May 21, 2007
Sales Talk Stalling Wendy’s Turnaround
A report by Dow Jones suggests that it isn’t business as usual at Wendy’s as the company’s management team finds itself being distracted by a possible sale instead of being fully focused on getting the restaurant chain turned around.
Last month, Wendy’s board announced it was looking into various strategic alternatives for the company.
John Glass, an analyst at CIBC Markets, has since described a “surreal feel” around the restaurant chain’s headquarters in Dublin, Ohio.
“Striving to fix the business while simultaneously attempting to sell or otherwise recapitalize it stand in contrast to each other,” wrote Mr. Glass in a research note. He expressed concern that moving to sell the company at this juncture could “undermine management’s attempt at a fundamental recovery, as our experience is that these processes are extremely distracting.”
Bob Bertini a spokesperson for Wendy’s, told Dow Jones, “Management can only worry about what management can control.”
Mr. Bertini said the company was focused on creating value for its shareholders and “we’re moving forward with implementation of the strategic plan.”
Discussion Questions: Looking beyond just Wendy’s, how does senior management keep itself and subordinates focused on executing a strategic plan when bad news and sale rumors abound? Does the role of a CEO/president have to change in any way during periods such as this?
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Communication, communication, communication. If employees start hearing about rumors or decisions from the media first, there is a huge problem. The rumors may pop up in the media first but top management needs to communicate with the employees and let them know what the plan is–over and over and over.
Wendy’s has great food but the company has certainly lost direction since Dave’s death. The advertising is weak and execution at the store level is not being well monitored. Top management needs to get back to basics. They have been trying to create a new image rather than capitalizing on their strengths. Being distracted won’t help.
How does senior management keep itself and subordinates focused on executing a strategic plan when bad news and sale rumors abound concerning take-over, acquisitions, etc? The best approach is honest and straightforward communications expressed with an appropriate bedside manner. Otherwise, the rumors will become worse than reality; the morale will in itself become a detrimental problem that affects business so negatively that the take-over company will inherit problems that they did not intend to buy.
One example of a current situation of relevance is in the travel industry. National Rental Car is currently facing an impending take-over by Enterprise Rental Car. Business travelers that adore National Rental Car and its coveted Emerald Aisle club, are spooked by the belief that Enterprise will make changes, or possibly overlook in National what generates the loyalty that business travelers love about that brand. Employees at National Rental Counters for the most part seem to be somewhat informed and reasonably at ease, while giving predictions to loyal customers that very little will be changed if and when the take-over occurs. The discussion with customers seems to be coming from a sincere perspective which reflects well on management at National, and results indicate this is helping to keep the brand strong for everyone’s benefit.
I don’t eat at Wendy’s any longer–it was my fast-food favorite–since their new commercial slant of “being in the middle.” I believe the commercials promote sexism and are inappropriate. Wendy’s has the best fast-food product hands down for adults and children and are ruining it with bad attempts of being clever and trying to appeal to a younger market. Get a new ad agency. Boo to Wendy’s.
It’s very hard to stay focused. When a company is being shopped or there is about to have a change in control, the CEO will usually issue a message to employees that there will be no changes made and that all jobs are safe. What he means to say is that you have about a 33% chance of being fired and other 25% chance you will probably quit, regardless of your rainmaking abilities. Therefore, priorities must change and people need to take care of themselves first, whether it’s looking for a new job or preparing to lose the one you have. Taking care of yourself and your family should come before turning around a company just so they can fire you for all your efforts. Mr. Bertini is right, management can only worry about what management can control, so I think it’s best to take control of your own destiny and not put it in control of a new owner.
The truth is–it doesn’t and probably can’t. Platitudes about leadership aside, people worry about their jobs. There’s just no way to get around that. How much may be an issue and that’s best addressed by keeping the communication lines open and honest.
There’s always an excuse to dither around. What retail company doesn’t have rumors of one sort or another? Wendy’s is in a very prosaic business: they serve hamburgers and soft drinks at low prices. Everyone at Wendy’s knows the goal: increase comp sales and profits. Everyone at Wendy’s has observed their competition, which can hardly be called stealthy: McDonald’s, Burger King, In-N-Out Burger, etc. Wendy’s has 6,700 locations. Surely they can test some new services, menu items, promotions, etc. and come up with ways to improve themselves. Their resources are huge and their competitors are not structurally superior. Who cares about the rumors discussed by security analysts?
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Communication, communication, communication. If employees start hearing about rumors or decisions from the media first, there is a huge problem. The rumors may pop up in the media first but top management needs to communicate with the employees and let them know what the plan is–over and over and over.
Wendy’s has great food but the company has certainly lost direction since Dave’s death. The advertising is weak and execution at the store level is not being well monitored. Top management needs to get back to basics. They have been trying to create a new image rather than capitalizing on their strengths. Being distracted won’t help.
How does senior management keep itself and subordinates focused on executing a strategic plan when bad news and sale rumors abound concerning take-over, acquisitions, etc? The best approach is honest and straightforward communications expressed with an appropriate bedside manner. Otherwise, the rumors will become worse than reality; the morale will in itself become a detrimental problem that affects business so negatively that the take-over company will inherit problems that they did not intend to buy.
One example of a current situation of relevance is in the travel industry. National Rental Car is currently facing an impending take-over by Enterprise Rental Car. Business travelers that adore National Rental Car and its coveted Emerald Aisle club, are spooked by the belief that Enterprise will make changes, or possibly overlook in National what generates the loyalty that business travelers love about that brand. Employees at National Rental Counters for the most part seem to be somewhat informed and reasonably at ease, while giving predictions to loyal customers that very little will be changed if and when the take-over occurs. The discussion with customers seems to be coming from a sincere perspective which reflects well on management at National, and results indicate this is helping to keep the brand strong for everyone’s benefit.
I don’t eat at Wendy’s any longer–it was my fast-food favorite–since their new commercial slant of “being in the middle.” I believe the commercials promote sexism and are inappropriate. Wendy’s has the best fast-food product hands down for adults and children and are ruining it with bad attempts of being clever and trying to appeal to a younger market. Get a new ad agency. Boo to Wendy’s.
It’s very hard to stay focused. When a company is being shopped or there is about to have a change in control, the CEO will usually issue a message to employees that there will be no changes made and that all jobs are safe. What he means to say is that you have about a 33% chance of being fired and other 25% chance you will probably quit, regardless of your rainmaking abilities. Therefore, priorities must change and people need to take care of themselves first, whether it’s looking for a new job or preparing to lose the one you have. Taking care of yourself and your family should come before turning around a company just so they can fire you for all your efforts. Mr. Bertini is right, management can only worry about what management can control, so I think it’s best to take control of your own destiny and not put it in control of a new owner.
The truth is–it doesn’t and probably can’t. Platitudes about leadership aside, people worry about their jobs. There’s just no way to get around that. How much may be an issue and that’s best addressed by keeping the communication lines open and honest.
There’s always an excuse to dither around. What retail company doesn’t have rumors of one sort or another? Wendy’s is in a very prosaic business: they serve hamburgers and soft drinks at low prices. Everyone at Wendy’s knows the goal: increase comp sales and profits. Everyone at Wendy’s has observed their competition, which can hardly be called stealthy: McDonald’s, Burger King, In-N-Out Burger, etc. Wendy’s has 6,700 locations. Surely they can test some new services, menu items, promotions, etc. and come up with ways to improve themselves. Their resources are huge and their competitors are not structurally superior. Who cares about the rumors discussed by security analysts?