With Wendy's Eyeing Sale Block, Saatchi's Effort Better Be a Biggie

Investor Pressure Turns Up Heat on New Shops at Beleaguered Fast Feeder

By Published on .

CHICAGO (AdAge.com) -- Memo to Kevin Roberts: Investors better love it.

A week after Mr. Roberts' "Lovemarks" shop, Saatchi & Saatchi, shot footage for its inaugural campaign for Wendy's, the beleaguered fast feeder announced it would evaluate all options to raise shareholder value -- including a sale.
Ian Rowden, exec VP-chief marketing officer at Wendy's, said the company spent much of 2006 re-establishing the brand with its base of younger core customers and creating the right mix of promotions and products -- which pleased at least one franchisee.
Ian Rowden, exec VP-chief marketing officer at Wendy's, said the company spent much of 2006 re-establishing the brand with its base of younger core customers and creating the right mix of promotions and products -- which pleased at least one franchisee.

Observers and insiders took the action as a preemptive strike against activist investor Nelson Peltz. But the company pooh-poohs the idea that advertising could make or break the company. "The decision of the board has absolutely nothing to do with the advertising," a spokesman said. "It's just one component of a very aggressive marketing plan."

Profit is paramount
But it's obvious the looming threat adds pressure for the campaign to drive results. Mr. Peltz "doesn't care about the quality of the advertising, just that it performs," said one executive familiar with the billionaire.

The new work from Saatchi is slated to be shown to franchisees by early June. Executives wouldn't disclose the specific content of the ads, but it's believed Wendy's is going back to basics. It's continuing to focus on key messages such as claims that Wendy's beef is fresh, not frozen, while hammering home quality using an honest yet contemporary tone. Speculation has swirled that the spots also might incorporate a voice-over character representing Wendy, daughter of the chain's late founder, Dave Thomas. The spokesman said the effort will be "very contemporary, very much in line with the strengths and the equities of the Wendy's brand."

During Wendy's shareholder meeting last week, President-CEO Kerrii Anderson said repeatedly that the brand's performance continues to improve on the strategic plan she put in place. "We also continue to focus on strengthening the overall brand perception and value perception at the Wendy's brands as we evolve our brand positioning [with] our new advertising agencies, Saatchi & Saatchi and Kirshenbaum Bond & Partners," she said.

Ads credited for sales
Ian Rowden, exec VP-chief marketing officer, said Wendy's spent much of 2006 re-establishing the brand with its base of younger core customers and creating the right mix of promotions and products.

One franchisee said Wendy's strategy is working: Sales have improved, and traffic is up. "It's got to be coming from somewhere."

It certainly isn't coming from McDonald's, whose sales have defied gravity, nor from No. 2 Burger King, which last week reported a quarterly profit and 2.6% comparable-sales gain. The increased competition puts pressure on Wendy's as the chain has relinquished some of its differentiating points to the competition, according to David Palmer, a restaurant analyst with UBS Equity Research. He said Wendy's revival of its fresh-beef claim hasn't had time to show "how much of a positive that can be."

But the recent turn of events can't let Mr. Roberts sleep any easier. John Glass, a restaurant analyst with CIBC World Markets, said Wendy's plans "to fix the business while simultaneously attempting to sell or otherwise recapitalize it stand in contrast to each other" and could undermine attempts to turn around the company.
In this article:
Most Popular