Where Wendy’s Went Wrong: Critical Lessons in Crisis Management
by Steven Fink
When it was first reported in the media that someone claimed to have found part of a finger in a cup of chili served at a Wendy’s restaurant, it seemed the fast food chain was off to a flying start in its initial handling of the crisis. Within only a day or two, the local franchise operator in California handed off the event to the corporate office in Ohio, and the parent company was able to swiftly announce with assurance that wherever the finger came from, it did not come from any Wendy’s employees or food suppliers – the obvious places to look.
As someone who has managed crises for clients in all fields – including fast food restaurant and other food industry clients – for more than two decades, I observed Wendy’s crisis management efforts with professional interest. After Wendy’s skillfully navigated the first, usually treacherous 24 or so hours, I was prepared to see the company skillfully and successfully manage the crisis.
But then the company suffered a brain cramp, and it was all downhill from there. Wendy’s seemed to have run out of ideas of what to do next, which is astonishing when you consider how many other successfully handled crises there are to learn from – including some well-known hoax crises – in the food industry. Crisis Management by now is a well-documented road map, but Wendy’s executives never opened the map.
Worse, they completely lost sight of the actual crisis.
This is a common mistake for companies inexperienced in crisis management. The finger in the chili was not the keystone crisis: it was an event that caused a massive crisis of confidence in the public’s mind having to do with the safety and cleanliness and quality of Wendy’s food. In short: A crisis of perception. That is why sales plummeted by a reported 50 percent. At no time did the company take any proactive steps to assure customers that it was safe to eat at Wendy’s, nor did it offer up any outside food or health experts to speak to the news media on its behalf.
When Pepsi was the target of a widely-publicized hoax claiming hypodermic syringes were found in cans of its soda, no less a personage than then-FDA Commissioner David Kessler appeared on all the morning talk shows and even “Nightline” to attest to the company’s long record of food safety and the fact that the syringe story was an obvious hoax. No one went to bat for Wendy’s.
In a crisis, perception always trumps reality. Wendy’s should have removed chili from its menu just to send an unmistakable message that it was taking all possible steps to assure customer safety. Chili isn’t even its core product – it’s hamburgers – so removing chili would not have crippled the company financially. Even if Wendy’s knew the claim to have been a hoax (see below), removing a “questionable” product is an important message to consumers and would have helped stem the exodus of customers. One message the company could have adopted would have been to tell the public that it firmly believes its chili is safe, etc., but until it can get to the bottom of the matter, chili will be off the menu.
When Chicago’s Jewell Food chain suffered the nation’s worst outbreak of salmonella poisoning from milk the company produced in its own dairy, the local health department eventually said it was OK to resume milk production and sales, even though the source of the outbreak hadn’t been located. The company announced it would not re-open the dairy until the source of the original outbreak was found and completely eradicated. The source was never located and the company kept the dairy shuttered. Wendy’s took no bold actions to let customers know it would do whatever was necessary to protect their safety.
Wendy’s relinquished control of the crisis to law enforcement. This was a big mistake because the cops were focused exclusively on the “crime” (i.e., where did the finger come from?) which, as previously noted, was not the keystone crisis. Cops are only interested in catching bad guys; it’s not their job to manage a business crisis. Catching the culprit is unquestionably important, but Wendy’s acted as though this was the single most important thing to do and nothing else could be done until this law enforcement mission was completed. While Wendy’s kept upping the reward for information about the finger, no one was addressing the real crisis: the perceived lack of consumer safety causing the real lack of customers.
When the FBI scoured the country looking for the terrorist who laced Tylenol capsules with cyanide, killing seven, Johnson & Johnson let the cops do their job while the company worked on a strategic plan to bring the product back in a new and more secure triple-seal safety package. Wendy’s should have let the cops do their investigative work and the company should have begun actively working to restore faith in their restaurants.
Just a few days after the finger incident came to light, I told an NPR radio interviewer that the Wendy’s event had all the earmarks of an obvious hoax, and I couldn’t understand why the company wasn’t more outspoken on this point. Consider: If Wendy’s was certain that all employees and suppliers were in possession of their proper digits, and the finger was not “cooked,” then the finger had to be placed in the chili after it was served, or after it left Wendy’s control. Who placed it in the chili is important, but it is not essential to managing the crisis.
So why didn’t Wendy’s cry “hoax”? The public would have been receptive to that message and it would have helped defuse the issue. It is possible that the company cowered in the face of an aggressive plaintiff’s attorney. This is unfortunate, and may have been caused by Wendy’s own attorneys advising them not to say anything publicly due to pending litigation. But since Wendy’s did not have an independent third party (such as an FDA Commissioner) rallying to their defense and speaking to the safety of the food and integrity of the restaurants, who else was going to speak for them? If Wendy’s doesn’t defend itself, why should leery customers trust them and frequent the restaurant?
Wendy’s had no plan to entice customers back into its restaurants, even after a month had gone by. Offering a free milkshake and a cents-off coupon won’t do it.
When the popular Pat & Oscars restaurant chain in Southern California suffered an E. coli outbreak due to contaminated lettuce from an outside supplier, business dropped by a staggering 70 percent, and did not bounce back even after it was widely reported that the restaurant chain was blameless and the outside supplier had been promptly fired and replaced. It was essential for customers to actually see that it was safe to return there, so Pat & Oscar’s threw open its doors and gave free meals to customers over a widely-publicized three-day period. People waited in long lines out the doors for more than two hours. The news media covered the event for 48 hours, doing live remote feeds from the various restaurant locations throughout the day and night broadcasts, always showing the restaurants jammed pack with smiling, contented customers enjoying their food, and a long line of diners waiting to get in. The company successfully recovered its lost sales, and acquired many more new customers.
In the face of dwindling sales, Wendy’s announced it was laying off some workers and cutting back the hours of others. Think of the negative message this sends to all of the other thousands of workers in the Wendy’s family. Those affected workers should be kept on the job at full salary and benefits, and Wendy’s corporate office should have seen to it and picked up the costs, if necessary. (Insurance will probably reimburse the company for such losses anyway). Idle workers should have been given “busy work” to do, such as making and delivering free meals to homeless shelters. Keeping workers on the job sends a strong, positive message to other Wendy’s family employees that the company will stand behind them in tough times, and that the company is positive about being about to bounce back. Think how good that would have been for company morale!
When Tylenol was off the shelves for six weeks, McNeil Labs (with parent company J&J’s backing) kept everyone working – “busy work” if necessary – but no one was laid off. The company told the workers, “We’re coming back!” They even had buttons made proclaiming it. It not only bolstered the morale of McNeil workers, but the morale of every worker in the worldwide J&J family.
One of the biggest mistakes Wendy’s seemingly made was that there was no one running the crisis who had any real world crisis management experience. They also apparently had no crisis management plan in place in advance. This also is a common error, often made by executives who either think they can handle anything that comes along on their own, or find themselves in deep denial until it is too late. A crisis is a dynamic, fluid, turbulent and fast-paced state of affairs that requires someone at the helm who has successfully sailed treacherous waters before. Wendy’s ignored this lesson and paid the price for going it alone.
Finally, can Wendy’s recover? Yes, it can if the company wises up and starts to focus on the issues that really matter. When Jack in the Box suffered an E. coli outbreak and four youngsters died, people were writing the company’s epitaph. But by adopting certain crisis management practices and strategic initiatives the company today is one of the strongest fast food chains in the industry.
Wendy’s did plenty wrong, but it is still not to late to get it right and recover.
Steven Fink is President of Lexicon Communications (www.CrisisManagement.com), the nation’s oldest crisis management firm. Some of his food industry and franchise clients include Jack in the Box, Pat & Oscar’s, 7-ELEVEN and the Carl’s Jr. Trust. He is also the author of Crisis Management: Planning for the Inevitable.