March 26, 2005 in Business

Incident hurts Wendy’s sales

Compiled from wire reports The Spokesman-Review
 

Sales have dropped sharply at Wendy’s fast food restaurants in the area of Northern California where a woman claimed she found part of a finger in a bowl of chili, but analysts say the company’s long-term prognosis should not be affected.

Peter Oakes, a restaurant analyst with Piper Jaffray & Co. in New York, said he doesn’t expect Wendy’s business to suffer long-term from the discovery Tuesday night of a partial finger.

The hamburger chain serves about 6 million meals a day across the country and has a “national reputation for both quality and cleanliness,” he said.

“To me the yardstick here is whether the single incident prompts the consumer to lose confidence in the brand. It’s understandable to see some kind of knee-jerk reaction,” Oakes said.

Franchise owners have informed the company’s corporate headquarters in the Columbus suburb of Dublin that business is down, said Denny Lynch, spokesman for Wendy’s International Inc. He said he could not release specific sales figures because Wendy’s does not own those restaurants.

“It is an isolated incident. However, it is dramatically affecting sales in that market,” Lynch said.

Authorities in San Jose, Calif., planned to search a fingerprint database on Friday to try to identify the finger’s owner.

Capt. Bob Dixon of the Santa Clara County coroner’s office said he did not know when their fingerprint expert might have a match. “Nobody’s claimed it yet,” he said.

Wendy’s said the finger did not come from the restaurant’s employees. It is also confident company suppliers are not to blame because of product coding that allows the company to trace where a product comes from, the day it was produced, when it was shipped and when it arrived at the restaurant, Lynch said.

However, he acknowledged the process was “not absolutely 100 percent perfect.”

Wal-Mart board member resigns

A senior board member of Wal-Mart Stores Inc. resigned Friday following an internal investigation related to personal reimbursements, billing and company gift cards.

In addition to Thomas Coughlin, three Wal-Mart employees, including one company officer, lost their jobs in connection with the probe, the world’s largest retailer said in a brief statement. The employees were not identified.

Wal-Mart also said it did not expect any adverse financial impact to the company from the investigation. The company declined further comment Friday.

Coughlin, a 28-year veteran of the company, was most recently the board’s vice chairman. Previously, he had served as executive vice president and president and chief executive of the Wal-Mart Stores Division and Sam’s Club, USA. He also serves on the board of directors of ChoicePoint Inc.

Wal-Mart said it initiated the investigation on its own and referred the matter to the U.S. Attorney for the Western District of Arkansas. The U.S. attorney’s office declined to comment Friday.

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