050502 Wendy's Chili Mystery: A Corporate Nightmare

New York - This weekend, Wendy's, the third-largest hamburger chain in the United States, will give away an estimated $10 million worth of its "Jr. Frosty" soft ice cream. The offer, unusual for a public company, amounts to the latest development in a big story you may have missed: the finger-in-the-chili affair.

Of course, it's not every day that a chunk of finger is found in a bowl of beef chili. It's not every day that a customer describes said finger as "kind of hard, crunchy" on national television.

It's not every day that the police pronounce on whether a piece of finger has or has not been simmered for four hours, the Wendy's way.

But all that and more has occurred since March 22, when Anna Ayala, 39, said she bit down on a piece of finger that was in chili at a Wendy's restaurant in San Jose, California. Jokes have abounded: the great "finger food" at Wendy's, the chili that's "fingerlickin' good," the finger-pointing Ayala.

The laughs have come at a price for Wendy's, which operates more than 6,000 outlets in the United States and also has restaurants in Japan, Mexico and the Philippines. "Every time they show a picture of that finger tissue on television, it's a nightmare," said Dennis Lynch, a Wendy's spokesman.

The nightmare has seen sales plunge 20 percent to 50 percent in the San Francisco Bay Area and about 2 percent across all Wendy's restaurants since the finger was found. As Wendy's is a corporation with annual sales of over $3 billion, that's real money.

"We are forever going to be associated with this affair," said Lynch, 52, who has been at the Ohio-based company for more than 25 years. "It will enter American business lore, be in the textbooks, the crisis-study workshops, the case studies. But we hope that our brand will emerge stronger and we will be seen as having done the right thing."

What Wendy's has done is stand its ground, refuse from the outset any settlement with Ayala, investigate all employees who had contact with the chili (they passed lie-detector tests), and offer a reward of $100,000 to anyone with information on where the finger came from.

In some ways, the strategy has worked. Three weeks ago, Ayala was arrested in Las Vegas, where she lives. She was charged with attempted larceny in what the San Jose Police Department called a "hoax" against the fast-food chain. That was a breakthrough for Wendy's, which cultivates the image of being more genuine and wholesome than its main rivals, McDonald's and Burger King. But the police statements and the arrest hardly brought closure on the case.

These points were clarified: the finger had not been cooked, forensic evidence showed; Wendy's was not responsible for the introduction of the finger; Ayala's claim of having vomited could not be corroborated.

Still, the police were not ready to say that Ayala, who has denied the charges, had planted the finger. But on Friday, the police chief in San Jose, Rob Davis, said the finger came from a friend of Ayala's husband who lost it in an industrial accident. "The jig is up," Davis said. "The puzzle pieces are beginning to fall into place."

This is a great country. It combines a lot of money and a lot of loonies, and a fair number of the latter want to get their hands on the former. The result is a vivid, often sleazy panoply in which human foibles get played out with particular transparency.

I have no idea what really transpired on March 22 in that Wendy's restaurant, but the police have suggested there was a plot of some sort involving a filched fingertip and said "the true victims are Wendy's owners and operators."

As plots go, it has a certain bravado - as well as a peculiarly American lunacy, especially when you consider that the affair may well end up getting pored over in Harvard Business School, along with other such cases, like the syringe-in-a-Diet-Pepsi case of 1993 (in which Pepsi was vindicated).

To take the pulse of Wendy's, I visited a restaurant in downtown Manhattan, where I ordered a hamburger known as a Classic Double and, with mild trepidation, some chili. As I prodded the chili with a spoon in search of any extraneous matter (none was there), I read the framed words of Dave Thomas, the founder of Wendy's:

"Profit is not a dirty word. The key to success is hard work and a burning desire to succeed."

I could not argue with that. But I had to admire the sang-froid of Cindy Wong, another client with a burger, who said the finger did not bother her. "These things happen," she said. "It's no different from finding an insect in your salad."

Right. Two other clients, students named Frank Jackson and Terence Carpenter, had been more troubled, avoiding Wendy's for a few weeks. But once Ayala was arrested, they returned because they like the food.

"Everyone is after an angle in this country, an easy way to have it," Carpenter, 22, observed. "There's so much money out there. People are looking for a way to sue.

"When I worked at Starbucks and mopped the floor I had to put up a big sign in case anyone slipped where it was wet and started a lawsuit."

Ayala, who has been accused in an unrelated case of making off with money from the sale of a mobile home she did not own, never brought a suit, although she did briefly threaten one. Now, Wendy's is counterattacking.

"We're going to give away 14 million ice-creams this weekend to cement customer loyalty," Lynch said. "It's our way of saying something bad happened, but let's move on and have some fun."

A lot of kids are going to be licking their fingers.

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E-mail: sflanagan@sprintmail.com