Remember Dave Thomas' Secret Recipe for Success

Wendy's president Tom Mueller resigned this week after the chain struggled with weak sales. It is amazing how unsavory truths are garnished to look so pleasant in corporate-speak. The reason given for his departure was that he resigned for "personal reasons." Yeah, right. With competition heating up, Wendy’s now more than ever needs to better ground itself with Dave Thomas’ magic formula for success.

Thomas' formula will still out-compete the competition, if Wendy’s can remember how to engage it. Here’s the magic formula:

"It all comes back to the basic. Serve customers the best-tasting food at a good value in a clean, comfortable restaurant, and they'll keep coming back." – Dave Thomas, Founder of Wendy’s

Difficult times.
Although the burger industry has been going through tough times, burger chains like McDonald’s, Burger King and Hardee’s have been on the upward trend while Wendy’s core business has been marching downward. Mueller tried to rejuvenate the brand. Joining Wendy's International in 1998 from Burger King, Mueller introduced salads. It was Wendy's! Not McD, nor BK that introduced salads. Wendy's also added chicken strips first to their menu.The top two dogs copied Wendy's, and their sales began to increase while sales at Wendy's softened.

But such menu innovation wasn’t enough. Some of the softness for Wendy's was no doubt due to the sliced-finger-in-the-chili-bowl scandal. Remember that? (Speaking of which, Wendy's has not yet given the guy that revealed the bogus scandal his $100,000 reward.) Although the firm moved early on new menu items, more innovation from competitors, such as the McGriddles sandwich and Subway's comparatively lower-cal hoagies, softened sales. Wendy's co-founder, Dave Thomas had connected with a message of meals geared at Middle America . He died in 2002 and the fast-food chain has had a tough time connecting with customers since.

Where are the innovative leaders?
Stocks went down after the announcement that Schuessler, who held the position before Mueller, would replace him. All of the analysts as of today have downgraded Wendy’s. The market certainly knows Schuessler, so why is the market less than bullish on Schuessler and his executive team? It wants strong and innovative leadership. He plans to give fanatical attention to execution of restaurant operations, marketing and R&D. Yes. The company and franchises can always improve their execution. It gets this attitude from its founder.

“We always have to ask, “How can we improve; how can we make the system better? Wendy’s is not unique in franchising – great franchisors don’t have I’s – they have We’s.” – Dave Thomas, Founder of Wendy’s

However, Wendy’s food is arguably no longer the best tasting or that innovative. It is losing its edge and the market doesn’t believe that Schuessler can bring it back. Franchise and corporate execution is important -- but more important that better execution is this -- are they being led in the right direction? Dave Thomas used to say he was in the burger business, and that a frosty was an extra. Well, if Wendy’s is in the burger business, how come it doesn’t have the best dog-gone burger anymore? Why is it Hardee’s that introduces monster burgers and not Wendy’s? Or, if you think you are not so much a hamburger business anymore and that the market is now shifting to low-fat diet stuff, then why aren’t you helping that market better?

Wendy’s directors are older than their top competitors. Schuessler himself is 73. One has to honestly ask if they understand the needs of echo-boomers? Or, when they are listening and reading reams of data, does its leadership have a gut feeling on the one kernel that needs to be acted on, on the right changes being suggested by their own system that will resonate with the market?

Recommendations.
Wendy’s will focus on better efficiencies. That’s usually the first thing franchisors do when they need time. It plans to sell selected real estate to franchisees, close underperforming Wendy's restaurants, and slow new-store openings. While it takes a breather by executing better, I would suggest that its leadership read again the secret recipe to success of its late, great founder.

"I think that franchisors today who don’t look at R&D as a major part of the future of franchising aren’t focused on keeping their companies competitive. When we work on new products or enhancements, we get all the other departments involved so that we understand how it affects our entire system. We include the folks in charge of operations and training, the people responsible for sourcing and purchasing new equipment and ingredients, the people who will plan the marketing strategy, and the accountants who can tell us what the financial impact on the system will be. We also include the Franchisee Advisory Council. We don’t isolate the process ." – Dave Thomas, Founder of Wendy’s