How Wendy’s 1980s Turnaround Changed the Fast Food Industry

How to make a huge change, and succeed.
Oct. 5 2012 3:30 AM

Better Than Fast Food

How Wendy’s 1980s turnaround changed the fast food business.

Pedestrians walk past a Wendy's restaurant in 2011 in Chicago, Illinois.
Pedestrians walk past a Wendy's restaurant in 2011 in Chicago, Illinois.

Photo by Scott Olson/Getty Images.

According to Wendy’s mythology, the chain’s founder, Dave Thomas, had a particular meal that he liked to order. He would get a single cheeseburger with pickles, onions, and mustard, a cup of chili, a side salad, and a small Frosty. Then he would wash it all down with a diet soda. The tastes of Jim Near, Wendy’s president from 1986 to 1995, were more variable. “He liked the hamburgers,” recalls Denny Lynch, senior vice president of communications at Wendy’s and one of the few employees remaining at the company whom knew both men personally, “but I think he switched it around.”

Katy Waldman Katy Waldman

Katy Waldman is Slate’s words correspondent. 

Near was a master of the switch-around. Thomas may have soaked up more media attention as the public face of Wendy’s, but Near, his friend and colleague, proved at least as influential in reversing the company’s faltering fortunes in the mid-’80s, one of the most successful turnarounds in American business history. Near grew up in the restaurant industry: As a teenager in Columbus, Ohio, in the early ’50s, he worked as a short-order cook at the White Castle his father owned. He met Thomas when the Burger Boy Food-A-Rama store he bought at age 23 began to lure customers away from Thomas’ nearby Kentucky Fried Chicken franchise. It was the beginning of a beautiful friendship.

But years would pass before the two men’s paths converged to produce fast food genius. In 1969, Thomas parted ways with KFC in order to launch his own franchise, which he named for his daughter, Melinda Lou. The young girl had struggled to pronounce Melinda as a toddler, so her family called her "Wenda.” Thomas’ new chain, Wendy’s, prided itself on fresh, high-quality ingredients and sandwiches made to order. In a fast food landscape dominated by an assembly-line mentality and low-grade meats and greens, it blew past the competition. Meanwhile, Near became vice president of Burger Boy, then accepted an executive position at the food-and-beverage company Borden Inc. He worked at Borden for five years before defecting to his old rival. In 1974, Near purchased the first of 39 Wendy’s stores he would franchise.

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If McDonald’s represented drive-through’s hyperactive clown, Wendy’s was its wholesome little sister. The chain defied convention by using fresh meat instead of frozen (despite a shorter shelf life and higher costs) and cooking its patties at less-than-blasting temperatures, to preserve the beef’s natural juices. Wendy’s popularity exploded in 1984 when it launched a wildly successful ad campaign, “Where’s the Beef.” WTB “was our grand-slam, homerun, bottom-of-the-ninth-in-the-World-Series,” Lynch remembers.

The growth quickly undermined the company. Wendy’s pulled in a record $76.2 million in sales in 1985 but got complacent from success. “In retrospect, we were reading our own news clippings maybe a little too much,” says Lynch. Management started cutting corners. The chain rolled out a misguided breakfast menu that tested well in trials but ultimately failed to turn a profit: Its elaborate, made-to-order French toast and omelets didn’t mesh with a fast food audience, many of whom wanted to eat on the go. The cumbersome breakfast effort marked a turning point in the Wendy’s narrative. By December, 20 percent of the company’s stores teetered on the edge of bankruptcy.

All businesses go through boom-and-bust cycles, and the management team at Wendy’s could have hunkered down and waited for their fortunes to change. Instead, though, Thomas tapped his friend Jim Near to run the company as president.

Near brought immense restaurant experience to his new role: He’d worked grills and cash registers, opened and closed stores for the day, managed payrolls, and hired and trained employees. He was, in the words of Peter Romeo, author of Restaurant Reality Check, “a ketchup-in-his-veins type of guy.”

Near fine-tuned and standardized the Wendy’s operations. Floors were going to sparkle, and greeters would welcome customers at the entrance. Every meal would be prepared according to precise specifications that were carefully tested in control groups and uniform across franchises. Near also seemed to excel at placing the right people in the right jobs. For instance, a friendly, talkative type might go behind the register, while a quick-handed pro would be assigned to man the grills.

Near deepened his credibility with the store owners he managed. He took responsibility for two Wendy’s in his neighborhood, visiting them every morning and every evening. He told employees they reported directly to him and that their new focus would be on the fundamentals of the business. Near liked to stalk through the dining areas of his stores examining people’s trays. If customers were leaving fries, he’d go harass the fryers: Were they serving the potatoes too hot? Too cold? Not using enough shortening? And he would sit in his car in the parking lot, surveilling the activity at the drive-thru window.