Fast Food Competition
In the fast food industry, Wendy’s mainly competes with top burger chains McDonald’s and Burger King. According to Peterson and Taylor (2017), McDonald’s had the highest sales revenue in 2016 when ranked with other fast food restaurants. In that year, the company succeeded in making over $36 billion in sales, while Burger King had $9.7 billion and Wendy’s had $9.9 billion (Peterson & Taylor, 2017).
These top three burger chains have many similarities, including similar menu items, prices, and promotion methods (see Table 1). However, of these companies, McDonald’s continues to provide consumers the best contemporary offering. The company works to make eating at its restaurants the most convenient choice with features like mobile ordering and curbside pickup (Maynard, 2018). In 2018, McDonald’s focused on positioning itself for growth by adding more offerings such as new fresh beef burgers, a special Sprite drink exclusive to its restaurants, and its $1, $2, and $3 value menu (Here’s why 2018, 2018). Additionally, McDonald’s plans to introduce table service to its restaurants as well (Here’s why 2018, 2018).
Comparison of Wendy’s with Main Competitors
Criteria of Comparison Brand Chosen: Wendy’s Competitor # 1: Burger King Competitor # 2: McDonald’s
Product Offerings Burgers, Fries, Chicken, Sandwiches, Chili, Baked Potatoes Breakfast Items, Salad, Frosty drinks, Cookies, Coffee Burgers, Fries, Chicken, Sandwiches, Breakfast Items, Salad, Shakes, Sundaes, Pies, Coffee, Iced Coffee
Burgers, Fries, Chicken, Sandwiches, Breakfast Items, Salad, Shakes, McFlurry drinks, Sundaes, Pies, Coffee, Specialty Coffee
Price Ranges Jr. Cheeseburger: $0.99
Dave’s Hot ‘n Juicy Combo: $8.09 (Wendy’s prices, 2018)
Value Menu Burger: $1
Ultimate Bacon Cheeseburger Meal: $8.59
(Burger King prices, 2018)
Value Cheeseburger: $1
Double Quarter Pounder with Cheese Meal: $6.69 (McDonald’s prices, 2018)
Distribution – how many stores in the U.S.? 5,769 in 2017 (Statista: Number of Wendy’s, 2018) 7,406 in 2014 (Statista: Number of Burger King, 2018)
14,027 in 2017 (Statista: Number of McDonald’s, 2018)
Promotion Television commercials, coupons, billboards, digital advertising, social media
Television commercials, coupons, billboards, digital advertising, social media
Television commercials, coupons, billboards, digital advertising, social media
Disruptive Idea They Have Launched 4 for $4 Value Bundle Chicken Fries All-Day Breakfast
What is Important to Today’s Fast Food Customer
With all the fast food choices available today, consumers can be selective in which restaurants they choose. There are several factors that consumers consider important, including affordable choices, food safety and cleanliness, healthful choices, and quality, fresh ingredients. According to Taylor (2018), slow wage growth for low-income American families has forced fast food chains to compete based on price and value menu offerings. Since these low-income earners compose 40% of Wendy’s customer base, the fast food chain continues to keep prices low despite seeing a narrower profit margin (Taylor, 2018). Another drawback to appealing to customers who base purchase decisions primarily on price is that brand loyalty is often low. Many consumers frequent a variety of fast food chains depending on which is offering the best deal (Taylor, 2018). Moreover, a 2018 survey revealed that fast food customers choose to eat at a restaurant more frequently when motivated by value, rather than brand loyalty (Taylor, 2018).
Additionally, food safety and cleanliness are also important issues for fast food restaurants to address. In the summer of 2018, Wendy’s faced negative publicity when a viral video surfaced of a rodent in its hamburger buns (Price, 2018). This incident should remind fast food restaurants that maintaining hygienic food preparation and storage conditions is essential to maintaining a positive brand image. Lastly, consumers value healthful options and fresh ingredients in their fast food selections. According to a 2015 study (Tristano, 2016), “The most important factor for fast-food patrons is ‘high-quality, fresh food'” (para. 3). In comparison, healthful choices only placed six on the study’s list of important factors (Tristano, 2016). Thus, when forced to choose between fresh, quality food or healthful food, consumers are more likely to choose the first option (Tristano, 2016). Wendy’s exemplifies its dedication to quality ingredients through its policy of fresh beef hamburgers. This commitment gives Wendy’s a competitive edge when compared to other fast food restaurants. Although healthful choices are not as significant of a consumer preference, Wendy’s has made efforts to provide healthful food choices (Wendy’s: Nutrition and Health, 2018).
Wendy’s Biggest Concern
For the Wendy’s brand, its biggest concern would relate to competition. Since consumers have countless options to choose from, fast food restaurants are pressured to improve food quality to stay competitive. Moreover, this competitive environment has fueled a price war with each chain offering a value menu or dollar deals. Wendy’s also faces competition in how quickly it can prepare its burgers. As McDonald’s learned with its new Quarter Pounder, sometimes companies have to make a trade-off between freshness and speed (No more fast food, 2017). When McDonald’s changed the Quarter Pounder to fresh beef in 2017, preparation time increased by one minute (No more fast food, 2017). Although that amount may seem negligible, in the fast food industry, that time increase could push consumers to visit competitors instead. With any change or update to its menu, Wendy’s must calculate how much preparation time will increase.
Not only does Wendy’s compete with other fast food chains, it also competes with fast casual restaurants and, ultimately, even grocery stores for consumers’ money. In 2016, Todd Penegor, the CEO of Wendy’s, said the “the continued gap between the cost of eating at home and the cost of dining out” (Little, 2016, para. 9) was causing the fast food industry to see a slowdown in profit. When grocery store prices decline and fast food prices rise, consumers may choose eating cheaply at home over picking up fast food.
Recommendation for Changes to Wendy’s
One recommended change for the Wendy’s brand would be to consider ways to prepare its positioning for future changes in the industry. Wendy’s should work to ensure that its positioning “has a ‘foot in the present’ and a ‘foot in the future'” (Keller, 2013, p. 65). While consumers currently prefer value and fresh ingredients from fast food companies, Wendy’s should be aware of new entrants in the quick service industry that offer consumers more healthful choices. For example, companies like Salad and Go provide a variety of salads with the convenience of drive-through (Garfield, 2018). LocoL, another healthful fast food company, offers healthful options with prices of $6 or less (Garfield, 2018). Wendy’s may not be competing directly with these companies for the same target market currently. However, as affordable options for healthful food become more prevalent, Wendy’s will need to expand its positioning beyond simply value and convenience. By giving consumers the value they currently want and introducing more healthful options to future-proof the brand, Wendy’s can maintain this delicate balance of effective brand positioning.
If the Chief Marketing Officer of Wendy’s were tasked with planning the company’s marketing with a $100 million budget for one year, he would be wise to consider the company’s past marketing budget allocations and marketing best practices. In 2017, Wendy’s spent $372 million in advertising for a year (Statista: Wendy’s, 2018). Therefore, if the Chief Marketing Officer (CMO) only had $100 million budgeted for marketing expenditures, significant spending cuts would have to be made in order to keep the campaign from exceeding available funds.
After assessing previous years’ total marketing spending, the CMO should determine which areas to spend this marketing budget. According to Hanssens and Pauwels (2016), CMOs choose which channels to allocate funds to, and lower-level managers in charge of each channel make tactical decisions about how to use the funds that they are given. Therefore, the CMO would focus on how to divide funds among the four main facets of marketing communication: advertising and promotion, interactive or online marketing, events and experiences, and mobile marketing (Keller, 2013).
Each of these marketing options has benefits and drawbacks. For example, television commercials allow companies to reach large audiences (Hanssens & Pauwels, 2016). However, television commercials are very costly. In 2018, Wendy’s spent an estimated $31 million on “Cut to the Chase,” a television commercial that premiered during the NCAA Basketball Tournament (Watch the newest ads, 2018). On the other hand, according to Katz (2016), “Digital is becoming the dominant player in terms of advertising dollars spent, which indicates a significant change in how we consume content” (para. 9). In 2013, Internet marketing placed second after television in total amount of advertising money spent (Keller, 2013). However, in 2016, companies spent more on digital advertising (36.8% of media spending) than television advertising (36.4%) for the first time (Katz, 2016). Based on these statistics and the previously mentioned cost of television advertising, the CMO could allocate $40 million to the advertising and promotion channel, which includes television advertising. Then, the CMO could budget $40 million for digital marketing, including both interactive advertising and mobile marketing. Lastly, the remaining $20 million could then be spent on sponsorships and event marketing.
Christian Bible Integration
As a fast food restaurant, Wendy’s faces unique challenges when marketing its meal options. Restaurants in this category are often criticized for serving unhealthful food. According to a 2017 report (Nedelman, 2017), Wendy’s received a grade of C because of meat products containing antibiotics that can pose a threat to consumers through the development of antibiotic-resistant bacteria. Many of today’s consumers are also concerned with the use of GMOs (genetically modified organisms) in their food (Hingston & Noseworthy, 2018). Currently, Wendy’s does not have any information about GMOs on its website. When addressing use of GMOs, marketers should maintain transparency and should never “trick or manipulate consumers” (Hingston ; Noseworthy, 2018, p. 136).
Christian marketers at Wendy’s or other fast food restaurants should remember the biblical principle in James 2:16 (King James Version) of meeting others’ physical needs. This verse says that if “one of you say unto them, Depart in peace, be ye warmed and filled; notwithstanding ye give them not those things which are needful to the body; what doth it profit?” Christians can apply this verse to the food industry and work to give consumers meals that provide nutrients that people need, instead of giving them unhealthful or dangerous ingredients. If Christian brand managers are tasked with marketing a product that should be consumed carefully or in moderation, they should remember the importance of honesty. Giving the wrong impression or telling only part of the truth can cause a company to lose the trust of its consumers and can even endanger customers’ health.
Burger King prices. (2018). Fast Food Menu Prices. Retrieved from https://www.fastfoodmenuprices.com/burger-king-prices/
Garfield, L. (2018, February 19). 10 up-and-coming healthy fast food chains that should scare McDonald’s. Business Insider. Retrieved from https://www.businessinsider.com/new-healthy-fast-food-chains-better-than-mcdonalds-2017-2
Hanssens, D., & Pauwels, K. (2016). Demonstrating the value of marketing. Journal of Marketing, 80(6), 173–190. doi:10.1509/jm.15.0417
Here’s why 2018 could be a growth year for McDonald’s. (2018, January 9). Forbes. Retrieved from https://www.forbes.com/sites/greatspeculations/2018/01/09/heres-why-2018-could-be-a-growth-year-for-mcdonalds/#78344896738f
Hingston, S., & Noseworthy, T. (2018). Why consumers don’t see the benefits of genetically modified foods, and what marketers can do about it. Journal of Marketing, 82(5), 125–140. https://doi-org.ezproxy.liberty.edu/10.1509/jm.17.0100
Katz, B. (2016, September 14). Digital ad spending will surpass TV spending for the first time in U.S. history. Forbes. Retrieved from https://www.forbes.com/sites/brandonkatz/2016/ 09/14/digital-ad-spending-will-surpass-tv-spending-for-the-first-time-in-u-s-history/#3e1d7f314207
Keller, K. L. (2013). Strategic Brand Management: Building, Measuring, and Managing Brand Equity. Upper Saddle River, NJ: Pearson/Prentice Hall.
Little, K. (2016, August 16). Fast food’s big problem just keeps getting worse. CNBC. Retrieved from https://www.cnbc.com/2016/08/16/fast-foods-big-problem-just-keeps-getting-worse.html
Maynard, M. (2018, August 15). McDonald’s is spending $6 billion to play catch-up. Forbes. Retrieved from https://www.forbes.com/sites/michelinemaynard/2018/08/ 15/mcdonalds-6-billion-overhaul-swipes-familiar-ideas-from-fast-casual-restaurants/#5f45a516e255
McDonald’s prices. (2018). Fast Food Menu Prices. Retrieved from https://www.fastfoodmenuprices.com/mcdonalds-prices/
Nedelman, M. (2017, September 28). Restaurant report card: What’s in your fast food meat? CNN. Retrieved from https://www.cnn.com/2017/09/27/health/fast-food-antibiotics-grades/index.html
No more fast food: McDonald’s prioritizes fresh food. (2017, June 20). Fortune. Retrieved from http://fortune.com/2017/06/20/mcdonalds-sandwich-fastfood/
Peterson, H., & Taylor, K. (2017, August 2). The most successful fast-food chains in America. Business Insider. Retrieved from https://www.businessinsider.com/most-successful-fast-food-chains-in-america-2017-8#1-mcdonalds-20
Price, L. (2018, June 20). Live mice squirming in Wendy’s hamburger bun bag shown on video. USA Today. Retrieved from https://www.usatoday.com/story/news/nation/2018/06/20/ live-mice-found-wendys-hamburger-bun-bag/717635002/
Statista: Number of Burger King restaurants in the United States and Canada from 2011 to 2014. (2018). Statista. Retrieved from https://www.statista.com/statistics/256601/number-of-burger-king-restaurants-in-the-us-and-canada/
Statista: Number of McDonald’s restaurants in North America from 2012 to 2017, by country. (2018). Statista. Retrieved from https://www.statista.com/statistics/256040/mcdonalds-restaurants-in-north-america/
Statista: Number of Wendy’s restaurants worldwide from 2011 to 2017, by mode of operation. (2018). Statista. Retrieved from https://www.statista.com/statistics/ 221967/number-of-wendys-restaurants/
Statista: Wendy’s advertising spending in the United States from 2013 to 2017 (in million U.S. dollars). (2018). Statista. Retrieved from https://www.statista.com/statistics/306690/ad-spend-wednys-usa/
Taylor, K. (2018, September 8). Poor Americans are being left behind in the post-recession comeback, and it is creating a huge problem for fast-food chains like McDonald’s and Wendy’s. Business Insider. Retrieved from https://www.businessinsider.com/wendys-struggles-as-american-middle-class-dies-2018-9
Tristano, D. (2016, September 14). The no. 1 thing fast-food consumers care about (and it’s not healthy food). Forbes. Retrieved from https://www.forbes.com/sites/darrentristano/ 2016/09/14/the-number-1-thing-fast-food-consumers-care-most-about-and-its-not-healthy-food/#232a5ae94326
Watch the newest ads on TV from Wendy’s, Snapchat, Google and more. (2018, April 2). Ad Age. Retrieved from https://adage.com/article/hot-spots/watch-tv-ads-wendys-snapchat-google/312956/
Wendy’s: Nutrition and Health. (2018). Wendy’s. Retrieved from https://www.wendys.com/ nutrition-and-health
Wendy’s prices. (2018). Fast Food Menu Prices. Retrieved from https://www.fastfoodmenuprices.com/wendys-prices/