Wendy’s CEO Kirk Tanner on Leadership, Innovation, and Customer-Centric Growth | Leadership Next

Being locally relevant and designing the Wendy's experience is so important to do that from a local angle because you know that you got to be meaningful in the market you're operating in. It's understanding what the customer wants in those markets and what's on trend so that you know you have to execute against that. The base menu is there. It's there to enjoy. So the fresh burgers, the chicken sandwiches, the salads, those things are there, but there are unique local items on the menu.

Well, thank you. What was it? I'm having a Coke Zero from Wendy's.

My Wendy's order typically is an apple pecan salad, chili as a side, small chili, and I generally get a Coke Zero. But you know, we have freestyle machines in the restaurant, so you can get hundreds of different flavors. And I usually cherry is my go-to.

Probably three or four times a week. Now, I guess because I'm having fun. I'm due diligence. It's called due diligence. So, we have by our office, we have a Fresh AI in a restaurant right across the street. And so, I've been using it and testing it out and seeing how it works. It's really fun. Wendy, she greets you when you drive up. She's hospitable. She always asks you if you want something else. It builds on your order. So, she's very reliable. So I'm engaged.

Yeah, we are so passionate about the freshest quality ingredients at Wendy's. So, our beef is fresh, never frozen. It's locally sourced in the US. We use the freshest ingredients across building our sandwiches. That I think is really important today and will be important for the future. But doubling down on that is really important to us. And so our messaging around fresh, highest quality, we have options across the menu that allow you to build what you want. So anything that you want, we build for you. So personalization is also really important. So when you walk in Diane and want a baked potato, that's my go. Yep, we got that today. We've got it. Or if you want a single, you can build it over a thousand different ways because we make it fresh just for you, which I think is really unique in the industry.

Well, that's why I came because the growth potential of the brand, the equity in the brand, the opportunity for growth was the exciting part of Wendy's. Being able to build more restaurants, more places was really enticing. We have Wendy's in 33 countries outside the US, but we only have 1,300 restaurants. So, the opportunity is grand. Many of our competitors have more restaurants outside the US than they do inside the US. So I can think fried chicken brand that comes to mind. That might be it could be. Yeah. So that was such a compelling motivator for me to come to Wendy's was, we have such a fresh proposition that plays well around the world. Could we build more restaurants internationally? And then in the US, we are a challenger, but we're the second largest QSR burger in the US. Quick service restaurant. For those who don't know QSR, if I use an acronym, just shut me down.

So, quick service restaurants in the US, we have one Wendy's for every 56,000 people. Our competitor has one for every 36,000 people. So that gives us runway for growth. There's never enough, but we want to bring a Wendy's closer to you. So that was a big idea. And I love the challenger mindset in a competitive space, right? So challengers are always looking for ways to beat competition by delivering great customer experience.

Yeah. So, we're the second largest in the US from a burger category standpoint. We're growing our breakfast business. And so, if you thought about our fair share of breakfast, we would measure it against that share of burger quick service restaurants. And that would say we could double our breakfast business over the coming years. And so, that's how we look at it. We look at our share of opportunity and breakfast is a big opportunity for us. We started in 2020. We continue to build our breakfast platform. It did grow faster than the rest of our business last year. It grew at 6% and gave us a tailwind for growth and we see that continuing for the future.

Yeah, I think it's the quality of the food, right? It goes back to at breakfast we have the freshest we have great food at breakfast so driving awareness is the big idea for us at breakfast just making people aware that we have a breakfast our competitor started in 1977 we started in 2020 during right during COVID that's when we launched.

Yeah. Let me look I mean this is how I think about it is you have a restaurant that has employees in it in the morning prepping for lunch. You have consumers that are on the go and post-COVID are on the go more traffic and as consumers and customers we're looking for convenience. We're looking for quality and convenience and that's what Wendy's delivers. So if you take the opportunity of customers are looking for solutions. They're on the go. We have the highest quality food already in the restaurants. We have labor in the restaurants. We have an opportunity to have incremental day part that doesn't take away from lunch or dinner. I think that's compelling.

We're doing really well on eggs. Some of the commodities we forward buy. So that gives us some advantage for a time period unless they kill the chickens.

Those are different chickens. You're absolutely right. They lay eggs. You're absolutely shame on me. That's why you're running the company. But, you know, the opportunity at breakfast. The food cost is lower at breakfast than it is in the rest of day parts. So, there is profitability upside. I didn't talk about it, but now that brings that into focus.

Yeah, I had a Wendy's right by our house. It was actually my grandma's favorite place. Now, when you know, I'm getting up there. But, you know, it was a real treat to go out to a Wendy's and my grandma loved it. Actually, when I got this job, I got all these texts like, 'Congratulations, this and that.' And my brother sent me this text like, 'Grandma Brazier would be so excited.'

In Canada, 50 years ago we have over 400 restaurants in Canada. We source everything Canadian. So the beef is Canadian beef. Lucky you in a time of tariffs. So everything is very you know we talk about globally great, locally even better. And I think that comes to life in Canada and some of the markets that we're in. You want to be local as well, right? You want to be relevant to increasingly. You have to be local.

Yeah. I think well our social personality is definitely sassier.

It's engaging. It's young. It's, you know, if you think underdog or challenger mindset, it's attitude, I think, is a great way to describe it. Have you scaled it back? Were you worried about the attitude?

Yeah, absolutely. No, I think you have to be locally relevant. I'll give you an example. So, I was just in Japan as well. The in-dining experience is so important in Japan. So, setting up the dining room, padded chairs, those kind of things are really important. The same in the Philippines, the same in the UK. People come in and they dine in. In the US, we do a lot of drive-thru. We're hustling and bustling around. Padded chairs for you. We're hustling through the drive-thru. But being locally relevant and designing the Wendy's experience is so important to do that from a local angle because you know that you got to be meaningful in the market you're operating in. And those are the differences that we operate across the 33 countries that are outside.

Yeah. No, we don't have that and never will. See, this is why anyway in Canada, what's unique in probably some form of poutine somewhere? How can you not have cheeseburgers and gravy? You just get booted from the country. Yes. Yes. So, we have unique differences in Australia. We just launched a restaurant in Australia and we did, you know, some chicken tenders with the local sauces and things like that that are unique to that market. It's understanding what the customer wants in those markets and what's on trend. So that you know you have to execute against that. The base menu is there. It's there to enjoy. So the fresh burgers, the chicken sandwiches, the salads, those things are there, but there are unique local items on the menu.

Yeah. Consumers. A lot's been talked about consumer sentiment, consumer confidence. At Wendy's, it's our job, my job and the senior leadership team, the leadership team to control what we can control. Like, what is it about the customer right now that they are looking for that we want that Wendy's can deliver in good times and in bad times? But in tough times, you think about what you can offer to the customer to bring them into Wendy's. There are solutions that we have that we are focused on that I think deliver exactly what the customer wants. So, on a value standpoint, a lot's been talked about value at Wendy's, which is a surrogate for lower prices. Well, at Wendy's, we have what we call a Biggie bag. It's branded Biggie. So you come in and say, you know, I'll have a Biggie. That is an everyday value. And that comes in five, six, and $7. So it's a tremendous value. That's every day, but it's through the lens of quality. So just to go out and have a value message, it doesn't serve the purpose of what Wendy's wants to accomplish. We want to talk about the quality of our ingredients at a great value and that's it every day. So you can count on us there.

Okay. What's a moment of joy? Frosty girl. Dipped fries dipped in frosty. That's what I hear is you're catching up. You're catching up.

I was a Girl Scout.

It sounds like a man on the street, but I can tell you the thin mint frosty is amazing. Okay, I got to try it again. Get back. Get back. Get back. Get back.

Real experience. Yeah. Real experiences at PepsiCo. You get jobs maybe even before you're ready and you get those experiences and you think well is it management training? Is it well it's actual jobs. You are given these jobs and they're big jobs that have P&L and people responsibilities and you thrive in that market and people pick you up if you fall down. So you're able to fail forward I believe in that culture and then you know just this passion for building a business and growing in the consumer environment. So, you know, I think one of the capabilities that I've built over the years was this kind of obsession with where the customer is and how do you meet or exceed a customer's expectation that lives inside that culture, but you know, it's a competitive culture. It's a culture that one of your former CEOs was a former Marine. Steve Reinemund. Yep. I'm a big fan of Steve and Indra Nooyi of course with her with regard to passion and purpose. So I feel like we hear about these things on a macro level. Give us some story on a formative moment in your career at PepsiCo that you think shaped you as a leader, good and bad. You know, failure is welcome here.

Yeah, early on I had mentors and we talked about a servant leadership model and I in the trenches growing up in the early days and leading the front line and you know day to day it's very physical what we do. At PepsiCo you control basically all the aspects from if you're at Frito-Lay when the potato comes out of the ground you make it, you distribute it, you merchandise it at the store like it's fully vertical integration. So you own it and that mindset of being taught this idea of servant leadership was really helpful for me at a time I needed it because I was thinking about doing everything myself. I was pulled aside by a mentor and we were in a meeting and I had my team in there and I was answering all the questions because I wanted to be good and do good and all those things and he pulled me aside and says let your team answer, let others get results through others, that's important. And then we went through this servant leadership model which is kind of an upside down pyramid right that has the CEO at the bottom and the front line at the top because the customer is above the organization and everything is in service of the customer and everyone in the company should be in service of removing obstacles for those that are at the front line. That was so and I needed it at that time. And so I like wow okay that changed my perspective on how I led, how I got results through people. It didn't have to be me. And then later in my career I started talking a lot about and trying to teach this idea of selflessness meaning it's more important for the team to win than you individually to win. And that's challenging. Not everybody listens to those ideas in a competitive market. 'Here won't get you there' mentality.

Oh, let's mention dynamic pricing. I'm intrigued. What's that?

Yeah, we said dynamic pricing. We didn't say surge pricing. Yeah. Okay. That was made up and that's what went viral. Well, this is lower costs during off hours. So, yeah. So, it was you think about, you know, the afternoon day part or happy hour and advertising it through digital menu boards and being able to move and drive traffic. Okay, that's that. Yeah, that's what happened. It turned into something that was absolutely not true and it went a different way. But you know those are behind us. Failures generally for me have been in the product space when you're thinking about doing all the right things for the customer or the consumer. You've talked to the consumer, they've told you they love this idea and you execute against what consumers say. Well, consumers often do not tell you the truth. They tell you what they think you want to do. We want healthy food. We want healthy food. Not really. Yeah. So, made a big product change. That product change tasted the flavor slightly and that product was so important to customers out there that had three or four of them a day. They loved that taste. Well, we changed that taste. Sounds like New Coke. But you never worked there. So, but it was a similar one, just a Pepsi version of that. And it was a mistake because when you go back and say, well, let's understand the customers that love this brand. If you change it, will they still love it? The answer is no. Right? If you take something that you love and the person that provides that changes it and it changes how you love the brand, it's not going to be successful. Those things are really important. And a lot of innovation works and is incremental and some innovation doesn't work regardless of how many calories you put into it, effort you put into it. Sometimes you get it wrong and you have to be able to fail forward, right? Because you lose all those lessons when you fail forward and it's important not to fall in love with your ideas sometimes, right?

I think you said it brilliantly. If you look at the way consumers vote, not what they say, their actions, the transactions they make, the decisions they make, the behaviors they demonstrate. That is where you make decisions versus what they say. A lot of consumer research is done on direct surveys and focus groups and all those things. They're not as important to me when I'm looking at historical data, transaction data, behavioral studies, watching what people do and how they vote, and they vote with their wallets. Those are the most powerful insights. Again, we tell people what we think they want to hear. It's human nature to do that. It's cautious.

We're breaking her in. We're trying to create one. We're creating a customer. Yeah. Please look. Customers want choice. I think that's really important. And if you think about the world, we have so many more choices today than we did 20 years ago. Even if you went into a store, how many items were in a store 20 years ago? How many varieties of something you can get today? So, we've driven this choice on a menu. Having choice is really important. If it's salads or baked potatoes or the healthy ingredients we put on our hamburgers, etc., we give customers choice and we engage them in that way and clarity. If you go on our website or on our app you get clarity on the ingredient content, the calorie content. I think that's really important. Transparency is really important for customers today.

Look, if you look at any consumer, if it's restaurant or a CPG company, a consumer packaged goods company.

Hey, I'm learning. I'm learning. I'm coming along. Kirk Tanner, man of the people. Go on. As you were saying, there's always a tail, right? The 80/20 rule, all those kind of things or Pareto it's called. This idea of, you know, the most popular SKUs do about 80% of the business and there's a long tail. I think it's important when you're talking about efficiency and simplicity versus complexity, you always have to be looking at the tail and taking it out of the business. And so we constantly look at what's on our menu that's not relevant. What do we take off? What can we bring in? That's important, especially with store operations. For sure. Complexity is important to focus on.

Yeah, I'm trying to guess what the third. So, we have a large chicken sandwich business as well. Right. And so, our chicken our burgers are number one. Our chicken sandwiches are number two. And then we have amazing things like Frosty and baked potatoes. Baked potatoes, chicken nugs are also very important. Those are many of the popular things on the menu. We are innovating on our chicken. Chicken is growing. It's important as a consumer dynamic. Young people, multicultural consumers are looking for chicken. We are innovating on our chicken platform. We're doing this partnership with Takis. I don't know if you've heard of Takis.

So, Diane, I got asked this question at the investor day. Takis. Did they stump you on that one?

Okay, me. No, but a Gen Xer stood up in the audience and says, 'Does anyone in the Gen X generation eat Takis?' And I was like, 'Absolutely.' They're these little rolled corn chippy things. They're so I know they are. So, we're doing a Takis chicken sandwich and we're doing Takis fries. So, we're taking our hot crispy fries and covering them in the Takis seasoning.

My first job was at Sardini's. This is an Italian sandwich shop. They do tip there, I'm sure. In Fashion Place Mall in Salt Lake City. That's where I started. I loved it. It taught me a great deal. You know, making sandwiches and preparing. Again, it was made with fresh ingredients. We cut the steak would come in and you would slice the steak and create this, you know, it was a great job. It was a great job and I did it through high school. Yeah. So I grew in the restaurants. Your responsibilities grew, right? Fast food now seems to be more the realm of adult workers as opposed to kids. I think it's a combination of both. I think Wendy's is still a really great place to get your first job or a summer job and build your skills. I think that's really important that you get that first opportunity and I think Wendy's is that place to do that. I think that we can still play a role in that environment and I think that's a great place to start your career because you learn responsibilities and you learn about taking care of a customer. I think that customer mindset is one of the most powerful things you can teach a young person because that will spill over to any job that you do. Being able to resolve conflicts, engage with customers, deliver what they want. Those are all so valuable skills for whatever you're going to do in life.

Get started. I think the thing is like get started. Get a job. I think it's so important when you get a job as a young person immediately you get independence. If you ask a young person, what do you value most? I bet independence is one of those things for sure. And then the next thing is, well, how what'll give you independence? Well, your own money. Getting your own money allows you to do now the flexibility that you want. No one likes to go to their parents and go, 'Hey, dad, mom, can I have 20 bucks?' Come on. When you have your own money, it is so liberating and it drives independence. And then once you have it, you want to keep building on it. And I think that's the hope and dream, you know, unless your kid basically gets a job, buys an e-bike, gets it stolen twice, and then you're like, you know what, get another job. Just a hypothetical, not from experience.

Look, culture drives strategy in a business for sure. And so this idea of creating a culture where everyone can feel valued, engaged, and they can operate at their very best self. I think that's really important to create in high-performing companies. Generally, when you walk in the door of the company, you're valued, you're respected, your voice is heard, and you bring your best to work. That is really important. Regardless of what's going on in the outside environment, if you can create that on the inside, I think that's really important. When I talk to young people growing their careers, I talk to them about get the first job right or the job that you're in. A lot of young people come to me and go, 'I want to talk to you about the three next jobs.' I'm like, 'Three next jobs? What are you doing today?' And how do you do a great job and be recognized for your leadership, how you take people with you and how you perform in the job and then I believe your career acts like a vacuum and it sucks you along, you know? So if you do a great job, people see that you're doing a great job. I've not heard a vacuum analogy before. That's a good one. And then you get sucked along. And I found that to be true. I never asked for another job. I never went saying, 'Hey boss, I would really like that job.' Usually it was someone came and said, 'Hey, we'd like you to do this job.' And you know, some of those times you weren't even thinking about that opportunity, but someone pointed it out and said, 'You could do that. You should do that.' That I think is really powerful today because I see a lot of young people trying to map it out like it's a clear road map with no bumps in the road and no turns in the road and you're like, 'No, man. A five-month plan, not a five-year plan. There are bumps. There's potholes and there's S-turns and things are unpredictable. So, you just got to be great in the job you're in and you'll get pulled along.

Probably when I moved to the UK. I thought I was, you know, relatively young, but I had done the same level in the company. This was my third time doing that. So, another lateral move, but I took it to go to the UK to have a different experience and to learn and I showed up as the raw American can do anything high-fiving everybody. Really well over there, high-fiving everyone, charging the hill, and it was Yeah. 10-gallon approach right there for you. They went over like a lead balloon. It was not great.

Yeah. Debating an issue, being able to take one side and take another side and come up with what is a third way. So, what I learned right off the bat was discussion was important. You could have strong debates that were not personal, but if we were Americans, we'd take that stuff personal sometimes. I think that's changing. But having those debates taught me how to think. So I would go into every meeting thinking about a position of why it was important versus just do it. And that taught me how to think. And my thought leadership grew. And then I got more curious about it. And that changed the trajectory of what I wanted to do and how I wanted to think and how I wanted to study the business because I had to be more prepared because you were going to go into every meeting and there was going to be a debate like a House of Commons every boardroom meeting.

Understanding what the customer wants from us and expects and will embrace is the most important thing that we focus on at Wendy's. And in any of these matters, it's what's critical to our customer. The other thing I think about is supply chain sustainability. So optionality, insurance policy, you know, being able to source multiple places, being able to have insurance in your supply chain so that when something happens like right now with eggs, you have a sustainable supply chain that can deliver against what we need. Those are important. So when I think about these complex situations, I think about first I think what does the customer want? What does the customer expect? How do we exceed that? Whatever the topic is. The second thing I think about is the supply chain. How solid is it? What solutions can we build in to have redundancy so that we're protected? And that's how, you know, I believe you should run a business.

Very open. I think it's important to be very transparent. There's nothing hidden. You know, these why would you? What we're trying to accomplish is right in front of the customer because that's our number one mission. Actually, our promise at Wendy's is to deliver against that. And the first behavior is put the customer first. The second behavior is make every restaurant a star. And it's kind of goes back.

I think the passion was very similar. I was actually surprised how much love there was for the company inside the company. The love for Wendy's at Wendy's is tremendous. Dave's legacy rings true. People still talk about how it started, the values that he established. That love for the brand was really powerful. I think that you know Pepsi is a very competitive place. You know, we pick an enemy and we go after enemies. Yeah, of course. At Wendy's, we want to be hyper competitive and we're building that performance culture, but it comes from very similar love for the company. The cultures are very strong and when you have passion for what you do, you get the most out of people. And we have that at Wendy's. People are incredibly passionate about delivering for the customer every day. That is true.

Yeah, I'm an early riser. And so, obviously, if you're What does that mean? 5:00 a.m. 6 a.m. No, it's like 5:45. Get ready. Get ready for action.

Yeah. From a Wendy's standpoint, I think that our differentiator is our food and the quality of service that we are building. I think that's the thing that the takeaway and that fuels the growth for us to build more restaurants. That's as simple as I can make it. We have the opportunity to do it and we will reach our potential. From a leadership standpoint, I think it's important to be human and be, you know, be a real person and, you know, sometimes that's described as be down to earth, but I think being approachable and being real and authentic is so important instead of putting on a shield. I think a lot of times we put shields up because we think that's what we should do and I think it prevents us from being our best self. So being as approachable and as human as real as you can I think is an important leadership skill and capability and it just makes us more approachable and it makes us more relevant in what's going on in the world. Connect as human beings.

Thank you. Thank you so much.