How Wendy’s found
itself, slipped past
BK into No. 2 spot
Plenty of lessons to learn as one giant rival
leapfrogs another in hard-fought category
■BY MAUREEN MORRISON mcmorrison@adage.com
WENDY’S HAS BEEN something of a
red-headed stepchild in the burger category. A perennial No. 3, trailing
McDonald’s and Burger King, its
prospects dimmed considerably after
the passing of founder Dave Thomas in
2002.
But things are now looking up.
Wendy’s is poised to dethrone Burger
King as the No. 2 chain in the burger
category in 2011 U.S. sales and will be
second only to McDonald’s, according
to Technomic.
It’s a rare occurrence when one
rival surpasses another in a hard-fought category. In recent years only a
few such successes come to mind: Diet
Coke passing up Pepsi to become the
No. 2 soda brand in the U.S., and
Starbucks whisking by Burger King
and Wendy’s to become the overall
No. 3 fast-food chain based on U.S.
sales.
No matter your industry, there are
some noteworthy takeaways here.
It’s “a classic marketing story,” said
Tim Calkins, marketing professor at
Northwestern University’s Kellogg
School of Management, “about brands
that stumble and then get their footing
back. This is about really understanding your brand, and being true to it.”
Understand your core brand and
who it targets
After the passing of Mr. Thomas,
Wendy’s lost its marketing focus. Its
message had gotten off track, and it
cycled through multiple agencies, one
of which—Publicis Groupe’s Saatchi &
Saatchi—launched a polarizing red-wig campaign aimed at young men,
who are not the chain’s core demographic. In 2009 Wendy’s hired
Publicis Groupe’s Kaplan Thaler and
has been with the agency ever since.
A typical challenger strategy is to
zig while others are zagging. “In
recent years there’s been so much
emphasis around young users in the
fast-food category, but Wendy’s realized that’s not what its brand has been
about,” said restaurant-marketing
consultant Denise Lee Yohn. Rather
than chasing youth, Wendy’s moved
to “appeal to an older crowd”—long
its core audience.
Even good products need updating
Wendy’s has an established image of
quality product and never-frozen beef,
but the menu was rather uninspired.
“Two things drive [the quick-serv-ice restaurant category]: One is continual product innovation, and the
other is meaningful advertising campaigns,” said Joscelyn MacKay, senior
securities analyst at Morningstar.
Wendy’s has concentrated on those
two things since divesting Arby’s in
2011 to focus its energy solely on the
Wendy’s brand, she said.
Brolick in the most recent earnings call.
“The competitive set has changed ... and
we are confident that we can successfully build our brand, build sales and build
profits in this new environment.”
WENDY’S
CEOEMIL
BROLICK:
McDonald’s and Burger King also
have contemporary store redesigns set
to roll out in the coming years.
“The competitive set
has changed ... and
we are confident we
can build our brand
in this environment.”
Even before divesting Arby’s, and
after Nelson Peltz’s Triarc Cos. bought
the company in 2008, Wendy’s started
massively revamping core products,
including salads, fries and beefed-up
burgers. In late 2011 it launched a mid-tier “W burger.”
Be opportunistic
“They were willing to challenge
what they had been doing in the past
and were willing to sacrifice some
sacred cows,” said Ms. Yohn, referring
to the chain’s decision to take its core
products—such as fries, which weren’t
exactly considered a menu bright
spot—and overhaul them to have a
more-contemporary offering.
Indeed, Wendy’s has benefited from
the woes at Burger King, much like
Diet Coke benefited from Pepsi’s issues
to become the No. 2 soda brand.
Burger King has struggled with
management and ownership changes,
and analysts have said the chain faltered by focusing too much of its marketing on young men, a demographic
hit hard by the recession. Wendy’s
seized the moment, made the right
changes and zipped into the No. 2 spot.
Improve the customer experience
Wendy’s is testing more-modern
restaurant designs and looking to
compete with fast-casual chains, which
generally have better dining environments.
“The bottom line is that [fast-casual
chains] offer a better total experience,”
said Wendy’s President-CEO Emil
However, Burger King is deter-
mined to rebound. Last year it hired
Global CMO Flavia Faugeres (Wendy’s
has been sans CMO since June),
brought on McGarryBowen, and, to
appeal to a broader audience, traded in
its King character in favor of food as the
star of its advertising. A new brand
campaign is also expected this year.
Florida will reap next big GOP-ad windfall
As winnowing ground for Republican field, state could see as much as $15M in TV advertising
■ BY ANA RADELAT adageeditor@adage.com
FLORIDA, A MAKE-OR-BREAK state for
GOP White House hopefuls, will be saturated with as much as $15 million
worth of TV advertising in the next few
weeks as candidates and super PACs try
to prove Iowa either right or irrelevant.
“Florida is a state that’s very different
from Iowa,” said Ken Goldstein, presi-
dent of the Campaign Media Analysis
Group. “Iowa had about 120,000
[Republican primary] voters and Florida
will have 2 million.”
A winner-take-all state with 50 dele-
gates, Florida rose in importance in the
GOP’s White House race after the mud-
dled results of the Iowa caucuses, which
gave former Massachusetts Gov. Mitt
Romney an eight-vote victory over for-
mer Pennsylvania Sen. Rick Santorum.
The caucuses also gave Texas Rep. Ron
Paul unexpectedly strong support.
They will battle it out in New
Hampshire on Jan. 10, and are likely to
head to South Carolina’s Jan. 21 contest
and compete in Florida’s Jan. 31 primary.
Although Rep. Michele Bachman, R-Minn., has dropped out of the race, former House Speaker Newt Gingrich,
Texas Gov. Rick Perry and former Utah
Gov. Jon Huntsman are still running.
Florida could settle the volatile race
much the way it essentially sealed the
Republican nomination four years ago
for Sen. John McCain, R-Ariz.
The high-stakes contest is expected
to be very expensive. Florida has 10
media markets, and it’s estimated it costs
a campaign more than $1.5 million a
week to air an ad statewide.
According to the Center for Public
Integrity, candidates spent nearly
$4 million to air ads in Iowa, and the
super PACs spent more than $10 million. Advertising dollars are now flowing
into New Hampshire, and Mr. Goldstein
said much more money is going to
South Carolina. But spending in Florida
is expected to dwarf those buys and will
begin soon, especially when campaigns
fine-tune their messaging after the New
Hampshire and South Carolina races.
“We expect a lot of money is going to
be spent in a short period of time,” said
Ray Karczewski of Harrington, Richter
& Parsons, who sells advertising time for
Miami’s WSVN, a Fox station, and
Orlando’s WKFC, a Hearst station.
Mr. Romney’s 30-second “Leader”
ad began airing the day after the Iowa
caucuses, selling Mr. Romney as a candidate of “steadiness and constancy” and
insinuating that Mr. Gingrich is not.
Restore Our Future, a super PAC
supporting Mr. Romney, has also begun
its attacks in the Sunshine State, spending more than $530,000 to run an attack
ad aimed at Mr. Gingrich. Called
‘HAPPY’AD
Restore Our Future, a
super PACsupporting
Romney, slammed
Obama, Gingrich in a
spot titled “Happy.”
“Happy,” it slams the former congressional leader for his personal and political “baggage” and has been credited for
the erosion of support for Mr. Gingrich
in Iowa. Restore Our Future has also
spent about $90,000 on direct mail
attacking Mr. Gingrich and is likely to
soon target Mr. Santorum.
But Richard Martinez, general manager of WTVJ-6, an NBC station in
Miami, hasn’t run any presidential primary ads yet. The Miami-Fort
Lauderdale market is expensive and
heavily Democratic, which may have
prompted GOP candidates to hold off on
buying air time there.
But Mr. Martinez expects that to
change soon and estimates the South
Florida broadcasters will eventually sell
$2 million worth of primary ads, the
same amount as 2008.
GOP candidates are also likely to run
their first Spanish-language ads in this
Florida presidential campaign to reach
the state’s large Cuban-American population, which trends Republican in presidential elections. A spokeswoman for
Univision, the largest Spanish-language
network in the U.S., said its Miami station is “in conversations with all the
campaigns and PACs and has received
inquiries for proposals as they focus on
the Florida primary.”
