Wendy's - A Lesson in Corporate Response

The CEO of Wendy's Restaurants, Jack Schuessler, talks about his company's response to the "finger-in-the-chili" fraud in the Wall Street Journal:

There's nothing quite as unnerving as becoming the target of fraud. For us at Wendy's, that nightmare became reality when a customer falsely accused the Wendy's on Monterey Road in San Jose, Calif., of putting a human fingertip in a bowl of chili. Within an hour the story was on TV news, and soon after, Wendy's was fodder for Jay Leno. It was painful for us to watch unfold.

In the early hours of this crisis, we were faced with demanding questions and choices. The Wendy's brand, and our reputation as a quality restaurant leader, were at stake. And just as important, the livelihood of our employees was at risk. (Restaurant employee hours are tied to sales--higher sales require more labor hours.) How we chose to respond was critical.

When the accusation was first leveled, we immediately invited the health department into the restaurant to look at all our food handling procedures. And we carefully interviewed the employees (who passed lie-detector tests) and went directly to our suppliers to double-check their safety records. Within 24 hours, it was clear that no employee or vendor could have been the source of the contamination: In fact, we were so confident of our innocence that we offered a $100,000 reward to anyone who could identify the origin of the fingertip.

As a result of this hoax, our business in San Jose fell by 50% and the effects were felt in our restaurants throughout the Bay Area and across the U.S. Even though the strain of this crisis was enormous, we chose to follow our core values. It might have been expedient to pay off the accuser in an attempt to end the media onslaught--after all, that is the preferred form of capitulation in this trial-lawyer-driven age; but we never considered this option. Instead, we focused on helping the police uncover the truth, while standing behind our employees and protecting our brand. Wendy's founder, Dave Thomas, believed that a reputation is earned by the actions you take every day, and that's still our credo.

I think Wendy's will be a case study of how to property respond to such a situation. Realizing that their core business was at stake, they aggressively pursued the truth, and fortunately for them, the truth exonerated the company.

Unfortunately their employees will continue to be the butt of bad jokes for a long time to come. I've eaten at Wendy's a couple of times since the incident, and one time even ordered the chili, but I fought off the temptation to say "hold the fingers". I was in a Wendy's this week and heard someone else make a comment like that to the person taking the order. I'm sure the folks that work at Wendy's have already grown tired of the comments.

Last I heard Wendy's is pursuing not only criminal charges against the suspect, but hopefully a civil case as well. The company lost a lot of money as well as their reputation to this fraud, and they should aggressively punish the suspect.