In the past few weeks I went from never having heard the business term “fail fast” to hearing it everywhere.
It came up when I interviewed former McDonald’s executive Ed Rensi at his startup chain Tom & Eddie’s and when I listened to Kathy Benning of Buffalo Wild Wings address the Marketing Executives Study Group.
Even if the term strikes me as new, the concept of businesses quickly correcting course when plans go awry has been around forever. So why am I hearing more about it now? My hopeful guess is that restaurant brands are taking risks again, going after market share instead of riding out an economic recovery that remains tepid for a lot of people.
Take a look at the quick-service segment to see what I mean.
It may be too early to tell if Burger King can sustain the momentum evident in its 4.2-percent gain in North American same-store sales in the first quarter. But the chain is staying aggressive, launching an overhauled menu in April with 13 new items, including offerings like snack wraps, fruit smoothies and frappés that have built sales for McDonald’s. A menu relaunch of this magnitude and an accompanying — and expensive — ad campaign that includes celebrity endorsers like Jay Leno and David Beckham is a significant risk for a company that had lost its way the past few years.
Wendy’s, the chain that had passed Burger King to claim the title of second-largest burger brand by U.S. sales last year, has remained even more nimble.
After admitting that its first-quarter sales were “disappointing” due in part to the trade-down effect resulting from its marketing strategies, Wendy’s said it no longer would advertise The “W” cheeseburger.
Wendy’s introduced The “W” at $2.99 last November to have a mid-priced hamburger between its My 99-cent Everyday Value Menu burger and Dave’s Hot ‘N Juicy cheeseburger at $3.69. But rather than encouraging value-conscious diners to trade up, The “W” backfired and stole transactions from Dave’s Hot ‘N Juicy. The negative sales mix combined with food-cost inflation cut into store margins and produced same-store sales growth of less than 1 percent.
During Wendy’s May 8 earnings call, chief executive Emil Brolick conceded that The “W” “was not the right positioning” and disclosed that the chain no longer would advertise the sandwich, now being sold for $3.19.
The marketing mistake cost Wendy’s in the short term, but the even bigger misjudgment would have been to wait and hope for trends to turn around. Acting prudently and quickly could prove to be pivotal in Wendy’s own journey back to robust sales growth, ultimately showing that failing doesn’t make one a failure, but indecision and inaction do.
Contact Mark Brandau at mark.brandau@penton.com.
Follow him on Twitter: @Mark_from_NRN.
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