
Burger King have introduced upgraded products and salads. As well, Wendy’s does not have a signature product
like McDonald’s Big Mac or Burger King’s Whopper. There doesn’t seem to be a cornerstone to build around.
From a pricing perspective, Wendy’s may also be behind the times. While it offers a value menu it doesn’t promote
it that much. Instead, their emphasis is on various meal combinations that tend to drive prices up. In a lean
economy consumers look for better value and want to economize on discretionary purchases like fast food.
Competitors have leaned toward price discounting even though their franchises do not like such a tactic.
Most if not all fast food restaurants rely heavily on advertising to create an image that will bring customers in.
Between 1985 and 2002 Wendy’s founder Dave Thomas was the spokesperson for the company. His “folksy” image
was a hit with customers of all ages. He literally was the face of Wendy’s during the company’s most prosperous
years. With his death in 2002 Wendy’s was forced to move in a new direction with its advertising. One campaign
after another has been introduced and they have all met with failure.
For example, the 2004 campaign featured “Mr. Wendy” who claimed to be the unofficial spokesperson for the
chain. The campaign only lasted seven months as the public found it just plain irritating. By the end of 2004 same
store sales (stores open at least a year) fell 2.1 percent compared to the previous year. In a competitive market
such a drop signals an urgent need for change.
In 2005, Wendy’s launched a campaign with the slogan “Do Wendy’s. Do what tastes right.” TV ads showed
mouthwatering burgers and grilled chicken sandwiches. This campaign was perceived as a maintenance campaign
by company executives—the focus was on the food rather than image. In retrospect, that may not be a bad idea!
The company continued to look for something unique that would clearly differentiate Wendy’s from the rest of the
pack.
In 2007, Wendy’s launched yet another campaign featuring a male wearing a red wig with pigtails. This was very
different approach! The girl in the company sign that wears pigtails is the daughter of Dave Thomas. The family
raised some concerns about the new campaign and opposed its use. Less than a year later this campaign was
unceremoniously dumped; perhaps it presented the wrong image of the company.
In 2008 Wendy’s launched another new campaign with the slogan “It’s waaaaaaay delicious. It’s Wendy’s. The
campaign once again focuses on the product rather than image and features the more prominent burger and
chicken combination meals. The impact of this campaign was minimal.
In 2011, Wendy’s introduced a new campaign with a woman with red hair who is not called Wendy in the
commercials but it is implied she is the new modern version of ‘Wendy’. Although the campaign has been the most
effective since the death of Dave Thomas, many viewers dislike the new ‘Wendy’ because they think she appears to
be rude or smug in many of the commercials.
Some industry observers claim Wendy’s current advertising problems stem from the curse of Dave Thomas. When
Dave was the central spokesperson in ad campaigns Wendy’s was on a roll. Ever since the road to success has been
quite rocky!
Wendy’s is now in a position where their quality differentiation is no longer meaningful and their advertising is
ineffective. An overhaul of Wendy’s marketing strategy is needed since the problem seems to go beyond
advertising. Wendy’s must identify a direction that will reposition the brand in the longer term. The company must
consider how fast the marketplace is changing and how external influences affect customer behaviour. Wendy’s
needs a new marketing strategy that will have greater impact on consumers.
Challenge
Wendy’s has asked you to assess their present marketing and marketing communications strategies. Once your
assessment is complete they would like you to identify any new approaches that should be taken. Any and all
aspects of the marketing mix should be considered. For certain a new strategy for advertising will be recommended
in order to address the long-term brand image and brand building situation. What about product selection and
price? What about the environment of the restaurant? Are there any new external trends that will impact on the
recommendations you will make?
In terms of advertising does Wendy’s need a new creative concept (a message strategy that will differentiate it
from competitors and help build the brand in the longer-term)? What messages should be delivered and by what
means will it be delivered?
A clearly defined positioning strategy statement is essential. Any marketing and marketing communications
recommendations must adhere to the positioning strategy that you recommend.
Wendy’s is willing to spend $5 million on marketing and marketing communications and wants a Year 1 marketing
/ marketing communications strategy that will point the chain in the right direction.
Prior to undertaking this challenge you must research the market so that you are familiar with the latest trends
and issues that are influencing the restaurant market, particularly the quick-serve market, and the brand choices
made by consumers. You must also have a firm understanding of the marketing and advertising strategies of
primary competitors and some sense of how effective their strategies are.
It is very likely that Wendy’s has implemented new strategies beyond what is written in this case. Where
appropriate update case facts and offer some kind of assessment in your analysis. The fact remains, what would
you recommend to Wendy’s given the set of circumstances they presently face?
Explain your recommendations and the reasons for your choices below: