Wendy’s-Chili--A-Costing-Conundrum-case-study.pdfVIP

Case study Wendy’s Chili: A Costing Conundrum Su Qiyu h702334605 1. How was Wendy’s able to achieve its initial success and to grow so rapidly at a time when the quick- service hamburger business appeared to be saturated? The reasons why Wendy’s was able to achieve its initial success and grow so rapidly when the quick-service hamburger industry was almost saturated are excellent location choice for the restaurant, the large franchise growth, product differentiation and concentration on the time of delivery and quality of products. According to the case, Most of Wendy ’s restaurants was located in urban or suburban with dense population. This strategic location actually was contributed to the initial success of Wendy’s by proving and improving the ability to sever large volume of customers and attraction to potential customers. Secondly, the prosperity of Wendy ’s was through the franchise expansion. At first, by 1973, Wendy’s owned total 32 restaurants include 17 company restaurants and 15 franchised restaurants, but by 1978 just a few years later, the franchised restaurants went up to 1,119, which increased 7360%. According to the case, every franchised was expected to pay a royalty of 4% of gross sales. The revenues from those franchised restaurants composed a huge part of Wendy’s initial booming and success. Finally, perhaps the most important contribution to Wendy ’s early success is its differentiation strategy. It differentiates its product and itself quickly from competitors by creating and proving a unique “square-shape” and “old fashion” hamburger at a fair price and delivering at a decent time. Those burgers were