Why the Company Failed
Wendy's has finally come back to St. Louis after a long absence. At one time there were 56 stores in the greater St. Louis area and that number sank to zero when the franchise that owned them went out of business.The company went through a number of owners before they finally bit the dust. Originally called Davco Incorporated, the franchise was one of th first ones that Gordon Davenport opened with Dave Thomas was back in the 60's. I worked for them when they opened their first store in St. Louis.
They also had a large number of restaurants on the East Coast. Davenport was also the owner of Crystal Hamburgers, a White Castle type of hamburger chain in the south. The singer, Crystal Gayle was named after them because as a little girl she liked them so much.
But the franchise never made a single dollar of profit in St. Louis. They were able to survive because sales and profits were so high in the east coast. Finally, they decided to divest themselves of this losing company. The company became Midwest Davco when the former president decided to buy the company.
But that didn't last very long. The company was soon put up for sale again. This time the company was bought for 18 million by a man named Harold Arbeitman. Harold renamed the company Royal Foods after one of his car dealerships. Harold was a local car dealer who liked the chicken sandwich at Wendy's so much that he decided to buy the company. But the problem was that he knew nothing about the restaurant business.
He promised that nobody would lose their jobs and then promptly fired some 36 senior managers. They were replaced by $7 an hour shift managers and the quality of the food as well as service and cleanliness quickly went downhill. After cutting everything to the bone, the company was profitable for a few months, but then started losing money in a massive way.
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