Skip to main content
Select Source:

Wendy’s International, Inc.

Wendys 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)

Wendys International, Inc. is the operator, developer, and franchiser of the Wendys restaurant chain, which is the number three hamburger chain in the United States (with a market share of 12.7 percent in 2000), trailing McDonalds (43.1 percent) and Burger King (18.8 percent). At the end of 2001, there were more than 6,000 Wendys 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 Wendys chain totaled $6.84 billion in 2001. Wendys 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 Wendys International has also owned Tim Hortons, Canadas 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, Wendys 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 Wendys 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. Thomass 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 waitressand 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 KFChe 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 fewThomas urged the Colonel to concentrate on chicken aloneimproved the chicken bucket, bartered radio advertising with buckets of chicken, invented KFCs 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.

Wendys 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 Wendys 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 Thomass 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. Wendys 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. Wendys also commenced its first advertising campaign that year with locally broadcast Cmon to Wendys spots. The 30-second, animated ads stressed Wendys 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 Wendys. By the end of 1974 the chains 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 Wendys opened its first international restaurant, located in Canada. Wendys 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; Wendys opened its 500th shop.

The chains rapid expansion was supported by Wendys first national advertising campaign in 1977. The effort earned Wendys 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 Wendys advertising.

Before the decades end, the restaurant chain set even more records. In 1978, the 1,000th Wendys opened, in Springfield, Tennessee, not far from the site of Thomass first job. By the next year the number of shops had increased by half, and the first European Wendys opened in Munich, West Germany. In November 1979 Wendys celebrated its tenth birthday with many firsts to flaunt. Wendys 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 Wendys was distinguished from its competitors through celebrated advertising and winning menu additions. Wendys Has the Taste, the first ad of the decade, depicted customers and employees singing a catchy jingle. The ad emphasized Wendys new chicken sandwich and all-you-can-eat salad bar. The chain had introduced its Garden Spot in 1979 over Thomass 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 Wendys spokesperson in 1981 in a controversial ad titled, Aint No Reason (to go anyplace else). Customers use of the idiomatic double negative aint 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 Wendys explosiveas well as threateninggrowth incited the burger wars. Wendys moved into the number three spot behind McDonalds and Burger King, fueled by its introduction of a chainwide salad bar, chicken breast sandwiches, and baked potatoes. Burger King and McDonalds responded with moderately successful menu extensions of their own, then moved to a hard-nosed ad campaign. Burger King fired the first shot, but Wendys responded with a string of hardhitting, well-known commercials.

In 1983 Wendys 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 Wendys 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 industrys history, in addition to captivating judges at the 1984 Clio Awards and winning three of the industrys highest honors. Moreover, the Wheres 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 competitions pressed chicken patties and Wendys chicken breast filet sandwiches.

Parts focused on Wendys true moneymakers at that point; hamburger sales actually accounted for only 40 percent of the chains revenues. Much of Wendys 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 Wheres the Beef? campaign catapulted Wendys to a record $76.2 million in earnings in 1985.

As one unnamed Wendys executive confessed in Barrons, management started to believe that everything they touched would turn to gold. Unfortunately, 1985 marked a summit from which Wendys 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, McDonalds, Burger King, and Hardees assaulted Wendys on the hamburger front.

A kind of domino effect plunged the company toward a $4.9 million loss in 1986. Some of the chains original franchisees sold their stores to new owners who flouted Wendys high standards. Others became absentee managers, leaving the day-to-day supervision to employees. As standards of cleanliness, quality, and service slipped at some Wendys 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 Wendys restaurants were nearing failure, and franchisees presented the chains management a vote of no confidence.

The desperate situation brought Dave Thomas out of semiretirement and challenged one of Wendys most successful franchisees to revive the failing business. James W. Near had been one of Dave Thomass competitors in the late 1960s when they both operated restaurants in Columbus. Practically raised in his fathers 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 Wendys franchisee in 1974, opening 39 successful restaurants in West Virginia and Florida within four years. In 1978 he sold the restaurants back to Wendys and established Sisters Chicken & Biscuits as an expansion vehicle for the hamburger chain. Sisters became a subsidiary of Wendys in 1981 and was sold to its largest franchise owner in 1987.

Key Dates:

1969:
Dave Thomas opens the first Wendys restaurant in downtown Columbus, Ohio.
1972:
Wendys franchising begins.
1975:
First international restaurant opens in Canada.
1976:
Wendys International, Inc. goes public.
1977:
Company begins national television advertising.
1978:
The 1,000th Wendys opens in Springfield, Tennessee.
1979:
Salad bars are added to Wendys restaurants.
1981:
Thomas makes his first appearance as Wendys advertising spokesperson.
1984:
Famous and award-winning Wheres 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:
Wendys International acquires Tim Hortons, a Canadian coffee and baked goods chain.
1997:
The 5,000th Wendys restaurant opens in Columbus, Ohio.
2002:
Dave Thomas dies; Wendys International acquires a 45 percent stake in CaféExpress.

New Leadership Rejuvenates Wendys 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 Jims Right Hand Man. Nears 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 chains 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, Wendys 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. Wendys 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, Daves Deluxe, and Chicken Cordon Bleu specialty sandwiches appealed to Wendys 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 Wendys 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 Wendys burgers best.

Old Fashioned Guy, the next series of TV spots, featured Thomas declaring, Our hamburgers are the best in the business, or I wouldnt have named the place after my daughter. The hamburgers might have been the best, but Thomass 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 subjecthe 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 receptionhis promotions earned Wendys highest advertising awareness figures since the Wheres the Beef? campaign and were credited with boosting the chains turnaround. In fact, such campaigns even helped earn Thomas the designation, the Colonel Sanders of Wendys, in reference to the promotional efforts of Thomass early mentor.

The success of Wendys revitalization showed in sales, rejuvenated expansion, and widespread recognition of the accomplishment. Despite a lingering recession, in 1991 and 1992 Wendys 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. Wendys five-year average earnings-per-share growth hit 58 percent, more than four times that of McDonalds for the same period. Representing an irrefutable confirmation of Wendys successful turnaround, 1995 earnings rose above the companys 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. Wendys 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 Wendys. 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 Nations Restaurant News and Executive of the Year by Restaurants and Institutions. Restaurant Business acknowledged both mens 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 Wendys ambassador, Thomas began spending most of his time traveling to and from book promotions, public appearances, and franchise openings. His promotional work complemented Nears 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.

Wendys 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 Wendys to have the best food in the fast-food burger business, the best menu variety, and the most pleasant atmosphere. Restaurants and Institutions gave Wendys 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, Theyre doing everything one should in the fast-food industry.

Having brought Wendys 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 Wendys as senior vice-president for three years and chief operating officer for four. Before joining Wendys, Teter had accumulated 25 years of experience at the restaurant chains Arthur Treachers, Casa Lupita, and Red Robin. His strengths were regarded by many as exactly what Wendys 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. Wendys 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, Wendys saw foreign expansion as a way to keep growth and profitability up.

In 1995, Wendys 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. Wendys previous attempt to expand overseas, in the early to mid-1980s, was a flop. Wendys 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, Wendys would stick to basics: We just cant get diverted to things that sound sexy and look attractive.

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

As part of its expansion plan, Wendys acquired the privately owned Canadian restaurant chain Tim Hortons. Canadas largest coffee and baked goods chain exchanged all outstanding shares of its stock for 16.2 million shares of Wendys stock and the assumption of its $125 million in debt. The acquisition strengthened Wendys presence in Canada, bringing the total number of its restaurants in that country to 1,186. Wendys had been experimenting with sites that combined Wendys and Tim Hortons restaurants since 1992. The logic behind such combo sites was that they enabled Wendys 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 Wendys to plan on opening 30 more such sites a year after the merger. In addition, in 1996, Wendys bought out Hardees restaurants in the northern tier of states, strengthening the companys position there as well.

Wendys also continued to invest in its successful, homespun ads featuring Dave Thomas. The Letters to Dave campaign, focusing on the restaurants 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, Wendys spent only $80 million on advertising in 1994, one-fifth what McDonalds spent. Still, Wendys brand recognition trailed that of McDonalds by only a few points.

As Wendys 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 Wendys restaurant opened in Columbus, Ohio, in March 1997. By the end of that year, there were more than 5,200 Wendys units, up from 4,400 in 1994. Following Nears death in July 1997, president and CEO Teter became chairman of Wendys International as well. Also in 1997 Wendys 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 unitsincluding both Wendys and Tim Hortonsincreased by only 215 in 1998, reaching the 7,000 mark, while the unit gain in 1999 was 344. The Wendys 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 Wendys 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 Wendys International revenues of $2.07 billion. Systemwide sales for the Wendys chain that year were just under $6 billion, while Tim Hortons saw its systemwide sales exceed $1 billion for the first time.

Overseas, the Wendys chain continued to have difficulty getting establishedit simply could not compete with the deeper-pocketed McDonalds and Burger King chains. Thus, Wendys 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, Wendys 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 growthand highlighted the concentration on the Latin American market. (The 6,000th Wendys 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 Wendys International in early 2000. Schuessler had a long association with the company. He became a manager trainee for a Wendys franchisee in Atlanta in 1974. He joined Wendys 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 Wendys chain in 1997. After Schuesslers appointment as president and CEO, Wendys 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 Wendys 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 Wendys 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 Wendys 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 Chilis 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 Wendys International, the chain hoped to expand to 50 units by 2005.

Early 2002 also brought an end to an era at Wendys 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 Wendys continue to thrive without its famous pitchman? Company managers believed that the Wendys brand had become established enough to overcome Thomass 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 Wendys advertising campaign was going to be a particularly important one.

Principal Subsidiaries

Wendys Old Fashioned Hamburgers of New York, Inc.; Wendys Capital Corporation; Wendy Restaurant, Inc.; Wendys of Denver, Inc.; The New Bakery Co. of Ohio, Inc.; Delavest, Inc.; Wentexas, Inc.; Restaurant Finance Corporation; Wendys 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.; Wendys Financing I; THD Nevada, Inc.; The THD Group; BDJ 71112, LLC; Scioto Insurance Co.; Oldemark LLC; Nattlan I (Argentina); Nautilus Land S.A. (Argentina); Wendys 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); Wendys Restaurants of Canada Inc.; WENTIM, LTD. (Canada); Wendys Old Fashioned Hamburgers of Guam, L.L.C.; Wendys Restaurants (Ireland) Limited; Wendys Restaurants (NZ) Limited (New Zealand); Time weald Limited (U.K.).

Principal Competitors

McDonalds 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.; Doctors Associates Inc. (Subway).

Further Reading

Basralian, Joseph, Ground Game, Financial World, January 17, 1995, pp. 4042.

Blyskal, Jeff, Hot Stuff, Forbes, June 4, 1984, pp. 16971.

Breckenridge, Tom, and Sandy Theis, Wendys Founder Dave Thomas Dies, Cleveland Plain Dealer, January 9, 2002, p. A1.

Byrne, Harlan S., Wendys International: It Is Finally Learning How to Handle Success, Barrons, January 7, 1991, pp. 4344.

Campanella, Frank W., Beefed-Up Menu: At Wendys International, Its More Now Than Just Meat and Potatoes, Barrons, November 16, 1981, pp. 41 +.

Chaudhry, Rajan, James Near Cleans Up Wendys, Restaurants and Institutions, July 22, 1992, pp. 7282.

Daves World, Forbes, January 3, 1994, p. 149.

Elliott, Stuart, After Founder Dies, Wendys Ponders New Ways to Pitch, New York Times, January 9, 2002, p. C1.

From Peril to Profit: The Man Who Saved Wendys, Success, February 1992, p. 10.

Galuszka, Peter, Can Wendys Sizzle Again?, Business Week, November 1, 1999, p. 100.

Gebolys, Debbie, A Great, Big, Lovable Man, Columbus (Ohio) Dispatch, January 9, 2002, p. 1A.

Hamstra, Mark, Wendys Begins Rolling Tim Hortons into New Markets, Nations Restaurant News, July 13, 1998, pp. 3, 105.

, Wendys Restructuring Addresses Margins, Growth, Nations Restaurant News, February 16, 1998, pp. 3, 73.

History of Wendys Advertising, 19691993, Dublin, Ohio: Wendys International, Inc., 1993.

Hume, Scott, Thomas Shines As Wendys Col. Sanders, Advertising Age, August 6, 1990, p. 3.

, Why Wendys Is Losing Its Sizzle, Advertising Age, March 2, 1987, pp. 3+.

Killian, Linda, Hamburger Helper, Forbes, August 5,1991, pp. 10607.

King, Michael L., Its Vigor Lost, Wendys Seeks a New Niche, Wall Street Journal, July 8, 1980.

, Wendys New Management Cooks Up Plans for Growth and Diversification, Wall Street Journal, March 27, 1981.

Kramer, Louise, Wendys Importing Tim Hortons to U.S., Advertising Age, November 29, 1997, p. 17.

Leung, Shirley, Wendys Sees Future Growth in Acquisitions and Ventures: Hamburger Chain Is Looking at Purchases of Other Food Concepts, Wall Street Journal, February 11, 2002, p. B4.

Near, James W., Wendys Successful Mop Bucket Attitude, Wall Street Journal, April 27, 1992.

A New Chef Lights a Flame Under Wendys, Business Week, May 8, 1989, p. 70.

Papiernik, Richard L., Wendys Taps M&A Chief, Gears Up for Acquisitions, Nations Restaurant News, September 17, 2001, pp. 1+.

Perlik, Allison, Ever Forward, Restaurants and Institutions, October 15, 2001, pp. 5960+.

Roth, Daniel, Wheres the Beef?, Forbes, August 11, 1997, p. 134.

Ruggless, Ron, Café Express, Wendys Take Fast-Casual Approach, Nations Restaurant News, February 25, 2002, pp. 1+.

Sachdev, Ameet, Wendys Emerges As Rising Star Among Fast Food Companies, Chicago Tribune, March 9, 2002.

Scarpa, James, RB Leadership Award: R. David Thomas, James W. Near, Restaurant Business, May 1, 1992.

Tatge, Mark, Burgertory, Forbes, June 11, 2001, p. 76.

Thomas, R. David, Daves Way: A New Approach to Old-Fashioned Success, New York: Putnam Publishing, 1991, 256 p.

Wolf, Barnet D., Maintaining a Legacy, Columbus (Ohio) Dispatch, February 24, 2002, p. 1F.

Zuber, Amy, Industry Mourns Wendys Founder Thomas, Nations Restaurant News, January 21, 2002, pp. 1, 41.

, Wendys Reveals Acquisition War Chest, Nations Restaurant News, February 26, 2001, pp. 1+.

April S. Dougal
updates: Susan Windisch Brown, David E. Salamie

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"Wendy’s International, Inc.." International Directory of Company Histories. . Encyclopedia.com. 17 Dec. 2017 <http://www.encyclopedia.com>.

"Wendy’s International, Inc.." International Directory of Company Histories. . Encyclopedia.com. (December 17, 2017). http://www.encyclopedia.com/books/politics-and-business-magazines/wendys-international-inc-1

"Wendy’s International, Inc.." International Directory of Company Histories. . Retrieved December 17, 2017 from Encyclopedia.com: http://www.encyclopedia.com/books/politics-and-business-magazines/wendys-international-inc-1

Wendy’s International, Inc.

Wendys 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, Wendys International, Inc., is one of the top three restaurant chains in the world. Wendys 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 waitressand 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 KFChe 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 fewThomas urged the Colonel to concentrate on chicken aloneimproved the chicken bucket, bartered radio advertising with buckets of chicken, invented KFCs 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.

Wendys 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 Wendys 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. Wendys 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. Wendys also commenced its first advertising campaign that year with locally broadcast Cmon to Wendys spots. The 30-second, animated ads stressed Wendys 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 Wendys. By the end of 1974 the chains 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 Wendys opened its first international restaurant, located in Canada. Wendys 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; Wendys opened its 500th shop.

The chains rapid expansion was supported by Wendys first national advertising campaign in 1977. The effort earned Wendys 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 Wendys advertising.

Before the decades end, the restaurant chain set even more records. In 1978, the 1,000th Wendys 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 Wendys opened in Munich, West Germany. In November 1979 Wendys celebrated its tenth birthday with many firsts to flaunt. Wendys 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 Wendys was distinguished from its competitors through celebrated advertising and winning menu additions. Wendys Has the Taste, the first ad of the decade, depicted customers and employees singing a catchy jingle. The ad emphasized Wendys new chicken sandwich and all-you-can-eat salad bar. The chain had introduced its Garden Spot in 1979 over Thomass protestations, becoming the first national restaurant chain to offer salad bars nationwide.

Founder Dave Thomas made his first appearance as Wendys spokesperson in 1981 in a controversial ad titled, Aint No Reason (to go anyplace else). Customers use of the idiomatic double negative aint 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 Wendys explosiveas well as threateninggrowth incited the burger wars. Wendys moved into the number three spot behind McDonalds and Burger King Corp., fueled by its introduction of a chainwide salad bar, chicken breast sandwiches, and baked potatoes. Burger King and McDonalds responded with moderately successful menu extensions of their own, then moved to a hard-nosed ad campaign. Burger King fired the first shot, but Wendys responded with a string of hard-hitting, well-known commercials.

In 1983 Wendys 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 Wendys 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 industrys history, in addition to captivating judges at the 1984 Clio Awards and winning three of the industrys highest honors. Moreover, the Wheres 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 competitions pressed chicken patties and Wendys chicken breast filet sandwiches.

Parts focused on Wendys true money-makers at that point; hamburger sales actually only accounted for 40 percent of the chains revenues. Much of Wendys 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 Wheres the Beef? campaign catapulted Wendys to a record $76.2 million earnings in 1985.

As one unnamed Wendys executive confessed in Barrons, management started to believe that everything they touched would turn to gold. Unfortunately, 1985 marked a summit from which Wendys 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, McDonalds, Burger King, and Hardees assaulted Wendys on the hamburger front.

A kind of domino effect plunged the company toward a $4.9 million loss in 1986. Some of the chains original franchisees sold their stores to new owners who flouted Wendys high standards. Others became absentee managers, leaving the day-to-day supervision to employees. As standards of cleanliness, quality, and service slipped at some Wendys 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 Wendys restaurants were nearing failure, and franchisees presented the chains management a vote of no confidence.

The desperate situation brought Dave Thomas out of semi-retirement and challenged one of Wendys most successful franchisees to revive the failing business. James W. Near had been one of Dave Thomass competitors in the late 1960s when they both operated restaurants in Columbus. Practically raised in his fathers 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 Wendys franchisee in 1974, opening 39 successful restaurants in West Virginia and Florida within four years. In 1978, he sold the restaurants back to Wendys and established Sisters Chicken & Biscuits as an expansion vehicle for the hamburger chain. Sisters became a subsidiary of Wendys in 1981 and was sold to its largest franchise owner in 1987.

New Leadership Rejuvenates Wendys 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 Jims Right Hand Man. Nears 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 chains 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, Wendys 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. Wendys 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, Daves Deluxe, and Chicken Cordon Bleu specialty sandwiches appealed to Wendys 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 didnt concur that Wendys 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 Wendys burgers best.

Old Fashioned Guy, the next series of TV spots, featured Thomas declaring, Our hamburgers are the best in the business, or I wouldnt 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 wasnt an ideal subjecthe 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 receptionhis promotions have earned Wendys highest advertising awareness figures since the Wheres the Beef? campaign and have been credited with boosting the chains turnaround. In fact, such campaigns have even helped earn Thomas the designation, the Colonel Sanders of Wendys, in reference to the promotional efforts of Thomass early mentor.

The success of Wendys revitalization showed in sales, rejuvenated expansion, and widespread recognition of the accomplishment. Despite a lingering recession, in 1991 and 1992 Wendys 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. Wendys 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 Wendys successful turnaround, 1995 earnings rose above the companys 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, Wendys 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 Wendys. 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 Nations Restaurant News and Executive of the Year by Restaurants & Institutions. Restaurant Business acknowledged both mens 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 Wendys ambassador, Thomas began spending most of his time traveling to and from book promotions, public appearances, and franchise openings. His promotional work complemented Nears 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.

Wendys 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 Wendys to have the best food in the fast food burger business, the best menu variety, and the most pleasant atmosphere. Restaurants and Institutions gave Wendys 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, Theyre doing everything one should in the fast-food industry.

Having brought Wendys to this high point, Near decided to step down in late 1994. He was replaced by Gordon Teter, who had served Wendys as senior vice-president for three years and chief operating officer for four. Before joining Wendys, Teter had accumulated 25 years of experience at the restaurant chains Arthur Treachers, Casa Lupita, and Red Robin. His strengths were regarded by many as exactly what Wendys 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. Wendys 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, Wendys saw foreign expansion as a way to keep growth and profitability up.

In 1995, Wendys 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. Wendys previous attempt to expand overseas, in the early to mid-1980s, was a flop. Wendys 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, Wendys would stick to basics: We just cant get diverted to things that sound sexy and look attractive.

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

Wendys also continued to invest in its successful, homespun ads featuring Dave Thomas. The Letters to Dave campaign, focusing on the restaurants 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, Wendys spent only $80 million on advertising in 1994, one-fifth what MacDonalds spent. Still, Wendys brand recognition trailed that of Mac-Donalds by only a few points.

As Wendys 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. Wendys 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: Thats our goal.

Principal Subsidiaries

Wendys Restaurants of Canada, Inc.; The New Bakery Co. of Ohio, Inc.

Further Reading

Basralian, Joseph, Ground Game, Financial World, January 17, 1995, pp.4042.

Blyskal, Jeff, Hot Stuff, Forbes, June 4, 1984, pp. 16971.

Byrne, Harlan S., Wendys International: It Is Finally Learning How to Handle Success, Barrons, January 7, 1991, pp. 4344.

Chaudhry, Rajan, James Near Cleans Up Wendys, Restaurants & Institutions, July 22, 1992, pp. 7282.

Daves World, Forbes, January 3, 1994, p. 149.

From Peril to Profit: The Man Who Saved Wendys, Success, February 1992, p. 10.

History of Wendys Advertising, 19691993, Dublin, Ohio: Wendys International, Inc., 1993.

Hume, Scott, Thomas Shines as Wendys Col. Sanders, Advertising Age, August 6, 1990, p. 3.

Killian, Linda, Hamburger Helper, Forbes, August 5, 1991, pp. 10607.

Near, James W., Wendys Successful Mop Bucket Attitude, Wall Street Journal, April 27, 1992.

Roth, Daniel, Wheres the Beef?, Forbes, August 11, 1997, p. 134.

Scarpa, James, RB Leadership Award: R. David Thomas, James W. Near, Restaurant Business, May 1, 1992.

Thomas, R. David, Daves Way, New York: Putnam Publishing Group, 1991.

April S. Dougal
updated by Susan Windisch Brown

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"Wendy’s International, Inc.." International Directory of Company Histories. . Encyclopedia.com. 17 Dec. 2017 <http://www.encyclopedia.com>.

"Wendy’s International, Inc.." International Directory of Company Histories. . Encyclopedia.com. (December 17, 2017). http://www.encyclopedia.com/books/politics-and-business-magazines/wendys-international-inc-0

"Wendy’s International, Inc.." International Directory of Company Histories. . Retrieved December 17, 2017 from Encyclopedia.com: http://www.encyclopedia.com/books/politics-and-business-magazines/wendys-international-inc-0

Wendy’s International, Inc.

Wendys 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

Wendys International, Inc. is one of the top three restaurant chains in the world. The chain has been touted as Americas favorite hamburger place for 14 years by Restaurants & Institutions Choice in Chains annual consumer survey. Wendys 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 waitressand 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 KFChe 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 fewThomas urged the Colonel to concentrate on chicken aloneimproved the chicken bucket, bartered radio advertising with buckets of chicken, invented KFCs spinning bucket sign, and built four additional locations in less than six years. His earnest, imaginative work paid offThomas 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 Wendys 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. Wendys 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. Wendys also commenced its first advertising campaign that year with locally broadcast Cmon to Wendys spots. The 30-second, animated ads stressed Wendys 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 Wendys. By the end of 1974 the chains 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 Wendys opened its first international restaurant, located in Canada. Wendys 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 growthWendys opened its 500th shop.

The chains rapid expansion was supported by Wendys first national advertising campaign in 1977. The effort earned Wendys another entry in the history booksit 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 Wendys advertising.

Before the decades end, the restaurant chain set even more records. In 1978, the 1000th Wendys 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 Wendys opened in Munich, West Germany. In November of 1979 Wendys celebrated its tenth birthday with many firsts to flaunt. Wendys 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 Wendys was distinguished from its competitors through celebrated advertising and winning menu additions. Wendys Has the Taste, the first ad of the decade, depicted customers and employees singing a catchy jingle. The ad emphasized Wendys new chicken sandwich and all-you-can-eat salad bar. The chain had introduced its Garden Spot in 1979 over Thomass protestations, becoming the first national restaurant chain to offer salad bars nationwide.

Founder Dave Thomas made his first appearance as Wendys spokesperson in 1981 in a controversial ad titled, Aint No Reason (to go anyplace else). Customers use of the idiomatic double negative aint 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 Wendys explosiveas well as threateninggrowth incited the burger wars. Wendys moved into the number three spot behind McDonalds and Burger King Corp., fueled by its introduction of a chainwide salad bar, chicken breast sandwiches, and baked potatoes. Burger King and McDonalds responded with unsuccessful menu extensions of their own, then moved to a hard-nosed ad campaign. Burger King fired the first shot, but Wendys responded with a string of hard-hitting, well-known commercials.

In 1983 Wendys 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 Wendys 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 industrys history, in addition to captivating judges at the 1984 Clio Awards and winning three of the industrys highest honors. Wheres 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 competitions pressed chicken patties and Wendys chicken breast filet sandwiches.

Parts focused on Wendys true money-makers at that pointhamburger sales actually only comprised 40 percent of the chains revenues. Much of Wendys 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 Wheres the Beef? campaign catapulted Wendys to a record $76.2 million earnings in 1985.

As one unnamed Wendys 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 Wendys 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, McDonalds, Burger King, and Hardees assaulted Wendys on the hamburger front.

A kind of domino effect plunged the company toward a $4.9 million loss in 1986. Some of the chains original franchisees sold their stores to new owners who flouted Wendys high standards. Others became absentee managers, leaving the day-to-day supervision to employees. As the chains 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 Wendys restaurants were nearing failure, and franchisees presented the chains management a vote of no confidence.

The desperate situation brought Dave Thomas out of semi-retirement, and challenged one of Wendys most successful franchisees to revive the failing business. James W. Near had been one of Dave Thomass competitors in the late 1960s when they both operated restaurants in Columbus. Practically raised in his fathers 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 Wendys franchisee in 1974, opening 39 successful restaurants in West Virginia and Florida within four years. In 1978, he sold the restaurants back to Wendys and established Sisters Chicken & Biscuits as an expansion vehicle for the hamburger chain. Sisters became a subsidiary of Wendys 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 agreedhis new business card read, Founder and Jims Right Hand Man. Nears 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 chains successbase 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. Wendys 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, Daves Deluxe, and Chicken Cordon Bleu specialty sandwiches appealed to Wendys 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 didnt concur that Wendys 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 Wendys burgers best.

Old Fashioned Guy, the next series of TV spots, featured Thomas declaring, Our hamburgers are the best in the business, or I wouldnt 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 wasnt an ideal subjecthe 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 receptionhis promotions have earned Wendys highest advertising awareness figures since Wheres the Beef? and have been credited with boosting the chains turnaround. They have even earned him the designation, the Colonel Sanders of Wendys, in reference to the promotional efforts of Thomas early mentor.

The success of Wendys 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, Wendys 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 Wendys. In 1989, Near was given the title of chief executive officer at Wendys, 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 Nations Restaurant News and Executive of the Year by Restaurants & Institutions. Restaurant Business acknowledged both mens 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 Bushs national initiative, Adoption Works For Everyone. Thomas published his autobiography, Daves Way, in 1991, and pledged all proceeds from its sale to national adoption awareness programs.

As Wendys ambassador, Thomas spends most of his time traveling to book promotions, public appearances, and franchises. His promotional work complemented Nears 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. Wendys 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

Wendys Restaurants of Canada, Inc. (Canada); The New Bakery Co. of Ohio, Inc.

Further Reading

Blyskal, Jeff, Hot Stuff, Forbes, June 4, 1984, pp. 16971.

Byrne, Harlan S., Wendys International: It Is Finally Learning How to Handle Success, Barrens, January 7, 1991, pp. 4344.

Chaudhry, Rajan, James Near Cleans Up Wendys, Restaurants & Institutions, July 22, 1992, pp. 7282.

From Peril to Profit: The Man Who Saved Wendys, Success, February 1992, p. 10.

History of Wendys Advertising, 1969-1993, Dublin, OH: Wendys International, Inc., 1993.

Hume, Scott, Thomas Shines as Wendys Col. Sanders, Advertising Age, August 6, 1990, p. 3 + .

James W. Near: Chairman and Chief Executive Officer, Dublin, OH: Wendys International, Inc., 1993.

Killian, Linda, Hamburger Helper, Forbes, August 5, 1991, pp. 106107.

Near, James W., Wendys Successful Mop Bucket Attitude, Wall Street Journal, April 27, 1992.

R. David Thomas: How Wendys Founder Worked His Way to Success, Dublin, OH: Wendys International, Inc. 1993.

Scarpa, James, RB Leadership Award: R. David Thomas, James W. Near, Restaurant Business, May 1, 1992.

Thomas, R. David, Daves Way, New York: Putnam Publishing Group, 1991.

Wendys International, Inc.: Backgrounder, Dublin, OH: Wendys International, Inc., 1993.

Wendys International, Inc.: Historical Highlights, Dublin, OH: Wendys International, Inc., 1993.

April S. Dougal

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"Wendy’s International, Inc.." International Directory of Company Histories. . Encyclopedia.com. 17 Dec. 2017 <http://www.encyclopedia.com>.

"Wendy’s International, Inc.." International Directory of Company Histories. . Encyclopedia.com. (December 17, 2017). http://www.encyclopedia.com/books/politics-and-business-magazines/wendys-international-inc

"Wendy’s International, Inc.." International Directory of Company Histories. . Retrieved December 17, 2017 from Encyclopedia.com: http://www.encyclopedia.com/books/politics-and-business-magazines/wendys-international-inc