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For CEO, Restraint Was No Easy Order

Wendy's stuck to its strategy of silence as police probed a report of a finger found in chili.

May 23, 2005|From Associated Press

DUBLIN, Ohio — Each morning when Wendy's International Inc. Chairman and Chief Executive Jack Schuessler woke up at 4:15 to watch cable news, there it was. If the anchor wasn't delivering a story about the finger in the chili, it was probably on the crawl across the bottom of the screen.

Late at night wasn't any better. Jay Leno and David Letterman were making a living off a woman's claim that she bit into a human digit while eating at Wendy's, an allegation authorities have since declared a hoax.

Daily reminders that the chain's reputation, built around its food quality, was suffering made it difficult for Wendy's to stick to its decision to keep its response low-profile, Schuessler said.

"The worst part was to be reminded of it every day," Schuessler said in his first published interview since a woman claimed March 22 that she had bitten into a fingertip while eating at a Wendy's in San Jose.

"When you just think it's quiet and you're making progress, then you see it on the news again, a different slant on it, and that's the most frustrating thing."

Anna Ayala, 39, is accused of making up the finger story to extort money from the nation's third-largest burger chain, which had sales of $3.6 billion in 2004. She is charged with conspiracy to commit fraud and attempted grand larceny. The loss to stores in the area where she made the claim was $2.5 million, according to the felony complaint against her.

Authorities said the finger came from a man who worked with Ayala's husband.

Even as Wendy's learned of evidence that would make it look better, the company stayed quiet so it wouldn't interfere with police, said Schuessler, who held daily crisis management conference calls with about eight top company executives and lawyers. Wendy's also didn't apologize, alter its national ad campaign or attack Ayala's character.

"Today's society is an easy-way-out society. To stick up for the truth and your core values sometimes is a hard thing to do, but you have to do it."

Schuessler, CEO since 2000, found out about Ayala's claim when he checked his e-mail from home at 5 a.m. on March 23. It was five days before she would appear in an interview on "Good Morning America," solidifying the public's interest in the story.

Within days, store employees passed polygraph tests, a health department inspection found no problems and a trace of the chili ingredients ruled out the suppliers as the source of the finger.

"The only thing we could think of is either somebody played a practical joke that went bad or it's going to be fraud," Schuessler said.

The latter of the two started to look more likely.

Ayala filed a claim against the franchise owner, which she later dropped. Police searched her home and began to question her friends and relatives. It also turned out she had filed claims against several corporations in the past, though it's unclear whether she had received any money.

Letterman weighed in with: "She went back there for lunch today -- she's trying to collect all five."

Leno joked: "Instead of a spoon, they serve it with nail clippers."

For Schuessler, it wasn't funny.

"It's very hard what we had to go through because your reputation is being slammed and your inclination is to fight back aggressively," he said.

Wendy's -- long known for the "Quality is our recipe" slogan -- was a pioneer among fast-food restaurants in serving more healthful food such as salads and baked potatoes and has long touted its made-to-order hamburgers.

Ayala's accusation contributed to the company's second straight quarter of decreasing sales at stores open at least a year, considered the best indicator of a retailer's strength. So-called same-store sales declined 2% to 2.5% between late March, when the claim was made, and the end of April.

Sales have since improved, but the company wouldn't provide specific numbers.

Schuessler declined to comment on how the finger episode would affect second-quarter earnings but said he believed that the chain would turn in its 18th straight year of same-store sales growth.

The company is launching an ad campaign largely geared toward attracting young customers, a key target for fast-food chains.

But the key to turning things around lies in the chain's core values, he said.

"You've got to take care of the customer," Schuessler said. "Some people complicate the restaurant business, but all it's about is serving great food quickly in a clean environment with a smile and a 'thank you.' "

The head of a public relations firm that specializes in damage control said Wendy's was right to keep a relatively low profile.

"At some point it doesn't pay to continue provoking the idea," said Eric Dezenhall, president and CEO of Dezenhall Resources in Washington. "Plus, there's no perfect way to manage a crisis, he added: "It's called damage control, not damage begone."

Arlene Spiegel, a restaurant industry consultant in New York, said Wendy's executives "could have used this as a tremendous opportunity to showcase their commitment to the highest food-handling standards."

"I would have had a really strong, credible spokesperson making the rounds of every talk show," she said.

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