Dave's Way

Roots & Adoption

(who, I learned later, was my adoptive1 mother)

I had a lot of respect for her. She had so little, but she made so much out of it. Minnie was a real strong-willed lady. She believed if you worked hard, you made things happen. And, she was a hard worker and she provided.

“Hard work is good for the soul, and it keeps you from feeling sorry for yourself because you don’t have time. Four kids were depending on me and I just knew that the Lord would provide, and He did. All my kids grew up to be fine people, David, and your mother was one of the finest.

“If you want to go to heaven you’ve got to accept the suffering God sends your way. All good Christians have pain, David,” she told me when my mother died. “It’s the price we pay for eternal peace and happiness. Your mother had pain and now she is at rest.”

Grandma would finger the yard goods in the notions department and say, “They’re making this stuff thinner and thinner. They just don’t put in the quality like when I was young. Quality’s everything, David. Remember that. If people keep cutting corners, this country’s going to be in big trouble.”

I never remember him hugging me or showing any affection. I tried to feel proud of him because all kids have a need to look up to their parents, but it wasn’t easy.

Everybody says foster mother for adoptive mother and I used to, too. “Adoptive” still sounds a little long and strange to me, but I’m committed to using it—because it’s the right word to use.

I was twelve years old then, and this was my fourth move in six years. I didn’t get to know many kids in Indiana, but I did know a few from school and I missed them. Now I had to face the struggle of trying to meet new friends. I wasn’t up for it, so for three days I just slept late and moped around. My dad had enough of that and told me to go out and get a job.

My mother’s name was Mollie, and I first learned more details about my birth family from Minnie Sinclair when I was twenty-one and had just gotten out of the Army. I learned from Grandma Minnie that my mother Mollie had lived around Philadelphia, so I went there to try to find her. For some reason I went to the police station’s missing-persons department because I didn’t know where to start. An officer looked at my adoption papers and Mollie’s letters to Minnie and found an address in nearby Camden, New Jersey. I went to the address in Camden and met my grandfather, who was a tailor, and my grandmother, who was then very ill. I can still remember the sewing machines and different-colored spools of thread. They told me that my mother had died from rheumatic fever, just like my adoptive mother, about two years before. I learned that Mollie had worked in a restaurant for a while as a waitress. She married a man named Joe and never had any other children. They didn’t tell me anything about my birth father. I don’t know if they really didn’t know or just wouldn’t tell me. But I felt it was a deep, dark secret. However, having reached half my goal, I decided not to press them further. I just accepted the fact that I might never know who my birth father was.

We learned that he was single until the age of thirty-five, had worked as a stock broker, and had a son who is now a college professor. Sam had passed away years before Pam’s call. When I met his family, they said that they’d never heard of my mother and didn’t think that my dad even knew I was conceived.

It may sound strange to you that I should support adoption, because my adopted childhood was not all that happy. That’s not the way I look at it. Adoption made it possible for me to get Minnie Sinclair’s love and teaching. Adoption gave me my adoptive mother’s care and affection in my early years, even if I don’t remember it. And although he had different values than I grew up to believe in, my adoptive father tried his best. Had I not been adopted, I could have ended up as a ward of the state or raised in a county orphanage. So the way I see it, adoption turned out to be a big plus for me.

There are kids who are growing up living in makeshift orphanages made out of converted office space and worse in some parts of this country. That shouldn’t happen in the most powerful country in the world.

Without a home and affection, the chances for making it in this world are mighty slim.

Early Work & Grit

…both of us once dressed up like grown-ups and went around the neighborhood, knocking on people’s doors to raise money for our church. Since it was dark, nobody looked at us real close. And we really did give the money to the church. So, the first time I put the arm on folks to raise money for a good cause was back when I was ten.

Sure, you can change your dreams, but I think it’s real important to have a dream you can live by pretty young in life. It’s the best way to keep your energy focused.

Work hard toward that goal day by day, minute by minute. It’s like an athlete training for the Olympics, practicing every day with that gold medal in sight. In order to be a success you have to really, really want it and believe that you will get it.

Take a step every day. I never did anything for pleasure alone. At the end of each day, I wanted to say that I developed something or took a step forward.

I had to fold each paper and I had to collect, but the hardest part was finding the right houses because the addresses were confusing. I had nobody to help me or show me what to do, so I just quit.

I thought a lot about working in a restaurant, but every place I went they said I was just too young. So I was forced to put my real ambition on hold for two years.

Dave called me aside after about four weeks. He said I’d done a good job but that he was closing the store for two weeks so he could go on vacation. In a way, I was happy to hear the news. It was really hot, and I could spend sometime at the rec center swimming pool nearby. Then, a week later, Dave called and said he came back early and wanted me back in on Monday. On the phone, I stammered and said, since he told me I’d be off for two weeks, I’d already made some plans. When I didn’t show up the next Monday, the Help Wanted sign went back up in the window, and I knew I was fired. Every now and then I can close my eyes and see that sign in my mind. It’s sort of a symbol for a lesson I learned from the experience: when you take a job, you better be ready to show up for work when it suits your boss…not just when it suits you.

I’ll never forget my dad’s face when I told him I’d lost my job at Walgreen’s. I thought he would understand about the age and all, but he didn’t. He got so angry I thought the veins in his neck would burst.

He slammed his fist on the kitchen table and screamed, “You’ll never keep a job! I’ll be supporting you for the rest of your life!” I can tell you that moment has stayed with me, and I vowed to myself, “I’ll never lose another job again.”

During the summer, I worked at the Regas every day. During the school year, I worked every weekend. The Regas was open twenty-four hours a day, and I worked the twelve-hour shift from 8 P.M. to 8 A.M.

My dad knew I loved my own job, but there was no way he could or would drive me sixty miles a day, so he gave me a choice. Either I quit my job at the Regas and find another one in Oak Ridge, or I could ride the Trailways bus to and from work every day. I only had to think about it for a minute. During the school year, I rode the bus back and forth to Knoxville on the weekends.

One night, when I was real tired, I broke down and told Gene Rankin the truth, that I had just turned fourteen. I was physically tired, but most of all I was tired of having lied to the people at the Regas who had done so much to give me a chance. Gene said that everyone there suspected I wasn’t sixteen. “But you had such determination,” he said, “we just decided to let it go.”

It was really rough going back to living with the family every day. I had had a taste of independence in Knoxville and I wanted it again.

My hourly wage was 50 cents, but I got a nickel raise after only the first week. I made up my mind to work as hard as I could and get promoted to the fountain.

When I told my dad I was staying in Fort Wayne, he didn’t seem surprised by my decision, but I think he was surprised at how determined I was. I didn’t ask him if it was O.K.; I just told him this was what I intended to do. I remember he was packing his tools outside the trailer, getting ready for the move. “Someday you’ll be proud of me,” I said, choking up. “I’m going to have my own restaurant, and I’m going to be a success.” “I hope you’re right, son,” he said. “Good luck to you.” That was all he said.

Mentors & Models

Born in Patras, Greece, in 1888, Frank came to America because he couldn’t get along with his stepmother. He borrowed $100 from his father and traveled over on a steamer when he was fifteen. He didn’t have a job and couldn’t speak English.

I admired Frank because he was both so tough and so fair. He used to say, “As long as you try, you can do anything you want to do, be anything you want to be.” I believed him.

Frank Regas was short and stocky and full of energy. He would come to work every day in a three-piece suit. He loved to wear a vest with a pocket watch, but when the crowds started coming through the door he would take off his jacket, roll up his sleeves, and pitch in wherever help was needed. There’s nothing he wouldn’t do in the restaurant. He’d bus dishes or even wash dishes…whatever it took. Frank liked to wear a suit, but he used to say that you didn’t have to wear a suit or expensive clothes to make a good impression. But he would look for people that were clean and took pride in themselves, especially when he was hiring. If they did that much, he felt, they would take pride in their work.

Mr. Frank used to say, “don’t try to alibi by saying that it was only one customer. I won’t buy it. Work as if your job depends on every single customer, every day, because it does.”

He told me, “There’s a lot of opportunity out there and you’ll make a lot of money, but you have to set high goals and work hard to achieve them.” Gene was the first person to hear about my dream of owning a restaurant.

Don’t retire…age is just a number. I’m really against seniors retiring.

He told me, “Hey, son, this is America. If I can do it so can you. All you’ve got to do is work hard and have ethics. You’ve got to have a philosophy.” Kenny also said he was one drink away from being a drunk.

He belonged to Alcoholics Anonymous and hadn’t had a drink in thirty years because he had a philosophy of life: Follow the Ten Commandments. “In the morning you’ve got to get up and look in the mirror. You’ve got to be honest with the guy in the mirror before anyone else. The support of your family is the most important thing that you have in your life.” The Ten Commandments, being honest with himself first, and supporting his family were the keys to Kenny’s philosophy.

Kenny took me to dinner at the Cleveland Athletic Club—the first private club I’d ever been to—and he tipped the waiter $15. He told me, “I’ve got the money, I’ve got the responsibility to share it.” I decided right then and there that I wanted to be like Kenny King.

Kenny knew he was swaying me, but he cautioned me, too. “It’s good you’re impressed with all this,” he said, “but don’t take yourself too seriously, and remember, you don’t have all the answers.”

Everybody has a need for heroes, I think, people to mold themselves after, people they want to be like. You have to be able to dream, but those dreams should be about real people who have actually done things.

Army Lessons

I’m the first to admit that the closest I ever got to battlefield conflict was dirty looks from GIs on the other side of a chow line.

I started to get bored from sitting around with nothing to do. Not one to stay in bed, I went down to the mess hall and volunteered to work there until they would let me back into basic. I guess that I was curious, too, about how the Army ran its version of a restaurant. Just how did such a big operation work? For the next few weeks, I cleared tables, swept up, and helped the cooks a little. Some thought my gung-ho attitude was a bit weird. But I figured that I knew something about feeding people, and I could turn this into an edge. My gut instincts were right; there were some staffing problems in the mess hall. Some of the cooks were “lifers” who were just re-upping themselves to get their twenty-year pension. They would get drunk and wouldn’t show up for work. That meant I got involved in cooking more and more.

Plenty of people complain that they are bored stiff with their job, but they don’t do anything about it. They don’t look for ways to make their job more challenging. I began to think: “What problem is there in this operation that I could help fix?” There was one big problem: There was a lot of stuff the mess hall needed but couldn’t get. Anybody who could help solve that problem would be sure to get ahead.

There’s always been an incredible amount of waste in the Armed Services because nobody’s accountable.

The Air Force mess staff would often just throw away their beat-up utensils and tableware. I used to go to the dump and take the things my outfit could use. Then we would either turn around and trade it in for new, or we would use it.

The military can be one of the best places in the world to learn to be an entrepreneur. Any place with plenty of rules—rules that sometimes conflict with each other or are hard to enforce—will reward people who get around those rules in a way that doesn’t harm the organization or the people in it.

“Sir, our men are here serving their country and the colonel’s wife is only serving cookies and tea.” He got real huffy and barked, “Regulations prohibit me from authorizing paint for the mess halls.” I was really mad by this time and decided I would get that paint if it took me the rest of my duty tour. I talked to everyone I could. I raised hell about it and put in requisitions all over the place. Finally, I don’t know which requisition hit or who saw it through for me, but one day I got a truckload of five hundred gallons of paint.

When I presented the paint to my mess hall sergeant, my reputation turned to gold. Each company was evaluated on appearance, and after we painted the mess halls and the barracks, we got a high rating. Most important, the troops were proud. You could tell by the way they walked and joked when they came in for chow. There was less griping, and fewer jokes about “s——t on a shingle”—that Army staple of chipped beef on toast. I learned the power of a simple coat of paint, and it’s a lesson we have repeated countless times since to motivate employees and help make customers happier in our Wendy’s restaurants.

The engineering officer who refused my paint request came to me. He wanted to paint his office and asked for three gallons of my paint. I was real diplomatic and told him, “No, sir. I just wouldn’t feel right about that. The men of this division have fought awful hard to get this paint. I’m afraid you’ll have to go and do your own deal and put in your requisition just like I did.”

In Germany, managers move steadily up the ranks, and the idea of a nineteen-year-old being the boss was something these people could neither understand nor accept. So there was a cultural issue that was already against me. To make matters worse, under a United Nations pact we weren’t supposed to fire any civilians. You had to go through the German government to get them dismissed, and you had to have evidence that they had done something wrong, and that was very complicated to prove. So I had a problem. How do you get people’s attention when you don’t have the real authority to fire them and they don’t accept you as the boss?

If you are given responsibility without authority you cannot do your job. And if you are given authority without people understanding that you have that authority, you can’t manage them.

Family & Parenting

None of the waitresses thought it would last, but thirty-seven years later we’re still together and going strong.

I left the responsibility of the house and the child to Lorraine. I had no real idea of what a father should be like.

Lorraine made the decisions; I was no model father who shared in taking care of the home.

Lorraine told me to do whatever I thought best. She would have to give up friends and family to move to Columbus, and she would still be raising the kids almost by herself, but she knew I wanted to get somewhere fast, and she supported me. My clearest memory of this time was how Lorraine was such a great support for me, and such a model parent. As a parent, I really didn’t have any role models. Lorraine came from a really strong family. As a result, she knew what to do, and she did it: Girl Scouts and paper drives, homework and teacher conferences. Lorraine did a fantastic job, but I have to confess that I cheated my kids by not being involved enough in raising them.

Some people say, “I’m not going to give my kids a free lunch. I’ll make them work for everything they get, just like I did.” Spoiling my kids is not one of my major problems in life. They are my kids, and if they are spoiled by my giving and can’t handle it, that’s their problem.

The main thing I want to pass on to my grandchildren is that they can go out and be anything they want to be. But I’m going to push education a little harder with my grandchildren. A good education gives a person more self-confidence. I’ve always had to fight for everything, and I think that with an education you don’t have to fight quite so hard. You have more choices open to you, and you can choose without as much fear of failure.

KFC and the Colonel

Phil’s six stockholders didn’t want us to go into the barbecue business because they didn’t think anybody ate barbecue more than once a week or that many people ate it at all. Phil and I went to take a look at Mac’s Barbecue for ourselves. They had a really limited menu and I know that carryout alone the night we were there did $2,000—and this was over forty years ago. That really made the decision. We went to Mac and said we wanted to become a franchisee. He said, “O.K., I’ll sell you all your barbecue sauce.” We didn’t even pay royalty—a real simple deal compared with franchise arrangements today.

But the main problem was that we didn’t stick to Mac’s basic program, which was just that—basic. When customers complained about the paper plates we switched to china. But china and silver ran our costs up. When customers said they would prefer rolls to rye bread, we gave them rolls and butter. We later realized that the key to Mac’s success was that he picked a limited menu and stuck with it. We had all these other items on our menu—many of which were good—but the variety killed our focus and made the business much harder to manage. That’s what did in Howard Johnson’s and so many other full-service restaurants: lack of focus and all the complications that came with too much variety.

Once Phil hired an efficiency expert from Chicago. This guy charged us $1,000 and his only advice was to close the restaurant between 2 p.m. and 5 p.m. because we weren’t making any money then. That was dumb because if we started breaking shifts and sending home waitresses we’d lose some great people.

…with the responsibility of two kids, I wanted and needed more money. I was still making only $75.00 a week and we were constantly strapped. Somewhere, there had to be a golden egg. When it turned up—and it did—I didn’t even recognize it.

He had just returned from a National Restaurant Convention at the Palmer House in Chicago and he was raving about a guy he had met, a Kentucky “Colonel,” who claimed he had a better way to cook fried chicken. Phil said that since neither he nor this guy were drinking men, they just kind of bumped into each other in the lobby and talked for three hours while everyone else was out doing the town. He really liked this Harland Sanders.

The deal was simple enough. Colonel Sanders would sell you a supply of his secret spices and some Mirromac pressure cookers at $27.50 a piece. And he wanted 5 cents for every chicken you sold. It was strictly a handshake deal.

Colonel Sanders claimed his chicken only took thirty minutes because he fried and steamed it in one step. He also claimed it was “a damned sight better” than any chicken anywhere in the United States. And it was exotic. People in Indiana were curious about chicken that had a “Kentucky” put in front of it. People wanted to try something that they thought was different. I’m sure Kentucky Fried Chicken meant a whole lot more outside of Kentucky than inside it. It’s still the same today. Isn’t it funny how often Maine lobster is served on Florida menus?

He introduced himself and asked if I knew him. I pretended I didn’t even though I knew all about him. We sat down over a cup of coffee, and he talked to me like an old friend. I’ve never met a better salesman. When he left, I had a sense this man was going to change my life.

When I finally tasted Kentucky Fried Chicken in a restaurant in Michigan City, Indiana, I knew it was a really good product. I had to tell Phil Clauss that I was wrong, something I didn’t like to do very often.

Maybe this Colonel in a white Cadillac had something. Even though I was to make a lot of money in chicken, the funniest thing was that I personally hated chicken.

We had to modify our stoves to fit the Colonel’s special pots, and he wanted to be sure we knew how to “do his chicken right.” You couldn’t believe how particular he was about his crackling gravy.

Kentucky Fried Chicken was a sensation from day one; but why? We knew it tasted good, but there had to be more to it. We did some customer surveys (which were nearly unknown in the restaurant business back then) and found out that people liked the idea of taking food home to eat. It was convenient and saved a lot of time. Also, people were traveling more. They said they were going to the lake or the park, and the wife (O.K., today it’s the spouse) was home making salads, so with our chicken, their picnic fixings were complete. In those days people didn’t buy food to take home except for an occasional bag of hamburgers, so we were on the edge of a new phenomenon and we were smart enough to see it.

Within a few months, we built one of the first places in the United States totally devoted to carryout or take-home chicken. With this room, we helped pioneer the idea of carryout.

The Colonel was feeling his way into franchising and no one knew much about it. He sold strictly by word of mouth. He was a great salesman, but he was his only salesman. The company consisted of the Colonel and his wife. The Colonel was sixty-five and his goal was to make $1,000 a month.

Phil and I were more ambitious than that and knew we could sell more chicken. We were impatient and didn’t want to wait for one neighbor to tell another about us, so we started promoting. In those days you just opened up and cooked the best food you could and hoped for word of mouth to spread your name. Image was a new word, franchise was a new word, promotion, marketing and merchandising were all new words in the restaurant business.

Few people know this, but selling chicken in a bucket was really Phil’s idea. When the Colonel first started coming around with his pots, herbs, and spices in the backseat of his Cadillac, the only packaging idea he had was the dinner box, which was a simple cardboard rectangle. It showed three baby chicks on one side, “My Old Kentucky Home” on the other, and held three pieces of chicken, mashed potatoes, gravy, coleslaw, rolls, and honey all for $1.10. But Phil and I saw the possibilities way beyond the box. It wasn’t big enough for large families who wanted a lot of chicken or for parties. Plus, a stack of boxes was hard to carry.

We changed the coatings on the bucket, found a manufacturer, and asked Phil’s brother-in-law, Jim Chamberlain, who ran an advertising agency in Fort Wayne, to do some sketches of the Colonel for us to put on the bucket. The Colonel had no money at the time, so he offered Jim a penny-per-bucket royalty for his work. Being a struggling artist, Jim said he wanted a flat $10,000. Tough as it was, the Colonel came up with the money, but Jim kicked himself for years for not taking the royalty deal!

Food is a personal thing, and it’s tied closely to family life. People want to know the values of the person who is ladling out the goods. Harland Sanders stood for values that people understood and liked. It was just the next step from what had already happened with packaged goods. Remember, people thought of Betty Crocker and Uncle Ben as real people behind the products, too.

“payola”

Traveling with the Colonel was a caution. During one of the early trips we made together in the fifties, we drove to Houston, Texas, where he wanted to stay at a $15-a-day hotel. This was a lot of money in those days! I was too ashamed to admit that I didn’t have that kind of cash, and Lorraine had to wire me some money.

Harland Sanders’s temper was legend. After ordering a bicarbonate of soda in a restaurant he got the owner so riled up in a spat over the price of the tonic that the owner threw a heavy sugar shaker at the Colonel. The owner succeeded in breaking the glass door to his own restaurant!

I was a smoker then, but I didn’t know that he hated smoking. He never told me. The roads were like glass. Suddenly, he made me pull the car to the side of the road, yanked the ashtray from the dashboard, and actually threw it out the window. “I hate smoking,” he fumed. “It makes me sick and I won’t tolerate it!” I didn’t smoke the rest of the trip, but it would have been a lot easier if he just had said something first.

The Colonel had a real personal style with the way he ran things. I should know—I worked with him for thirteen years. Although I disagreed with some of what he did and preached, I still use much of his philosophy today at Wendy’s.

No good business will go anywhere without high standards. The Colonel was a perfectionist when it came to fixing his chicken. I admired him for sticking to his guns. He didn’t have much money in those days and he wanted his business to grow, but he wasn’t so hungry that he’d let the quality of his product slide. When the Colonel gave us a franchise, he didn’t just ride off into the sunset. He’d come back to check on us every three weeks or so. I can still hear his badgering today: “We want customers, don’t we?” “We want sales, don’t we?” “And we want to uphold the Colonel’s standards of quality, don’t we?” He made business standards a personal affair. He was right.

Cleanliness is the single most important ingredient on a restaurant’s menu. What really gave fast-food chains a boost is that they were reliably clean. Too many people were nervous about the “greasy spoon” diners that populated the American landscape.

I liked his philosophy but didn’t agree with his style. From the Colonel I learned to set down firm rules and guidelines, but I also learned that tantrums weren’t the best way to solve a problem.

Sales were dismal, our credit was zero, and even the Colonel insisted on making his deliveries C.O.D. And the Colonel didn’t spare me any advice when he saw me. “I’m telling you for the last time, Dave,” he said. “As your friend, get out now while you can. Things are just too far gone here. Listen to the Colonel, boy.” I thanked him, paid him, and told him, “It’ll turn around. It will. You’ll see, in a few months, it’ll turn.”

The local radio station manager knew I couldn’t afford to buy ads, but he swapped me radio spots for some chicken. His deal set me thinking. That chicken swap at the radio station led to the biggest breakthrough of all: We had to focus these four takeout places in a way that made sense to the customers. It dawned on me that it wasn’t our menu that was drawing people in. It was our chicken! I drove straight to our closest restaurant and grabbed one of the menus. It was too full, too crowded—that was my problem. Within a few weeks, the menu was slimmed down to chicken, salads, dessert, and beverages. Since nobody had ever heard the name Hobby Ranch House, I changed the name of our restaurants to Colonel Sanders Kentucky Fried Chicken Take-Home.

It took him about two weeks to come up with my illuminated, revolving bucket, and he did a fantastic job. That’s how the bucket sign got started, and the Colonel began using my “wobbling” bucket in all of his stores. That bucket sign came to stand for Kentucky Fried Chicken, the same way that three balls over the door meant you were a pawnbroker, or a whirling candy-cane lamp meant you were a barber.

As KFC got bigger and bigger, the Colonel started to lose control. He insisted on calling all the shots, but more and more franchisees stopped listening. It was no longer a big happy family where the Colonel knew everyone on a first name basis.

John Brown and Jack Massey offered Colonel Sanders $2 million with $500,000 down and a note to cover the rest. He would receive a salary of $40,000 a year for as long as he lived, and he would receive residuals for TV commercials and promotional appearances, but he got no stock.

The Colonel called me late one night and in a trembling voice told me he had decided to sell out. “What do you think, Dave? Did I do the right thing?” I told him that since the deal was done, he shouldn’t worry, and he and his wife should enjoy themselves on the money he earned. Down deep, I knew that he had been too active a person to be happily retired. The Colonel never could live with his selling of KFC. As long as I knew him, he cursed himself for what he called the biggest mistake of his life. Five years later John Y. Brown and Jack Massey turned around and sold KFC for $130 million.

Even though he had sold out his interest in KFC, he was still a spokesman for the company, and he still saw the business as HIS concept. He was afraid that the big boys who bought him out and who “didn’t know a drumstick from a pig’s ear” would ruin it. Even things that didn’t make a difference set the Colonel off. The new management had come up with a simpler way to drain grease off the chicken by just dumping it onto wire racks. It was less time-consuming and a lot easier than the Colonel’s way, which was to ladle the grease off by hand. The Colonel hated the new “dump” system because he said it bruised the chicken. As I was getting set for the grand opening of my fifth store, I got a frantic call from the Colonel. “I hear you’re using that new system to drain my chicken,” he said in an angry voice. I explained how it saved time and affected neither the look nor the taste. “Let me tell you something, boy,” the Colonel declared. “If you dump my chicken you are slapping the Colonel right in the face.” I tried to reason with him, but he said he’d never talk to me again. We saw each other maybe once or twice after that before he died at the age of ninety, but the relationship was history. To this day, I really admire him and like him, even though he was a tough customer to get along with sometimes.

In 1968 Phil Clauss and I decided the time was right for us to sell our stores to the company. We sold our stock in the franchise for approximately $1.7 million in KFC stock.

I invested $50,000 in another firm called National Diversified, which was in a different kind of restaurant business that didn’t compete with Kentucky Fried Chicken.

John Brown called me into his office. “Dave,” he said, “we’ve got a problem, and it might involve a conflict of interest. We know that you have a significant block of stock in National Diversified, and since they’ve signed a deal with KFC it may present a conflict of interest.” He told me the best way to relieve this problem was for me to sell my stock in National Diversified to KFC for what I paid for it. I knew by then my stock would have a market value of about $2 million if I could have found someone to buy it, but I didn’t want to be involved in a conflict of interest. I never questioned John Brown because I trusted him. He told me I did something I shouldn’t have done, and like a big dummy, I believed him. I sold my stock to KFC, trusting John Brown, and thinking that I was doing the right thing. A friend later told me that was a wrong move. There was no conflict of interest. Since I was not a corporate officer of KFC and never made any major decisions or signed any deals for them, I was just an employee. I decided to go to the Board of KFC and ask for my stock back. They said “no” right away and wouldn’t even listen to my side.

My experience with John Brown and the National Diversified stock made me a little less trusting of people, especially the real smooth types. When big bucks are involved, be careful, no matter who you think you’re dealing with.

Wendy’s Vision

Kenny King warned, “Just know what you’re getting into, Dave. It could be a big mistake. You want to push this carryout thing, but I think you need a coffee-shop type of operation. You’re a smart young man, though, and I’ll help you any way I can.” The Colonel exploded when he heard about it. “You’re stupid if you go there,” he said. “I thought you were smarter than that. That operation is on its ass and you’re going to uproot your wife and kids and make a G.D. fool of yourself. Wise up, boy. You’ll paint yourself right into a corner. It’s a one-way street going nowhere.” Well, I was going nowhere at the Ranch House, too. No matter how much money we made I probably wouldn’t see much more than I was seeing. I had the title of vice president, but I still wore an apron every day, and I still worked the grill every day, and I still earned $27 a day before taxes.

But not getting regular wages made me nervous. When you’ve been poor you always have that fear that you might be poor again, and you lie awake worrying at night. I was scared.

To me, nothing would be a more appealing advertisement than showing a little girl, smiling and rosy-cheeked, enjoying one of my fresh, made-to-order hamburgers, but none of my daughters’ names fit. Then it came to me. When my daughter, Melinda Lou, was born, neither her brother nor her two sisters could pronounce her name. They started calling her Wenda, which then turned into Wendy. Her cleanly scrubbed, freckled face was it.

Wendy’s was born at a time when nostalgia was sweeping the country. I wanted to offer a warm but simple family atmosphere, with upscale overtones, so the interior of my store featured carpeting, Tiffany lamps, hanging beads, old-fashioned advertising on the tabletops, and bentwood chairs. The crew was dressed in traditional “whites,” which gave the feel of cleanliness and tradition.

The menu for Wendy’s would be limited and simple.

My angle was that at Wendy’s you could get hamburgers served the way you liked them because of the many ways you could mix the condiments. The customer could come up with hundreds of combinations, but the menu itself was super narrow. The only item on the original menu that we got rid of was sugar cream pie at 40 cents a slice. Why? Because I kept on eating it all, and we’d forever be running out for the customer. Wendy’s stuck with my original menu for ten years, but it was a fight to keep it that way because there was always pressure to add more items. I’d come up with ideas. Everyone else would, too; but we hung tough. To this day, I believe that most entrepreneurs—especially in the restaurant business—get into trouble by making their menus too broad and offering too many products.

…my biggest worry was the view held by serious business people that the fast-food industry was saturated, and the last thing that America needed was another hamburger restaurant. Every day, there’d be articles in The Wall Street Journal or some other business publication about new fast-food places. To me, hamburgers made to order and made from fresh meat made all the difference.

(Research isn’t everything. Not long after we started, Burger King paid a lot of money for a research study that explained why Wendy’s wouldn’t work.)

People were fed up with poor quality. There was a big drive for things natural and wholesome, the way people remembered them being…

People were adjusting to a new, more complicated way of life. So many changes were going on—the Vietnam war, computers, the stress of modern-day life. The young adults were after something that was “totally radical,” while their parents just wanted the kids to turn down their stereos and stay in school. The parents wanted a simpler time and traditional values.

People were on the move. That’s why the Pick-Up window was so important. Drive-ins had lost popularity, and nobody had figured out how to deliver a custom sandwich through a pick-up window.

I knew we had to crawl before we tried to walk. Wendy’s started making money after six weeks in business. Before then, our whole focus was just on what we needed to break even.

In November 1970 I opened the second Wendy’s restaurant in the suburbs. It was important to see if the ideas would work in a second location and if it could work in the suburbs. You had to know if the first success was just a fluke.

Franchising & Ownership

Many company founders go down the drain being greedy. If you want to build your company, you have to deal your key people in. If you take care of everyone who is working hard to help you, you take care of yourself. An organization is able to grow and profit when the key people share in the future, when you tell your people that this is their company, too.

Right off the bat, I offered Bob Barney ten shares of stock and Ron Musick five shares at $100 a share. It was like the deal that Phil Clauss had cut with me earlier.

And today, those five shares have brought him and his family considerable pride and comfort. At the beginning, though, it meant sharing in the risk.

When people ask me how to start a small business, I say: “Go open one up.” Then grind it out. Make a profit. No one wants to hear that, but it’s true. Nobody’s going to tell you anything worth hearing until the customer tells you at the cash register.

As the industry got more competitive, it got crystal clear that only experienced operators could survive. A franchisee couldn’t say, “I’m just putting up the money to run this thing and open the doors.” You can’t hire out everything that needs to be done. We call that an absentee-run show. And it’s a zero. We have told some franchisees, some excellent people, to please leave the business. A franchise isn’t just an investment, it’s a way of life. You can’t play this game from the sidelines.

I knew I had to move fast because I wanted to build a national business. That meant national TV advertising if we were to compete with Burger King or McDonald’s. The only way I could get the money was by building more restaurants. To do that fast we had to offer franchises.

The proof that our way was right, I think, was the number of owners who signed up with us who had already been franchisees with other restaurant businesses. Plenty of franchise operators have gotten into trouble because they force their franchisees to buy supplies or equipment from them. The franchisees end up owing a lot of money to the franchisor.

When you become a franchisor like Wendy’s, you have a tremendous responsibility. Remember, I was a stakeholder in a franchise, too, for more than a decade with Kentucky Fried Chicken. So I know what it’s like from the franchisee side. Franchises are valuable, and it’s right to expect franchisees to work hard for the money they make. But a franchisee is also a customer…and a human being. Often a franchisee has raised the money for the franchise by borrowing on his house or on the savings for the kids’ education. You have to be sure that the franchisee who goes out and risks his or her money, buys a franchise, and works hard is going to be successful. It’s a two-way deal, and you’ve got to have a two-way attitude.

Operations & Competition

Entrepreneurs who get into the restaurant business think that it’s their secret recipe for clam chowder or lemon pie that will make them rich and let them build a chain operation. It isn’t a question of knowing how to make a french fry. It’s a question of making four thousand units to make them the same right way day after day. The concept is important, but the management of operations is way more important.

Adding a brand-new item won’t save a stumbling restaurant. Too many people want to hit a home run with the latest fad menu item rather than have a sparkling, clean restroom. We are always getting ideas for new products from managers: alfalfa sprouts on hamburgers, Cajun hamburgers, ham on toasted muffins. There’s no end. But, as I say again and again, “The salad bar won’t wash your windows.” Well-managed operations are more important than any one product you sell.

You really have to start back with the McDonald brothers. I owe a big debt to McDonald’s. They set me up. By that I mean they gave me something to look good against.

I saw my first McDonald’s in Fort Wayne. The tiny hamburger didn’t impress me. It takes a certain percentage of meat to make a good sandwich. Instead, McDonald’s impressed me with two things: their real estate and their potatoes. They had great locations, and when they first began, they did their french fries with fresh potatoes, and were they good.

It’s simple: A prewrapped, production sandwich is always a mistake. It’s the wrong thing to do. If it sits there sweating under a heat lamp with the ketchup and mustard already spread on, it will never be as good as one that’s freshly made. The whole premise of McDonald’s was price—to offer a 15-cent hamburger when hamburgers were selling for 35 and 40 cents. Of course, you could hardly find the hamburger for the pickle. It was a pocketbook issue and had nothing to do with quality or real value. I was never sold on McDonald’s, Burger Chef, Burger King, or Hardee’s. Even Burger King wasn’t cooking to order. It was premaking and then heating sandwiches up. Since I was against premade sandwiches, I never wanted to be a franchisee with any of these companies.

It doesn’t cost any more in labor to make a cheap hamburger than a quality one, so labor isn’t an issue. We use only fresh, 100% pure beef and we cook it at a low temperature. When it’s cooking, we press in the flavor and we press out the fat. Each patty weighs a quarter pound and is properly proportioned to the bun. In fact, we designed the patty so that the edges would stick out over the sides of the bun. That sent a message to people about how big it was—what Grandma Minnie said about not cutting corners.

(I have a confession to make: I’ve never eaten a Triple. The Triple really helped build demand for the Double. It was outrageous; the Double—a reasonable compromise.)

It had to be customized. We stressed we were M-A-D-E—TO—O-R-D-E-R.

We weren’t and aren’t a fast-food restaurant. I hate the term “fast food,” especially when it’s applied to Wendy’s. Our SERVICE is fast. Our goal is to get the order to the customer in fifteen seconds at the counter and thirty seconds at the Pick-Up window. Our food is not cooked any faster or slower than any other restaurant’s. We don’t cook by machine, and our restaurants don’t look like they popped out of some plastic mold.

McDonald’s was offering an 18-cent deal against mine, which was three times the price. Experts said I’d never make it, but they were wrong because people want quality and they’ll pay for it.

Many people don’t realize it, but the whole business of fast food became a new ballgame when the baby boomers matured and consumers became more discriminating and health-conscious.

We were the first national chain to go with a salad bar. So in 1980, sales took off because of the salad bar. This didn’t hurt our expenses, either, since ground beef was continuing to go up in price and the supply was getting tighter.

More new products came in 1983. In November, we added more variety to the salad bar and started offering the hot stuffed baked potato. This strengthened our selection with people who were concerned with nutrition. Again, we were the first national chain to come out with a baked potato.

Remember, the best way to serve the customer is not to offer the most choices but the most sensible choices in whatever your pocket of strength is.

First, you don’t win customers over for life. In the restaurant business, you have to win them every visit.

Ray Kroc, the guy who made McDonald’s, was once asked what he would do if he found out one of his competitors was drowning. “ ‘Put a hose in his mouth,’ ”5 was his answer. Our take on competition boils down to one principle: We compete by focusing on our customer rather than on our competition.

Business moves through a restaurant in waves. A bad manager will be behind the wave, picking up the clutter, always trying to catch up. The manager who’s on top of things will always be ready for customers, ahead of the wave all the way. You can tell as much about a restaurant during the “down” time as during the peak time. After the rush, you have to clean the doors and empty the trash bins. When you go into a restaurant after the rush and no one is doing cleanup, you can pretty much tell that it’s a low-volume, poorly managed unit. If you learn to ride the wave well, the restaurant always has a quiet hum, always busy but never frantic. It never works too far ahead, and it never lets itself get behind.

We knew that if we could offer a custom-made sandwich at a drive-through window, that would give us a real edge, but the program wasn’t working. For some reason, the drive-through wasn’t delivering the business we expected. The window accounted for only about 10% of our business. It didn’t make sense.

…told me that he had to learn the business from the ground up if he was going to solve the problem. So, he went to work on the restaurant floor and looked at the window from the INSIDE, from the viewpoint of everything else going on in the restaurant. “Give me a few months and I’ll have it working for you,” he promised. I crossed my fingers.

So, the problem of sales at the drive-through really turned out to be a communications problem. Bob junked the microphone/speakers we started with and installed some really fine equipment. This was just when real breakthroughs were being made in transistor electronics, so we were at the cutting edge. No more runners.

We also officially changed the name to Pick-Up Window from drive-in, because drive-ins had a bad name as hangouts for cruisers and joy-riders.

The window accounts for 40–45% of our sales. And that’s not all. Perfecting the window has had a terrific bearing on another very expensive cost: real estate. When a high percentage of your business goes through the drive-through window, you’re able to reduce the size of the parking lots. Perfecting the drive-through helped everybody in our business save money on real estate.

We like plenty of customers, but that long line did not make me happy. A long line does not necessarily mean that you are doing a terrific business. It usually means that you are doing something wrong.

Be careful how you pick the problems you THINK you need to solve. You can pay a big price for focusing on the wrong problem.

Marketing & Customers

More than anything, I’m a marketer. I love to sell. I do television ads because I can reach more people on TV than I could in person.

I have never had a very high opinion of most marketing consultants and advertising executives because most of them don’t want to get their hands dirty in your business. They act like they know everything about their client’s business, but they’re just too lazy to get inside of things and understand them. We had one creative type who was describing our chili in radio copy. It finally dawned on me that he had never eaten our product. He never worked with us again.

My accountant kept scratching his head. “If you want to make more money, raise your prices,” he said. “Wrong!” I told him. “The best way to make money in this business is to make your labor costs and your rent a smaller percent of your sales. That means getting your sales up—even if you have to spend more on food costs to do it.” It may not have been textbook marketing, but it worked.

Some marketing people think that they are creative geniuses. They forget that advertising is supposed to sell something. It’s not an ego trip for the company or a chance to win some fancy award from an advertising association.

Some people think ads will solve everything and use them as a crutch. It doesn’t work. No ad can ever substitute for a well-run business.

The first quarter after we ran this campaign our sales were up 24% and earnings rose 40%. But while the registers were ringing, you could barely hear them over all the criticism. English teachers and students from all over the country wrote letters to Wendy’s, telling us we were bumpkins and that we didn’t know how to use the English language. “Ain’t” was bad grammar. But “Ain’t no”—a double negative—was unforgivable. I got letters from twelve-year-olds saying that if they knew enough not to use ain’t, we should, too. Another letter said, “I hope your food is better than your language.” There were hundreds of articles and editorials with bruising headlines like: bad language is no way to sell hamburgers… wendy’s gets a beef: ain’t no way to talk… hamburger haven gets a language lesson…

Some groups threatened to boycott us until we cleaned up our grammar.

Go after the customers who will make a difference to your business. Expect some people not to like you and many more not to even notice that you exist. Spend your time thinking about the people you really want to be your customers. Then do everything you can to talk to those customers in a way that will make them feel good about you.

Leadership & People

But, most important, everyone would think I was a good boss, and every day when I walked into the restaurant, people would be glad to see me.

The more you are comfortable with being yourself, the more time you can spend studying other people.

Paying attention to other people is really important in business. Many young people don’t understand big business. It’s really about people: how to give them the products they want, how to serve them, how to manage them, how to work with them.

I was grateful to Sergeant McCauley for his trust and I told him I wouldn’t let him down. When anybody gives me their trust, I make sure that I thank them. You can bet that in 1972, when the first twenty investors each kicked in $50,000 to bankroll Wendy’s first expansion, I said plenty of “thank-yous.” Trust is about the most valuable thing anyone can give you in business, and you can never show too much appreciation for it.

I tell them that my philosophy of management is simply: HARASSMENT. And that’s no lie. By harassment, I mean keeping at someone until they either do what you think they should or until they change the way they act or prove their way is better. I only harass people I care about. Why should I waste my time trying to improve somebody I don’t like and who probably doesn’t like me, either? Harassment is a manager’s biggest responsibility. If you do it right, harassment should always have a touch of fun in it. And you always have to change your tone when you’re trying to tackle a real problem somebody has in doing the job, or you’ll mix them up.

Los Angeles Rams coach John Robinson “never criticizes his players until they’re convinced of his unconditional confidence in their abilities.” That’s a good outlook to have.

Tell people when they’re almost perfect…but do it nice. When Charlie finally got the signs up, I made sure that I thanked him for the great job. Then I gave him a slip of paper with the addresses of the two phone poles he missed.

Nothing makes me more unhappy than when I get weak excuses and alibis to explain poor performance. So, I always try to go easier on bad performance than when somebody is punting or lying.

I just don’t think harassment works for managers who are not perceived as nice people by their team. And if people don’t know you like them and you start harassing them, they’ll just clam up on you or even serve you a knuckle sandwich. But harassment can work. Why? So much of any business is detail and execution, and any manager has to stay on top of it. Harassment is personal communications. It’s not some dumb, dull memo that you could just as well address “To Whom It May Concern.”

Wendy’s turnover rate for restaurant general managers was 40% three years ago. This was typical for the quick-service restaurant industry. Our turnover rate today is down to 23%! What did we do differently? One thing was to INCREASE the amount of responsibility the restaurant managers had.

When we increased the responsibility, we also upped the rewards.

We believe in delegating responsibilities as far down as possible, but any manager who wants to delegate must remember to follow through and check that the delegation gets done.

Watch out for the braggarts. There are some people you just can’t stand. I’m suspicious of people who brag a lot. The quiet ones who listen well are often the best managers. The ones who interrupt you mid-sentence and who seem self-important can cause you real grief. We definitely look for team players.

Test people’s convictions. Sometimes I will argue with people to see how well they have thought something through or how strongly they believe in what they say. A person with strong convictions doesn’t have to be argumentative. Instead, they may come across as persistent or patient. Be real careful about trusting a person who changes his story on a dime just to please you.

Take criticism well. There’s no better way to guarantee that the criticism you give will be listened to than to take criticism well yourself.

Just get it out there. So many managers overdo it. Instead of visiting the guy next door, they write a memo. Instead of sending out a key reminder on a card you could stick in your pocket, they do a videotape. If you want to get it across, get it out fast and say it simple.

Integrity & Giving

I believe everyone has an obligation to put back into life more than what they take out. People who are successful have the biggest responsibility because along with the money they have the name and contacts to do the most good. Charitable giving is not just a nice thing to do once a year. It is an investment everyone who is able should make, and it returns the greatest rewards. I have no particular plan to my giving, although I do have a soft spot for children.

Give first priority to local causes. Not only will you be able to see the impact, you have the best chance of having a voice in the way the dollars are used.

…we’ve been a step ahead of the competition for a long time when it comes to nutrition. Today at Wendy’s you’ll find a brochure on nutritional facts that has more, clearer details than you’ll find on most grocery-store packages. I’m proud of the fact that Wendy’s has been out ahead of most of the quick-service restaurant industry on the issue of waste. Because we use paper wrappings for our sandwiches and very little Styrofoam, the public has seen us in a different light than some of our competitors. Every little step helps. We have reduced the package weights for our pickle containers, mustard, and mayonnaise…and they’re cheaper than the old containers were, too! Waste stirs me up. Our country cannot afford waste.

We won’t buy South American beef at all. Much of it has grazed on former rain-forest land, and we’re concerned about the ozone layer and the environment like everybody else.

Off and on for years I’ve found myself laying awake nights worrying about being poor again. I think about it a lot because I remember the days I didn’t have anything or anyone. I don’t know if I can ever relax and say, “I have so much I can stop worrying now.” But at least this fear has never turned me into a reckless spender or a miser. My fear of being poor has never caused me to hoard my money or be selfish with it, either. It has never kept me from giving to others. I like to give to people, to charities, to education, and to the less fortunate.

Success & Legacy

I was thirty-seven when I felt I’d really made it. What I’ve learned over the past twenty years is how to live with success…and that’s hard. People usually don’t worry about that. “Just let me succeed,” people pray. They think they’ll deal with the problems success may bring later. The truth is, those problems can come up overnight. You’d better be prepared for them.

Don’t just study people who succeed, study people who handle success well. See how people who have succeeded financially live their lives, and learn from that. Some people can’t handle money or success. It destroys them. They overbuy, drink, take drugs, become playboys or country-clubbers. Eventually they let their businesses slide, too, because they let their egos get in the way of their judgment. They forget about their families, their self-respect, and their fellow human beings.

It was great the way Colonel Sanders hung on to Kentucky Fried Chicken as “his” product, wanting to uphold the highest quality standards and all. But it was sad that the Colonel couldn’t let go of the day-to-day business, even when he really had nothing to do with it anymore. I vowed I would never be like that. Instead, what I wanted was a “slow-motion” handoff of Wendy’s to the management of the future, and it makes me proud to know that’s what we have had.

It’s even more important to have good, honest sounding boards AFTER you’re successful or after you’ve become a top manager. After all, who wants to take the risk of telling you the truth when you’re the boss?

Look at what your success will let you do next. Find something new.

After I achieve something, do I like to go ahead and do something new? Do you like to sit back and savor it, or is the success quickly yesterday’s news as far as you’re concerned? I’m not saying that sitting back is wrong. I often wish that I could, but achieving the last challenge doesn’t stick with me long. It’s never enough.

Do I want to be an innovator or a creator? At Wendy’s, we’re innovators, but I don’t know how creative we’ve been. In my mind, the difference between being innovative and being creative is that creators invent things, innovators use inventions in new ways. We’ve done a lot of innovative things: The Pick-Up Window and the square hamburger are two. We didn’t invent the salad bar or the stuffed baked potato, but we were the first ones to put them into a national chain of quick-service restaurants. Creators like to perfect things, innovators want to apply them. Entrepreneurs in business are mostly innovators, I think.

Because I always have kept moving, my life today is both happy and dissatisfied. I wouldn’t have it any other way…