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Wendy's remakes its signature hamburger

By Christina Rexrode

AP Business Writer

POSTED:
LAST UPDATED: 08:34 a.m. HST, Sep 19, 2011


NEW YORK >> When Wendy's decided to remake its 42-year-old hamburger, the chain agonized over every detail. A pickle chemist was consulted. Customers were quizzed on their lettuce knowledge. And executives went on a cross-country burger-eating tour.

The result? Dave's Hot 'N Juicy, named after late Wendy's founder Dave Thomas. The burger — with extra cheese, a thicker beef patty, a buttered bun, and hold the mustard, among other changes — will be served in restaurants starting Monday.

"Our food was already good," said Denny Lynch, a Wendy's spokesman. "We wanted it to be better. Isn't that what long-term brands do? They reinvent themselves."

For Wendy's Co., based in Dublin, Ohio, reinvention is critical. That's why executives at the 6,600-restaurant chain spent the past two and a half years going over burger minutiae during an undertaking they call Project Gold Hamburger. That included deciding whether to switch from white onions on its burgers to red (they did), to change the fat/lean ratio of the meat (they didn't), or to go with plain or crinkled pickles (they picked crinkled.)

Wendy's is trying to boost lackluster sales and fight growing competition from much bigger rival McDonald's on one end and expanding fast-casual chains like Five Guys on the other. Part of the problem is that Americans in the economic downturn are being pickier about how they spend their dining-out dollars. But the biggest issue is that Wendy's, which hadn't changed its burger since the chain began in 1969, let its food offerings get stale while competitors updated their menus.

Still, it can be risky to tweak an old favorite. The past is littered with examples of this, including New Coke and Clear Pepsi, which were pulled from store shelves because customers didn't like them. Wendy's itself stumbled a few years ago when it rolled out breakfast foods. The company now says its mistake was offering omelets and pancakes, which aren't conducive to eating on the go.

"We have a lot of catching up to do in some areas," said Gerard Lewis, Wendy's head of new product development. "But after we launch this hamburger there will be folks who need to catch up to us."

How it all began

Project Gold Hamburger started around early 2009, shortly after hedge fund magnate Nelson Peltz bought Wendy's and combined it with Arby's. The marriage ultimately failed, with Peltz selling Arby's to a private-equity firm this summer.

It was clear that Wendy's had lost its way. In six of the past 11 quarters, the company has reported lower or flat revenue at restaurants open at least a year, a key measure of a company's growth. And after Thomas died in 2002, Wendy's struggled to find a new face for ads, at one point running bizarre commercials featuring a man wearing a red pigtailed wig.

Wendy's also faces strong competition from McDonald's, which has snatched customers from rivals by remaking itself into a hip, healthy place to eat, with smoothies, Wi-Fi and coffee drinks. Last year, McDonald's had 49.5 percent of the fast-food burger market in the U.S, up from 41.6 percent in 2002, according to research firm Technomic. During the same period, Wendy's share fell to 12.8 percent from 14 percent. Burger King's fell to 13.3 percent from 17 percent.

Anxious to reverse the decline, Wendy's polled more than 10,000 people about their likes and dislikes in hamburgers. Surveys showed that people like Wendy's food, but thought the brand hadn't kept up with the times. So, executives were shipped off to eat at burger joints around the country to measure burger characteristics like fatty flavor, salty flavor and whether the bun fell apart.

"I've traveled more with this burger than I have in my entire life," said Shelly Thobe, Wendy's director of hamburgers and new platforms.

Then, it was time for Wendy's to consider the chain's own burger, ingredient by ingredient. Each time researchers made a tweak, they asked for feedback, visiting research firms around the country to watch through two-way mirrors as people tasted the variations.

Wendy's chefs also tested new products at the headquarters in Dublin, just outside Columbus. From test kitchens, they slipped new burger incarnations through little windows into a "Sensory Test Area," a white-walled room with 16 cubicles where tasting volunteers — and sometimes employees — ranked each burger.

Many suggestions sounded good but didn't pan out. They tried green-leaf lettuce, but people preferred keeping iceberg because of its crunchiness. They thought about making the tomato slices thicker but didn't want to ask franchisees to buy new slicing equipment. They even tested a round burger, a trial that was practically anathema to a company that's made its name on square burgers. (While Wendy's did not go with the round shape, it changed the patty to a "natural square" with wavy edges because tasters said the straight edges looked processed.)

Among the proposed changes were some golden nuggets. Tasters said they wanted a thicker burger, so Wendy's started packing the meat more loosely, trained cooks to press down on the patties two times instead of eight and printed "Handle Like Eggs" on the boxes that the patties were shipped in so they wouldn't get smashed. And Wendy's researchers knew that customers wanted warmer and crunchier buns, so they decided that buttering them and then toasting them was the way to go.

In the end, Wendy's changed everything but the ketchup. It switched to whole-fat mayonnaise, nixed the mustard, and cut down on the pickles and onions — all to emphasize the flavor of the beef. The chain also started storing the cheese at higher temperatures so it would melt better, a change that required federal approval.

"It's not about getting real exotic," said Lori Estrada, Wendy's senior vice president of menu innovation and packaging. "It's about making everything work."

Change is good — but hard

Wendy's acknowledges that remaking a burger that's been around for more than four decades isn't easy.

The company in July sued a group of franchisees who refused to install the toasters needed to make the buns for the new burger. Each restaurant was asked to install two toasters, at a cost of $5,000 to $6,000 per restaurant. Locations with older grills had to replace those too, at a cost of about $15,000.

But the franchisees, who own or have stakes in more than 300 of the 5,200 franchise locations, say that Wendy's hasn't addressed their concerns about the safety of the toasters. The suit's two lead franchisees, whose pictures hang on a "Hall of Fame" in the headquarters' front lobby, say that employees could burn or cut themselves while using the toasters. The suit is still pending.

Wendy's also says that it knows some customers may not like the new burger — or its price. At a time when Americans are cutting back, Wendy's says prices for the burgers will likely increase because of the higher-quality ingredients, maybe by 10 or 20 cents. Franchisees set their own prices, though. A Wendy's near the Dublin headquarters, which was selling the new burgers last week, charges $3.49 for the quarter-pound, $4.69 for the half-pound, and $5.79 for the three-quarters pound.

Wendy's officials say complaints are inevitable. After all, the chain was flooded with complaints for three or four weeks last year when it made changes to its fries, including flavoring them with sea salt. But Lynch said fry sales "exceeded expectations," although he declined to give figures. He also said the new burger "speaks for itself."

Analysts have mixed views on whether the burger will be a recipe for success. Bob Goldin, an executive vice president at Technomic, said the move comes late as Wendy's has so much catching up to do with competitors. "It probably would have been a bigger deal if it had happened a lot sooner," he said.

Jeff Davis, at research firm Sandelman & Associates, is more optimistic, saying Wendy's still has a reputation for quality and credibility. "If they can hit those buttons, it's going to work for them," he said.

Wendy's is hoping the burger will be one of many successful changes. The chain, which got a new CEO last week, wants to expand overseas and on the West Coast, relaunch a breakfast line that's easier for on-the-go eating, and sell more high-margin snacks and beverages.

And early next year, it will introduce new chicken sandwiches.

The project is code-named Project Gold Chicken.






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