WENDY'S INTERNATIONAL, INC.1
"Hamburgers are the great American love affair," a New York financial analyst once observed.
But a key question posed to 43-year old R. David Thomas and his management team of franchise
veterans in 1969 was, "Does America really need another hamburger chain?" But Thomas,
sometimes described as "David following the hamburger Goliaths," was convinced he could play in
the competitive hamburger game with the likes of McDonald's and Burger King.
Background
So Thomas founded Wendy's in 1969 as Wendy's Old Fashioned Hamburgers Restaurants, Inc.
(later changed to Wendy's International, Inc.). And, Thomas started Wendy's just when it appeared to
some that America could not absorb one more hamburger outlet, much less an entire chain. Some
skeptical observers believed the entire fast-food growth curve had already peaked and that the rapid
expansion of franchised restaurants of the 1960s would cease.
Product Lines: Thomas' goal was to bring a "better" hamburger stand to Americans. After
several years of food service experience, including a brief stint as Vice-President of Operations in the
Arthur Treacher's Fish and Chips organization, Thomas opened the first Wendy's store in downtown
Columbus, Ohio, in 1969. Thomas tested a number of ideas in the first store and came out with the
recipe he thought would help Wendy's succeed.
1.
The 1/4 pound hamburger was designed as the basic menu item. This avoided
head-to-head competition with McDonald's or Burger King's one-tenth pound hamburger.
Also, Wendy's used: only fresh (not frozen) 100% ground beef, pattied daily; this
contrasted with McDonald's and Burger King's frozen patties. French fries complimented
the hamburger entree.
2.
Wendy's decided to offer lots of different condiments to customers. The various
combinations of condiments were promoted intensely in Wendy's advertising.
3.
"Frosty" daily dessert was selected as the main dessert to promote. It was a 100% dairy
product--a cross between chocolate and vanilla flavors--and halfway between soft ice
cream and a really thick milkshake.
4.
The final key menu decision was chili. Wendy's chili is particularly mild but can be made
"hot" by adding hot sauces and pepper.
These were the basis of Wendy's limited menu: freshly ground hamburger, french fries, condiments,
Frostys, and chili.
____________
1
Used by permission of Wendy's International Inc., Marketing Faculty of the Ohio State University
and the University of Minnesota. The case does not reflect Wendy's market position as appraised by
Wendy's International.
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©2002 Harcourt, Inc.
Buildings: All Wendy's restaurants were built to company specifications as to exterior style
and interior decor. Most were free-standing one-story brick buildings in design constructed on
25,000 square foot sites with parking for 35 to 40 cars. Some downtown restaurants were of a
storefront type which were varied according to available locations but generally retained the standard
red, yellow, and white decor and sign. Wendy's put substantial effort into designing a building that
reflected the "old-fashioned" theme. Large plate-glass windows let diners look out and let
prospective customers get a taste of the interior of the restaurant.
The restaurant design also stresses great flexibility. With a few minor changes, Wendy's could
sell almost any kind of food in these buildings. And the theme and decor could be changed almost
overnight. So Wendy's does not have any booths--only tables with four standardized chairs around
them.
Positioning Strategy: The Wendy's strategy was described by one analyst as "selling better
hamburgers than McDonald's or Burger King at a cheaper price per ounce." As he commented, it
takes no more labor to prepare a larger hamburger at a higher price. "McDonald's labor cost is about
22% of sales; Wendy's is only 15% because of its larger sandwiches."
In support of the higher priced hamburger strategy, Thomas stressed the freshness and quality of
Wendy's product. According to him, the words "quality is our recipe" were more than Wendy's
slogan. "This is the way we think about every part of our operation. We do this by quality of raw
materials, people, and delivery system."
Wendy's Today
Present Trends: The early forecasts of doom for Wendy's proved groundless. During the
1970s Wendy's experienced steady growth and by 1980 had almost 2,000 outlets.
By 1980 though Wendy's found itself being buttressed by a number of new negative factors
which promised to have a major impact on the fast-food business. Factors such as beef shortages,
rising beef prices, gasoline shortages, high construction costs, high interest rates, and minimum wage
restrictions had eroded the growth of fast-food franchises. In fact, sales at each Wendy's franchise
slipped in 1979 by an average of over $60,000 falling from $688,800 to $620,000. This was the first
year decline in average store revenues Wendy's had experienced.
In addition to these problems, competition is extremely tough. Sophisticated and successful
marketing strategies used by McDonald's and Burger King to maintain their positions in the industry,
have forced Wendy's to evaluate its own position in the business. In terms of 1979 market share,
Wendy's 4.1% share placed it fourth in the fast-food business behind McDonald's (18.1%), Burger
King (5.7%), and Kentucky Fried Chicken (5.5%).
Need to Reassess Wendy's Marketing Strategy: It is now 1980. R. David Thomas is pleased
with Wendy's performance to date but he now recognizes the necessity of gathering better
information about Wendy's customers and prospects to plan future marketing strategy.
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©2002 Harcourt, Inc.
As a first step, Thomas decided to do a market survey. A team of Ohio State University
students agreed to undertake the project. They called a random sample of households in the
Columbus metropolitan area and asked if the respondents would be willing to fill out a mail
questionnaire. Those agreeing were sent the questionnaire appearing in Figure 1. Six-hundred
twenty-two acceptable questionnaires were returned, edited, coded, and entered in a data base for
computer analysis. The data is contained on the data disk in file WENDYS.DAT. In the spreadsheet
file, WENDYS.XLS, the variable names match their location in the record. For example, the variable
name RIC1 refers to the variable located on the first record in the first column which asks about
whether the respondent ever eats at Fast Food Restaurants.
Thomas believes the Columbus survey data can be used to identify target market segments that
Wendy's should focus on and also to suggest marketing actions to reach those segments.
Questions:
1.
Prior to the analysis of the market survey data, what characteristics (see Figure 1) would
you recommend as potential bases for a segmentation strategy for Wendy's? Why?
2.
Using the market survey data identify:
a.
b.
c.
d.
Which segments are strong and weak in providing sales for Wendy's.
Which segments Wendy's is strong and weak in when compared to its competitors.
Which segments you would select as target markets for Wendy's. Why?
Which segments you would reject as target markets for Wendy's. Why?
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©2002 Harcourt, Inc.
Figure 1
Fast-Food Survey
The Ohio State University
Please take your time and be sure to answer every question. You will notice that you are not asked to
identify yourself anywhere in the questionnaire. This insures that all responses remain strictly
confidential.
Thank you for your time and cooperation. The results will be very helpful in my class project.
Record #1
COL. #
1.
Do you ever eat at FAST FOOD RESTAURANTS? 1. ___ Yes 2. ___ No
2.
IF YOU DO:
About how often do you use them?
1 ___
2 ___
3 ___
More than once a WEEK
once a WEEK
Two or three times a MONTH
4 ___ Once a MONTH
5 ___ Less than once a MONTH
IF YOU DON'T: please go to the last page.
Please indicate how familiar you are with each of the following fast-food restaurants. Circle
a "1" if you have never heard of the restaurant, a "6" if you are very familiar with the
restaurant, or somewhere in between depending upon how familiar you are with the
restaurant.
Have Never
Heard of It
Very Familiar
With It
3.
4.
5.
6.
ARBY'S
BORDEN BURGER
BURGER CHEF
BURGER KING
1
1
1
2
2
2
1
3
3
3
2
4
4
4
3
5
5
5
4
6
6
6
5
7.
8.
HUNGRY HERMAN'S
MC DONALD'S
1
2
1
3
2
4
3
5
4
6
5
WENDY'S
WHITE CASTLE
KENTUCKY FRIED CHICKEN
LUM'S
FRISCH'S
ARTHUR TREACHER'S
LONG JOHN SILVER'S
1
1
1
1
1
1
1
2
2
2
2
2
2
2
3
3
3
3
3
3
3
4
4
4
4
4
4
4
5
5
5
5
5
5
5
6
6
6
6
6
6
6
6
6
9.
10.
11.
12.
13.
14.
15.
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©2002 Harcourt, Inc.
How important is it to you that a fast-food restaurant satisfy you on the following
characteristics? Circle "1" if the characteristic is very important or "6" if the characteristic is
very unimportant, or somewhere in between depending on how important it is to you that
the restaurant satisfy you on the characteristic.
COL. #
Very
Important
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
Speed of service
Variety on menu
Popularity with children
Cleanliness
Convenience
Taste of the food
Price
Drive-in window
Friendliness of personnel
Quality of french fries
Taste of hamburgers
1
1
1
1
1
1
1
1
1
1
1
2
2
2
2
2
2
2
2
2
2
2
Very
Unimportant
3
3
3
3
3
3
3
3
3
3
3
4
4
4
4
4
4
4
4
4
4
4
5
5
5
5
5
5
5
5
5
5
5
6
6
6
6
6
6
6
6
6
6
6
Please indicate how much you think each of the fast-food restaurants has of the following
characteristics. Circle a "1" if you think the restaurant is high in the characteristic, a "6" if
you believe it is low in the characteristic, or somewhere in between depending on how much
of the characteristic you think the restaurant has. Please give your opinion of every
restaurant on each characteristic even if you have to guess.
FOOD
Tastes
Very Good
27.
28.
29.
30.
31.
32.
BORDEN BURGER
BURGER CHEF
BURGER KING
MC DONALD'S
WENDY'S
WHITE CASTLE
1
1
1
1
1
1
Tastes
Very Bad
2
2
2
2
2
2
3
3
3
3
3
3
4
4
4
4
4
4
5
5
5
5
5
5
6
6
6
6
6
6
CLEANLINESS
Extremely
Not
Clean
Clean
33.
34.
35.
36.
37.
38.
BORDEN BURGER
BURGER CHEF
BURGER KING
MC DONALD'S
WENDY'S
WHITE CASTLE
1
1
1
1
1
1
525
At All
2
2
2
2
2
2
3
3
3
3
3
3
4
4
4
4
4
4
5
5
5
5
5
5
6
6
6
6
6
6
©2002 Harcourt, Inc.
CONVENIENCE
Close to
Where I am
39.
40.
41.
42.
43.
44.
BORDEN BURGER
BURGER CHEF
BURGER KING
MC DONALD'S
WENDY'S
WHITE CASTLE
1
1
1
1
1
1
2
2
2
2
2
2
Out of
the Way
3
3
3
3
3
3
4
4
4
4
4
4
5
5
5
5
5
5
6
6
6
6
6
6
PRICE
Low
Cost Menu
45.
46.
47.
48.
49.
50.
BORDEN BURGER
BURGER CHEF
BURGER KING
MC DONALD'S
WENDY'S
WHITE CASTLE
1
1
1
1
1
1
2
2
2
2
2
2
High
Cost Menu
3
3
3
3
3
3
4
4
4
4
4
4
5
5
5
5
5
5
6
6
6
6
6
6
SERVICE
Very Fast
Service
51.
52.
53.
54.
55.
56.
BORDEN BURGER
BURGER CHEF
BURGER KING
MC DONALD'S
WENDY'S
WHITE CASTLE
1
1
1
1
1
1
2
2
2
2
2
2
Often a
Long Wait
3
3
3
3
3
3
4
4
4
4
4
4
5
5
5
5
5
5
6
6
6
6
6
6
POPULARITY WITH CHILDREN
Children Like the
Children Don't Like
Food Extremely Well
the Food at All
57.
58.
59.
60.
61.
62.
BORDEN BURGER
BURGER CHEF
BURGER KING
MC DONALD'S
WENDY'S
WHITE CASTLE
1
1
1
1
1
1
526
2
2
2
2
2
2
3
3
3
3
3
3
4
4
4
4
4
4
5
5
5
5
5
5
6
6
6
6
6
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©2002 Harcourt, Inc.
MENU
Wide Variety
Menu
63.
64.
65.
66.
67.
68.
BORDEN BURGER
BURGER CHEF
BURGER KING
MC DONALD'S
WENDY'S
WHITE CASTLE
1
1
1
1
1
1
Narrow Variety
Menu
2
2
2
2
2
2
3
3
3
3
3
3
4
4
4
4
4
4
5
5
5
5
5
5
6
6
6
6
6
6
Following are a series of questions regarding your attitudes toward fast-food restaurants. To
each question, please indicate whether you STRONGLY AGREE, AGREE, DON'T KNOW
(NEUTRAL), DISAGREE, or STRONGLY DISAGREE. There are no right or wrong
answers: we only want to know what YOU think.
Record 2:
COL. #
Strongly
Agree
Agree
Don't
Know
Strongly
Disagree Disagree
1.
If I eat out at all these days,
I usually go to a fast-food
restaurant.
1
2
3
4
5
2.
The hardest thing is to get
everyone to agree where to go to eat.
1
2
3
4
5
3.
Our children usually like to eat
where their parents do.
1
2
3
4
5
4.
Our children decide at what
fast-food restaurant we eat.
1
2
3
4
5
5.
Going to a fast-food hamburger
restaurant is OK on weekends but
not during the week.
1
2
3
4
5
6.
The easiest way to judge a fastfood hamburger restaurant is the
quality of the french fries.
1
2
3
4
5
7.
All fast-food hamburgers taste
the same.
1
2
3
4
5
8.
The way a fast-food store is
decorated is important to me.
1
2
3
4
5
9.
I tend to go to the same fastfood restaurant all the time.
1
2
3
4
5
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©2002 Harcourt, Inc.
COL. #
Strongly
Agree
Agree
Don't
Know
Disagree
Strongly
Disagree
10.
If a fast-food restaurant has an
atmosphere similar to that of a
regular restaurant I feel more
comfortable going to it.
1
2
3
4
5
11.
I am more interested in the taste
of a hamburger, not if the meat
were frozen or ground fresh daily.
1
2
3
4
5
12.
I would rather specify what
toppings I want on a hamburger
than buy one that is pre-cooked
and pre-wrapped.
1
2
3
4
5
13.
As long as the food tastes good
and I can get what I want, a place
does not have to be nice.
1
2
3
4
5
14.
I consider a hamburger made of
frozen meat to taste better than
one where the meat was fresh.
1
2
3
4
5
15.
I find that I go to fast-food
restaurants more now than fullservice restaurants.
1
2
3
4
5
16.
I prefer fast-food restaurants
that have a drive-in window so I
don't have to get out of my car.
1
2
3
4
5
People go to fast-food restaurants for many different reasons and on many different occasions. If
you sometimes eat at a fast-food hamburger restaurant, circle the number in the column below
that tells how often you go to this type of restaurant on the following occasions.
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©2002 Harcourt, Inc.
Record 2:
COL. #
Almost
Always
Never
17.
I go there for breakfast.
1
2
3
4
5
6
18.
I go there for lunch.
1
2
3
4
5
6
19.
I go there for a midafternoon snack.
1
2
3
4
5
6
20.
I go there for supper (or
dinner).
1
2
3
4
5
6
21.
I go there for an evening snack.
1
2
3
4
5
6
22.
I go there on weekdays.
1
2
3
4
5
6
23.
I go there primarily on
weekends.
1
2
3
4
5
6
24.
I go there when I'm too busy
to cook for others.
1
2
3
4
5
6
25.
I go there with friends.
1
2
3
4
5
6
26.
I go there with members of my
family.
1
2
3
4
5
6
27.
I go there by myself.
1
2
3
4
5
6
28.
I go there when I get a taste
for something special.
1
2
3
4
5
6
29.
I'll go there after a show or
an evening out.
1
2
3
4
5
6
30.
I go there when I'm traveling
away from home.
1
2
3
4
5
6
31.
I go there during a shopping trip.
1
2
3
4
5
6
32.
I'll go there to eat in
their dining room.
1
2
3
4
5
6
33.
I go there and eat in the
car.
1
2
3
4
5
6
34.
I buy food to go.
1
2
3
4
5
6
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©2002 Harcourt, Inc.
Please indicate your preference for all six fast-food restaurants listed below. This is done in the
following manner: rank the restaurants 1 through 6 by writing a "1" beside the most preferred
restaurant, "2" beside the next most preferred restaurant, and so forth. Rank all 6 restaurants even if
you have limited knowledge about them.
35.
36.
37.
38.
39.
40.
BORDEN BURGER
BURGER CHEF
BURGER KING
MC DONALD'S
WENDY'S
WHITE CASTLE
____________
____________
____________
____________
____________
____________
Please indicate how likely it is that you would go to each of the following places for dinner.
Very
Likely
41.
42.
43.
44.
45.
46.
47.
PONDEROSA
MC DONALD'S
STEAK AND ALE
WENDY'S
YORK STEAK HOUSE
BURGER KING
WHITE CASTLE
1
1
1
1
1
1
1
Not at All
Likely
2
2
2
2
2
2
2
3
3
3
3
3
3
3
4
4
4
4
4
4
4
5
5
5
5
5
5
5
6
6
6
6
6
6
6
How important do you consider each of the following as sources of information about fast-food
restaurants. Check for each item listed.
Information
Obtained
Through
48.
49.
50.
51.
52.
53.
54.
Television
Radio
Newspapers
Magazines
Bill Boards
Friends or Relatives
Mail
Important
Source of
Somewhat
Not an Important
Important Source Source of
Information
of Information
_____
_____
_____
_____
_____
_____
_____
_____
_____
_____
_____
_____
_____
_____
_____
_____
_____
_____
_____
_____
_____
55. Approximately how much do you spend for an average meal when eating out? (Check one)
1. ___ less than $1.00
4. ___ $3.01 to $4.00
2. ___ $1.00 to $2.00
5. ___ $4.01 to $5.00
3. ___ $2.01 to $3.00
6. ___ over $5.00
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©2002 Harcourt, Inc.
Info
56.
Which item do you feel is the best in terms of giving you the most for your money?
1. ___ Wendy's single burger
2. ___ McDonald's Quarter Pounder
3. ___ Burger King Whopper
4. ___ Burger Chef Super Chef
57.
Have you ever eaten at Wendy's? 1. ___ Yes 2. ___ No
If No, go to the demographic information at the end of the questionnaire.
If Yes, how often do you go to Wendy's?
58.
1.
2.
3.
___
___
___
More than once a WEEK
Once a WEEK
Two or three times a MONTH
4.
5.
6.
___
___
___
Once a MONTH
Less than once a MONTH
Only once
When you go to Wendy's what do you generally order? (Check Yes or No for each item.)
59.
60.
61.
62.
63.
64.
65.
Single 1/4 pound
Double 1/2 pound
Triple 3/4 pound
French fries
Chili
Frostys
Soft drink or other beverages
1.
1.
1.
1.
1.
1.
1.
___
___
___
___
___
___
___
Yes
Yes
Yes
Yes
Yes
Yes
Yes
2.
2.
2.
2.
2.
2.
2.
___
___
___
___
___
___
___
No
No
No
No
No
No
No
66.
Have you ever used Wendy's fast
drive-thru window service?
1. ___
Yes
2.
___
No
Do you enjoy the opportunity to garnish
your hamburgers your own way?
1. ___
Yes
2.
___
No
67.
Record 3
COL. #
The following questions are for classification purposes only.
1.
Are you: 1___ Single
2___ Married
2.
Are you: 1___ Male
2___ Female
3.
How many children 18 and under live in your home?
(Circle one) 0
1
2
3
4
5
531
3___
Other (widowed or divorced?)
6
7
©2002 Harcourt, Inc.
IF YOU HAVE children in the home, please indicate how many children are of the following ages?
(Circle one number in each category)
4.
5.
6.
7.
UNDER 2 YEARS
2-5
6-11
12-17
0
0
0
0
1
1
1
1
2
2
2
2
8.
Do you own or rent the apartment or house in which you are currently living?
1. ___ Rent
2. ___ Own
9.
In what type of dwelling are you now living?
1. ___
House
2. ___
Apartment
3.
___
3
3
3
3
4
4
4
4
Duplex
10.
Which of the following classifications come closest to describing your occupation?
1. ___ Managerial
6. ___ Professional
2. ___ Skilled Trade
7. ___ Housewife
3. ___ General Laborer
8. ___ Student
4. ___ Office Worker
9. ___ Retired
5. ___ Technical
11.
What was the last grade you completed in school?
1. ___ Less than 8 years
5. ___ 3-4 years college
2. ___ 9-11 years
6. ___ College graduate
3. ___ High school graduate
7. ___ Graduate or professional
4. ___ 1-2 years college
degree
or technical school
12.
Please check your age bracket.
1. ___ 15-19
4. ___
2. ___ 20-24
5. ___
3. ___ 25-29
6. ___
13.
30-34
35-39
40-49
7.
8.
9.
___ 50-59
___ 60-69
___ 70 or over
Finally, please check your approximate total family income (before taxes).
1.
2.
3.
___
___
___
Under $3,000 4. ___ $9,000-$11,999
$3,000-$5,999 5. ___ $12,000-$14,999
$6,000-$8,999 6. ___ $15,000-$17,999
7. ___
8. ___
$18,000-$20,000
$21,000-Over
AGAIN THANK YOU FOR TAKING TIME TO COMPLETE THIS QUESTIONNAIRE. PLEASE
PLACE IT IN THE ENCLOSED ENVELOPE AND MAIL IT BACK TO ME IN CARE OF
PROFESSOR CAROL SCOTT, DEPARTMENT OF MARKETING, THE OHIO STATE
UNIVERSITY, 1775 COLLEGE ROAD, COLUMBUS, OHIO 43210.
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©2002 Harcourt, Inc.