Customers ask Wendy’s, ‘Where’s the beef?’

Discussion
Photo: Wendy's
May 06, 2020
George Anderson

If you order a hamburger online from a Wendy’s in the U.S., you have roughly a one-in-five chance of getting a message that your local restaurant is out-of-stock on that particular item, according to new research.

Stephens analyst James Rutherford said a study conducted by his firm found 18 percent of Wendy’s were affected by burger out-of-stocks. The shortages were not equally spread out as restaurants in some states appeared to have sufficient inventory on hand while others in Connecticut, New York, Michigan, Ohio and Tennessee had the biggest issues.

Wendy’s use of fresh beef, while a marketing strength, has proven to be a supply chain weakness in recent weeks as the chain is not able to stockpile patties in the same way as rivals that use frozen meat.

“It is widely known that beef suppliers across North America are currently facing production challenges,” Wendy’s spokeswoman Heidi Schauer said in a statement to CNBC. “We continue to supply hamburgers to all of our restaurants, with deliveries two or three times a week, which is consistent with normal delivery schedules. However, some of our menu items may be temporarily limited at some restaurants in this current environment.”

The production of beef and other meats has fallen in recent weeks as major processing plants have been forced to temporarily close down due to outbreaks of COVID-19. Cassandra Fish, a meat industry analyst, told The New York Times that production has dropped more than 35 percent from its normal volume after four consecutive weeks of declines.

Shortages have also led to a spike in prices.

“Over the last month, we’ve seen significant increases in beef, with the largest increase being realized over the most recent week,” said Shake Shack president and chief financial officer Tara Comonte on the chain’s  first-quarter earnings call this week. “From a cost standpoint, we’re in a slightly more predictable position with chicken and pork due to locked in pricing agreements, albeit we’ll continue to monitor the broader environment closely.”

Recent meat processing plant closures have brought warnings in recent weeks from executives at Smithfield Foods and Tyson about supply chain disruptions. Most see these as temporary interruptions as companies become more adept at quickly disinfecting facilities where workers have tested positive for COVID-19 and enforcing social distancing policies to reduce the potential spread of the virus.

DISCUSSION QUESTIONS: Are consumers more likely now to stop patronizing a restaurant or grocery store due to out-of-stocks than they would have been before the coronavirus outbreak? Will the current experience change how large numbers of consumers react to out-of-stocks when life returns to some semblance of normalcy?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Wendy's has a marketing card that it can, and does, play for this shortage: unlike others, Wendy's brings fresh beef."
"Can you hear the vegans laughing/clapping? Me too, they live with me."
"Out-of-stocks in retail have never been a good thing. However today people are more willing to tolerate and forgive them because of the pandemic."

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18 Comments on "Customers ask Wendy’s, ‘Where’s the beef?’"


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Ken Morris
BrainTrust

Customers stop shopping at a restaurant or retailer because of what I call bad customer moments. Clearly the Wendy’s situation is just that. The 80/20 rule applies to these moments where 20 percent of customers account for 80 percent of sales and profits. These are the good customer that you want to retain but that 20 percent is not static. Customers enter or leave that golden 20 percent because of good or bad customer moments and this is clearly the latter. There better be some free burgers in Wendy’s future to win these folks back.

Neil Saunders
BrainTrust

Tolerance for out-of-stocks is higher during this crisis than before. Some of this is inevitably due to the fact that all retailers have more regular out-of-stocks so consumers can’t just switch from one player to another. However as we return to more normalized trading that tolerance will drop back. Out-of-stocks will remain a major annoyance for consumers. Given the pressure on store fulfillment from increased online ordering, this is something retailers will need to manage carefully.

David Naumann
BrainTrust

Out-of-stock situations negatively impact customer brand perception, but in today’s environment I think consumers are more tolerant, especially when they read about the situation in the news and realize it is out of restaurants’ and retailers’ control. If the meat shortages persist long enough, which I doubt they will, maybe some consumers will realized they can live with less meat in their diet.

Ben Ball
BrainTrust

Episodic events seldom change embedded behaviors significantly or long term. Consumers shop where it is convenient and in stores they like. They won’t stop going there permanently due to a temporary spike in out-of-stocks of any sort. And they will be just as aggravated by a single out-of-stock item they need six months from now as they were when it happened six months before COVID-19.

Dave Bruno
BrainTrust

I think “emotional tolerance” for out-of-stock issues is pretty high. People get it. This is an incredibly challenging situation. However if people are forced to look beyond their normal brands for new sources of the items they seek, new habits may form that last beyond the crisis. As discussed yesterday, the pandemic represents an unprecedented opportunity for customer acquisition by emerging, local and nimble brands capable of filling the gaps in the supply chain.

Shep Hyken
BrainTrust

This is a national problem, not a Wendy’s problem – actually not a specific restaurant or grocery problem. I don’t see it impacting the brand, unless they are the only brand with the problem, and that is not the case. The supply chain issues will impact everyone, and just as we (consumers) navigated through the toilet paper shortage, we’ll make it through the beef shortage. Yes, the meat problem is different than the toilet paper issue, but the outcome is the same. There’s a shortage. If you watched the news today, you would think every Wendy’s is out of meat – not just one in five. This will cause consumers to buy and hoard meat. This is America. We’ll get through it.

Scott Norris
Guest

Spent five minutes on the phone last night with my mother-in-law explaining that Wendy’s supply chain is different from McDonald’s and that the whole country is not running out of meat. The national processors are trying to give that impression to cause a run on supply for short-term profit & so they can pressure governments into keeping plants open / keeping inspectors at bay. Notice the Attorneys General of most Midwest/Mountain states just called for action against the big processors for price-gouging and anticompetitive behavior… I wrapped up the call by noting she has a wonderful local butcher just five minutes away, and they’ll never run out of meat!

Gregory Osborne
BrainTrust

In general, out-of-stock encounters discourage consumers and damage brands. There’s no question this hurts Wendy’s, and will even after the pandemic. But Wendy’s has a marketing card that it can, and does, play for this shortage: unlike others, Wendy’s brings fresh beef. The freshness of their beef has hurt them now, but it’s a long-term strategy to bring consumers better tasting burgers.

Camille P. Schuster, PhD.
BrainTrust

Out-of-stocks at restaurants are not different from out-of-stocks at grocery stores right now. Not being able to get certain products is part of the new normal. Regulating the amount that can be purchased means that more people have a chance of getting something which is much smarter than allowing consumers to stockpile. Right now out-of-stocks in meat are not surprising with the news of all the meat processing plants being closed or having to process less because of so many sick employees. Once all products are available all the time intolerance for out-of-stocks will increase.

David Weinand
BrainTrust

It’s been widely publicized that beef shortages are happening. I would assume that Wendy’s top tier customers would know this and give them a “hall pass” on out-of-stocks.

Tony Orlando
BrainTrust

Since this virus outbreak started, I have been talking to my customers online a lot. They get to hear the inside information I have, by working for a large wholesale meat distributor, and 99 percent are grateful to hear the truth. In the long run any store that tells customers the truth will benefit. You must never, ever gouge the consumer, even though you can, as it will come back to haunt you. Just today I have been telling my customers to buy extra, as everything will go up Thursday to cover these insane prices.

By not doing some sort of public campaign online, you will risk making your customers upset by not keeping them in the loop on what is happening to our food supply. You can even post a link to a good article if you lack the time to write your own blog — but do something, and they will appreciate it.

Steve Montgomery
BrainTrust

Out-of-stocks in retail have never been a good thing. However today people are more willing to tolerate and forgive them because of the pandemic. If you go into a supermarket you see people accepting that their favorite soup or whatever isn’t in stock.They understand the world we live in today and are far less likely to change stores or restaurants on a permanent basis because of an OOS.

Lee Peterson
BrainTrust

Can you hear the vegans laughing/clapping? Me too, they live with me. Anyway, over the last two months, everyone’s out of something all the time, including the behemoths like Amazon and Walmart. So I believe everyone will get a pass given the circumstances and if you’re a Wendy’s fan, for example, you’ll be back, checking.

Also agree with Gregory that the “fresh card” is the glass-half-full side of this for Wendy’s, although I’m sure their shareholders will see it a little differently.

Ryan Mathews
BrainTrust

I think in Wendy’s case they can make a credible argument that a pandemic is exactly the wrong time to lower safety, quality, and sanitation standards. Will that lesson live on past the crisis? I very much doubt it. Out-of-stocks due to holding or shifting supplies to first-responders is understandable. Out-of-stocks in “normal” circumstances will still be seen as inexcusable.

Doug Garnett
BrainTrust

Situations like this break chains of habit and tendencies in searching out food. However, consumers have always been brand polygamists — not brand loyalists. So this will have a short term impact – not a long term one.

I suppose a way to envision it is that Wendy’s might slip out of the “three go-to places” for some people, for a bit. But they’ll remain farther down on the list of places to go past those three. And eventually, they will cycle back up into the top three go-to places.

Ed Rosenbaum
BrainTrust

Wendy’s is but the first to let us know they are experiencing a shortage. More will follow. We certainly will not stop patronizing a restaurant or grocer because they are currently out of what we came there to purchase. Imagine how many grocers would be out of business because we went there for wipes or sprays that simply are not available now.

Sterling Hawkins
BrainTrust

We’re in a bit of an anomaly here with COVID-19 and while there are always make-or-break moments, consumers are generally a bit more tolerant right now. This is an opportunity for Wendy’s (and all businesses) to be more connected with their customers and share what they’re dealing with. Even though Wendy’s is not able to satisfy demand for their burgers, it’s an opportunity to build more loyalty and engagement in the long term (and perhaps even more demand since scarcity can drive greater demand). As we start to emerge into a “new normal” (whatever that is) consumers will again be less forgiving of situations like this.

Craig Sundstrom
Guest

Do people ever stop patronizing a restaurant because of “out-of-stocks”? I can’t imagine after having gone to all the trouble of being seated (remember that?) and perusing the menu, that a person would leave because a particular menu item was unavailable.

That having been said, Wendy’s isn’t a full-serve restaurant, and when you’re a hamburger place and you don’t have hamburgers available, that does present a particular problem. But it seems to be a passing issue, not game-changing one.

wpDiscuz
Braintrust
"Wendy's has a marketing card that it can, and does, play for this shortage: unlike others, Wendy's brings fresh beef."
"Can you hear the vegans laughing/clapping? Me too, they live with me."
"Out-of-stocks in retail have never been a good thing. However today people are more willing to tolerate and forgive them because of the pandemic."

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