Wendy’s failed to put its finger on the problem

Saturday, April 29, 2006 | 7:26 a.m.

E. coli hamburgers at Jack in the Box. Chili con finger at Wendy's.

How does a company woo back customers after a crisis? Especially after a scam involving your signature menu item?

Two UNLV marketing professors think they have the answer, one that's certain to be noticed in a town where the hospitality industry is a major employer.

After a Las Vegas woman planted a human finger in her chili at a San Jose restaurant last March, Wendy's sales plummeted $2.5 million in two months.

The popular fast-food chain tried to bring back customers by giving away free Frosty milkshakes. But sales remained stagnant.

That's because the free milkshake offer was a mistake, Kathryn A. Braun-LaTour and her husband, Michael LaTour, wrote in a study titled: "Is That a Finger in My Chili?" published last week in a leading research journal about the hospitality industry.

Wendy's should not have offered something for nothing, the couple wrote in the Cornell Hotel and Restaurant Administration Quarterly. Instead, their research found that the company should have appealed to emotions, reminding customers of what they used to love about Wendy's.

If the company had run ads reminding people about their childhood trips to the restaurant, customers would have returned more quickly, the LaTours said. In fact, the research found that emotional advertising is so powerful that ads could make people construct memories they never had.

The LaTours, along with co-author Elizabeth Loftus of the University of California, Irvine, cited as evidence the results of a survey of 100 UNLV undergraduates. All of the students knew about the chili incident, which was heavily publicized in Las Vegas.

Half of the students were shown an advertisement for the free shakes. The other half saw an advertisement with a child enjoying a hamburger, with a Wendy's Playland in the background. Text on the side encouraged consumers to remember their childhood visits to Wendy's, where they enjoyed "tasty fries and burgers" and "jumping in the ball pit" - "memories they would never forget."

The twist was that Wendy's does not have Playlands or playgrounds of any sort. Those are found at McDonald's restaurants. But few students seeing the childhood advertisement made the distinction. Instead, the ad made them recall happy memories of Wendy's.

Those students demonstrated a greater inclination to visit the restaurant again, eat the chili and take their kids. They also did not fault Wendy's for the incident.

Students shown the ad for a Frosty were less inclined to return to the restaurant, and some reacted negatively, said Kathryn LaTour, a hospitality marketing professor in the Harrah College of Hotel Administration. Students thought the offer of something free was manipulative.

"Unfortunately what a lot of companies do when a crisis occurs is offer a comp or something for free," she said. "There's a misconception that you can just give something for free and everyone will forget what happened."

The differences in effects "was profound," said Michael LaTour, chairman of the marketing department at UNLV's College of Business. "The differences between the emotional ad and the free Frosty ad were, statistically speaking, immense."

The best way to handle a crisis is to address the problem and appeal to people's positive memories of that company, the LaTours said.

For instance, when Jack in the Box faced its E. coli crisis in the early 1990s, it changed meat vendors and completely revamped its kitchens to ensure food safety.

But customers did not come back until the company went retro, bringing back the clown head that housed the company's drive-through intercom in the 1970s. "Jack," a man in a suit and a clown head, is now Jack in the Box's spokesperson.

As for Wendy's, it kept at least one loyal Las Vegas customer.

"I go there all the time, and chili is one of my favorite items on the menu," Michael LaTour said.