Mark Vandegrift 
Welcome to another episode of the Brand Shorthand Podcast. I'm your host, Mark Vandegrift. And with me today is our positioning perfuncturist, Lorraine Kessler.

Lorraine Kessler 
Perfuncturist. Okay. 

Mark Vandegrift
Lorraine, that's not an actual word, but perfunctory describes something that is done routinely. And I think positioning comes as naturally to you as to anyone. So, Lorraine, welcome back. Our positioning perfuncturist.

Lorraine Kessler
Okay. Well, positionist wasn't a word either and we created it.

Mark Vandegrift 
No, it wasn't. I don't think it it still isn't today, but we coined it, so

Lorraine Kessler 
And in all honesty, I want to give credit to James Olay, the founder of Crack Corn. Okay, Puffy Pop, wonderful snack. Not had it. He's the one who stood in my office and said something like, You're a positionist. And so he came up with that term. Yeah. Yep.

Mark Vandegrift 
Yeah. Well, good. Well, this is part two of our episode of Positioning is Everything Until It Isn't. And so we're going to continue that conversation from last episode. And we'll discuss what we'll call the decline of Wendy's now. So we saw the incline of Wendy's. This is now the decline of Wendy's. So, like part one of this topic, let's just follow the video from Michael Gridley or Girdley.

Lorraine Kessler 
Girdley.

Mark Vandegrift 
And this one is titled Gurgle Gurgle.

Lorraine Kessler
Yeah. I I kept typing Gridley and it's like Girdly. Yeah.

Mark Vandegrift
yeah. This one's titled The Rise and Fall of Wendy's. So in case you missed part one, check that out first because I think it provides a perspective that's critical to the proper understanding of positioning principles. So to kick off part two, the video starts to get into the decline of the Wendy's brand.

Mark Vandegrift
And at its peak, if you want to call it that, Wendy's acquired Tim Hortons for about $450 million. And that was in 1995. And just after that, that's when Dave Thomas passed away. So that kind of picks off where we left off. The thing is, Tim Hortons becomes valued higher than Wendy's. And so the investors forced the board to spin out Tim Hortons into its own entity. So you ask, well, why does that matter? Well, Tim Hortons had been masking the financial downturns that Wendy's had experienced. So all of a sudden now Wendy's is out here, it's naked again. And what happens? The owner of Arby's brand buys Wendy's. And then three years later, Arby sells Wendy's to a private equity firm. So I mean, there's all this, you know, as you say, the profiteering going on and Wall Street moves and all of that. So then Wendy's becomes part of Inspire brands. And that is one that owned Dunkin, Sonic, Buffalo Wild Wings, or BW3 as we call them around here, and Jimmy John's. So the financial investors love the move, but as you know, Lorraine, the problem with so many brands is that the brand becomes a financial line item and it's not treated for the asset that it is. So you're always great at explaining this type of thing to our listeners how investor greed and Wall Street dooms most brands. Do you want to explain how this impacted the Wendy's brand?

Lorraine Kessler 
Well, you can't have two masters, right, Mark? Amen. You can have the master of the brand and what it means to people and what we value and believe in that differentiates us as the master and have profit and cutting costs and making more money, against all other things, and have that be the master. And I think this is very much I mean, if you want to watch a documentary if any of them wants to watch a documentary other than about Wendy's, watch Freefall about Boeing now on Netflix because it confirms everything I'm saying. When you put profit over people or profit over everything, and that's what we mean positioning is everything until it isn't, until profit stomps on it, and all the profiteers jump in and they're looking for how they can make the most profit and squeeze it out not investing in things, right? Not thinking about how do we how do we innovate, as Mark Drucker would say. Peter Drucker. 

Mark Vandegrift 
Peter Drucker.

Lorraine Kessler 
Peter Drucker, sorry, you're Mark Drucker all of sudden. You know, now you can't have the split focus and this is what happens. It becomes profiteering over basic marketing sense profiteering as the goal. and I remember when I was studying great purpose statements of large companies and I forget what book I was reading or whatever and they actually said that the purpose of the company is to make a profit. Like if that's the purpose of the company you're with, then I think you should run. Like take the exit. And I'm a capitalist and I know that a business requires profit to stay in business. But how much is the is how much profit is the question and for what purpose? And too often it's for what? Invest outsiders, not the customer, not the employees, it's for who? CEOs, C class, and investors. And that's the ugly side of capitalism when that happens, in my opinion.

Mark Vandegrift 
Yep. Well, it's not uncommon. Not only did that happen, but you may remember this incident, which until I was watching the video, I didn't even know that it was concocted. But a big moment that didn't help Wendy's was the supposed incident or the purported incident of the finger found in the chili. That resulted in a drop of one million dollars in sales over only a few days. And I honestly I remember that, but I don't remember that it was made up. And it was someone that just was being, you know, trying to get clicks or I don't even know what would it would have been back then.

Lorraine Kessler 
No, they got money. They well they got taken to court and I, like you, did not realize that it was false either. I thought that really happened. And this to me was an unbelievable failure and they should, Wendy's should have sued whoever gave them this advice. According to AI, corporate executives chose not to launch a massive national ad campaign addressing the scandal, fearing that changing their usual marketing message would make consumers feel there was truth to the rumors. This was a huge, did they learn nothing from Tylenol?

Mark Vandegrift 
I know, right?

Lorraine Kessler 
Did they I mean we all study the Tylenol case? They came out, they had nothing to do with the deaths that were occurring in Chicago, I think seven people died because someone spiked Tylenol after it was on the shelf with lethal potassium cyanide. And immediately Tylenol pulled 31 bottles, costing the company over a hundred million pre-tax, fifty million after tax, from the shelves. And they went online with a huge advertising PR campaign, and this was Johnson and Johnson so they immediately mitigated it. Everybody knows that Tylenol was not to blame. They bit the bullet. They did the right thing. I don't know who gave this advice to Wendy's, but I would have been so fast on the PR and advertising to set the record. 'Cause look, we're in the business and we didn't know that this was a total shaft. 

Mark Vandegrift 
Yeah. Well they ended up offering a free Frosty. I'm like that was it? So

Lorraine Kessler 
Yeah. That's not the response. Yeah. Free Frosty with a toe. I mean, like what are you doing? What are you doing?

Mark Vandegrift 
Ha ha. You can have my fingernail clippings in your Frosty.

Lorraine Kessler
Yeah. We don't it's a surprise. It's like remember what was it? 

Mark Vandegrift
What part it body part will you have?

Lorraine Kessler
What was the little it was like Cracker Jack, you know, there's a little surprise inside. Like what are you doing? Oh my god, they should have come out. So so hard on that. It should have been in all the trades. And when we talk about PR, there's two types. There's consumer, which I think an advertisement, with a founder or that this was after the founder, but someone from Wendy's who's reputable, like Tylenol, but also to all the trades, a total article, 'cause the trades are are great at carrying the message too.

Mark Vandegrift 
Yeah. Well, fast forward in this video from Michael and the discussion is about the next twenty-four years of a revolving door of CEOs. And this rate of turnover, he says, resulted in inconsistency, more poor performance, and some stupid moves. With one CEO, which this is very recent, introducing dynamic pricing.

Lorraine Kessler
Yeah, that was a big success.

Mark Vandegrift 
And yeah, we discussed this in a previous episode, but it was a brain dead move. Lorraine, there's a lot here, okay? A lot of stuff going on here. But explain the implications of a crisis similar to what were mentioned above and what the right approach to public relations really is. You've already mentioned a few things, but speak not to even just consumer trade, but what sort of messaging maybe would have worked in this case?

Lorraine Kessler 
Well, I think you know, going back and you mentioned this in our first episode, going back to the founder's vision, you sometimes you have to go back to go forward, you know, back to the future kind of stuff. And and that's what happened is all these CEOs, I don't I wasn't part of the interviewing process, I wish I was, but I'm sure they were all talking about how they're gonna improve the stock value, how they're gonna improve profit, you know, look again at Boeing all these CEOs they give great lip service, but what they're really hired for is profit, profit, profit. And so that's not what made Wendy strong. That's not what made Wendy sustainable. What did is the founder's vision going back and that thought about the customer and we have to regain the trust of the customer. We have to better identify who is our core customer. So it goes back. Things change. You gotta go back to the four Cs that we use to help companies at the beginning, when positioning is everything, right? We have to go back c to the customer. Who is the core customer? What do they care a lot about? What how do we deliver that in a new way and given today's another C context? What's going on today? That's different than when we started this chain in 1969 or 68, whenever it was. What do people expect today that's different? How can we within our what we do well within our wheelhouse do well to adapt to the contextual changes? What's changed can from the competition? And so how do we address that? I think their message is quality is the recipe, and again, as we said, that's a little broad. So how do we how do we live that in a way that becomes more tangible for like you know, they were talking about the bigger beef and fresh not frozen. Well, what is it today? How can we support that better? and companies change. You know, this CEO swinging door syndrome, we just saw it at cracker barrel.

Mark Vandegrift 
Cracker Barrel, yeah.

Lorraine Kessler 
She's out, she's out. New one I hope they get someone who goes back to go forward and the new CEO of Burger King, after many missteps, you know, the King, the weird creepy Crispin Porter King that no one liked that's now probably, you know, a charge with CSAM, I don't know. But their new CEO seems to have gone back to the beginning. You rule is another way of saying, have it your way.

Mark Vandegrift 
Yep. Yep. Have it your way. 

Lorraine Kessler 
And so I applaud that. So you know, they're gonna like I hopefully Wendy's wakes up and sees that they've not only stumbled but fallen off a cliff and they gotta go back and start over and it hurts because you've got to close some s stores, you've got to invest. So it's gonna cost more initially to regain momentum. And no one wants to hear that who's worried about investors and stock prices.

Mark Vandegrift 
Well, I'm gonna throw you a curveball here. I didn't prep you with this question, but I happen to see a couple commercials of it. What they're promoting right now is they're frosty. And if you are a Wendy's goer, you know that the one thing that young people and older people talk about is a frosty and dipping Wendy's fries into the frosty. So, you know, ice cream and the salty flavor together. And that's what they're promoting. And I'm thinking quality is our recipe, Frosty's are not good for you, fries are not good for you. So, you know, you're talking about maybe that promotion that happens every so often. To me, that's what that is. What they don't have is that big idea. They're missing the big idea. Yeah. Yeah.

Lorraine Kessler
The sustaining idea that that yeah. I would agree. however, remember I said quality is relative. So your idea of quality is healthy food. That's I'm never I'm not expecting that from a fast food chain like Wendy's. What I am expecting in terms of quality is taste and the ingredients being really good ingredients. Like this is a really good French fry. This is a really good cold smoothie

Mark Vandegrift 
Frosty, yeah.

Lorraine Kessler 
Ice creamy, frosty drink. so I'm defining quality I think more within their ballywick. And I don't think that's a problem. but you're right, they're missing the overarching kind of thing that makes Wendy surge again. and in and maybe just today, competition's just too keen. I mean, in a way I feel like Chick fil A took their position. Right? I mean everything that Wendy's was, Chick-fil-A is and better. So I'd have to think a little bit more about that because I'm kind of somewhat mystified by Chick-fil-A and their success, but they kind of have occupied that space. So I feel like this is a this would be a challenge for Wendy's to come back.

Mark Vandegrift 
Well there's a quote that you pulled out in your email to me when you sent the link in the video he quotes he says, Some moats are too shallow.

Lorraine Kessler 
yeah. I thought that was good.

Mark Vandegrift 
And I yeah, I think that's a a great one because, you know, when we're trying to dig for a client's position, we know when that moat's too shallow and it's like, well, that's all they got. And so we try to we try to run with it, but while we're running with it, we're also trying to dig the moat deeper.

Lorraine Kessler 
Yeah, we're trying to figure out, yeah.

Mark Vandegrift 
Which, you know, sometimes that's like fixing the engine while the plane's in the air. But yeah, give us a sense for your perspective on this quote. And Let's get back to the primary thesis as well that positioning is everything until it isn't. Let close us out with that.

Lorraine Kessler
Yeah. Well, I think first of all, I think the credit of the moat ideas to Warren Buffett and you want to dig a deep moat. So the moat's too shallow. Yeah, it's really hard to differentiate when you're selling burgers, fries, drinks, right? And that's your main and a fast food environment. So what do you hang on to? what was the other part of your question that you had? Yeah.

Mark Vandegrift 
Well, just getting back to our thesis of positioning is everything until it isn't. You kind of made a comment about that. but I'm gonna about I'm about to give you some really bad news about Wendy's. So if we wanna finish out with that, we can do that

Lorraine Kessler
well, I think yeah, positioning is everything until the when you're in a space like Wendy's in and you've lost fascination. I think fascination is when you start off you're new, you're different, you create it's easy to get fans if you're doing things right that fit who you are. And there's reliability and trust that goes together to make a brand valuable. And you create kind of I hate to use the word, but it is kind of a brand tribe or cult who really become fans of what you're doing. And but you know, it's like a dying star. When that fascination wears off, it's really hard to relight that thing. I mean it's very, very hard. Chick-fil-A is riding high, but I feel like they're in danger because of ubiquity of being everywhere, that they are in danger of losing that star power, that fascination. And then how do you reinvent? How do you bring back? It's very difficult. And I can't even think of brands. Sears wasn't able to do it. Kmart wasn't able to do it. Target is suffering now, and I don't think they're able to do it. Kohl's is suffering now. They're not able to do it. Outback is certainly not gonna come back. I mean, these were brands that at one time had huge fan base. And once that fascination goes this is the magical element of branding and people's capricious choices, I think it's very, very hard. I I wouldn't know what to do. I mean, honest to God, I wouldn't know what to do with Wendy's right now. Yeah.

Mark Vandegrift 
Well, that was going to be my last question, but let me leave you with this news. They just lost their seventh CEO in the last 24 years. Same store sales are down 11%. They've closed, they've closed around 300 stores, and the stock is at a 20-year low, with only 2008 and 9 being worse, which as you remember was a significant recession. So I don't know where they go from here, but you know, I group them among McDonald's and Steak and Shake, which has really fallen off. You know, where do you go to get a great burger now? So some would say like a five guys or a Shake Shack, you know.

Lorraine Kessler 
No, they're in trouble too. I think Five Guys is lost their aplum too. So where do you go to get it great? Now I've heard some really good things about Burger King from people who are retrying it. So somehow they've and I thought they were near, you know, DOA. So they've come back. I really don't know what you do to bring this brand back. It would be it would be quite a creative challenge, and I mean creative. Not a financial.

Mark Vandegrift 
Yeah. Well, a as long as they're gonna chase profit, you know, we I went through Wendy's a couple of days ago just 'cause it was my only option and I was ready to eat my fingers off. And I got a junior bacon cheeseburger and I literally had to look pull the bun apart to see where the hamburger was. So, I mean, when you have to pull a bun apart to find the hamburger, you're not gonna win anybody back in terms of quality or anything else. And it's funny because we only get burgers now. Either we make them or we go to a place where we know they're giving us nice, thick, juicy hamburgers, and that's all we want, you know?

Lorraine Kessler 
Where do you go?

Mark Vandegrift 
Well, there's a place in Washington Square called Best Burger, and it they actually give you like real meat that's a real good size and sometimes if you want an extra little bit, you get a double. So Best Burger is where I tend to go or there's a couple local places that serve a good burger. It's not my first selection on most menus, but if I feel like a good burger, I go to Best Burger up at Washington Square.

Lorraine Kessler 
Now is that a franchise or is that just no, just a one right.

Mark Vandegrift 
Nope. Just a local place. Same guy. The owner is always on at the grill. He'll never grow up any bigger because he's an owner operator. It's kind of like one of our other clients that you know. That serves healthy food. Can't get out from behind the kitchen, but it's it makes the product good.

Lorraine Kessler 
Yeah. Well, they need to read the E Myth revisited, or E Myth books. But did you say that Wendy's are they still owned by Inspire brands?

Mark Vandegrift 
I don't know that they were purchased at one point by them.

Lorraine Kessler 
All right, because look at their portfolio all right. Well look at their that portfolio. I mean, they're all dogs right now. I mean I think it proves our point. When you have all these multiple brands and and it's owned by private equity or by people who want to put profit ahead of what the brand is really about and what it can deliver to a a core customer, it's it's troubling times. It's troubling times.

Mark Vandegrift 
Yeah. Well, I think you gotta go back and work on the product. That's where I would start if you made me CEO of Wendy's. That would be the first thing I'd do is say, Look, it's gonna hurt profit, but let's look at what our menu looks like. Let's get back to what Dave wanted and offer good fresh beef that's of a size that people actually know they're eating a burger.

Lorraine Kessler 
Yeah. Well, Burger King has kind of written a little bit of script on how to do that. and Domino's did that when it went back and said basically our pizza's not very good and we're fixing it. So sometimes that honesty and but again you have to go back, you have to invest to go forward in the right things.

Mark Vandegrift 
Yeah. Well, even outside of the burger joints, I look at Starbucks. They've gone back to the to a more experienced model. I told you my dad and I go to coffee every Thursday morning and the folks behind the counter bring out our coffee, they bring out our sandwiches, whatever we're doing, they say hello. It's not that rush transactional thing anymore. And we've noticed over the last couple of years the people visiting the store is going up and up.

Lorraine Kessler 
Right, right. So again, what you said, go back to what the founders, what made you great, go back to that. You know, this is biblical, Mark, right? They tell people who are having marriage problems, remember and return to what you first did. Same thing. First love, return. Remember and return, and then repeat. And that is the recipe.

Mark Vandegrift 
Yeah, good. Well, Lorraine, as always, thank you for your amazing insights. They're very much appreciated. Let's wrap up today's episode of the Brand Shorthand Podcast. Thank you to our listeners for joining us. And please remember to like, subscribe, share, subscribe, press the subscribe button. And until next time, have an amazing day.