Sunday, August 20, 2006

A match made to be?

Wendy’s is searching for a new CEO who can bedazzle Wall Street, pull droves of consumers off Main Street, and convince franchisees they’re heading for Easy Street. Could it have the ideal candidate in Claire Babrowski?

Babrowski, if you’ve forgotten, was the up-and-comer at McDonald’s who was seemingly put through a special Hamburger U. prep course for a top job at the burger chain, if not the CEO’s post. But the board passed her over to choose Jim Skinner for that lofty perch instead.

Babrowski subsequently quit, parting with McDonald’s for the first time since her teens, when she worked at a unit franchised to a girlfriend’s father. The dad would often join the girls as they sat chatting in a booth, raising their embarrassment to a life-threatening level. For the sake of their reputations, the pair opted for a job in the parent-free zone behind the counter.

For the next 31 years, Babrowski would rise through McDonald’s ranks, eventually overseeing a region’s operations, then operations for the whole U.S. The company dispatched her to run its 7,500-unit Asian/Pacific, Middle East and Africa territory, presumably as a way of further seasoning her. She was serving as worldwide chief restaurants operations officer when Skinner, a longtime veteran of the chain's overseas operations, got the nod instead of her.

She took six months off, then surfaced last summer as chief operating officer of RadioShack, the chain of electronic-gizmo shops (curiously, working under another restaurant expatriate, executive chairman Len Roberts, formerly of Arby’s and Shoney’s). When “misstatements” were discovered early this year on the resume of CEO David Edmondson, he left the company, and Babrowski was tapped to serve as acting CEO. She inherited a mess. But her handling of the situation made her the hands-on favorite to get the job on a permanent basis.

But, as was the case at McDonald’s at the time of Babrowski’s departure, and now Wendy’s, the company had lost credibility on Wall Street. The board opted to bring in a turnaround specialist from Kmart and Sears, whose background might buoy RadioShack’s stock price more quickly. Julian Day was a prime figure in the miraculous turnaround of both Kmart and Sears (in part through their merger), and RadioShack desperately needed a similar touch of retailing magic.

That was five weeks ago. On Friday, RadioShack announced that Babrowski had resigned.

The official statement said she would pursue outside interests. But an unnamed RadioShack official was cited in some news reports as saying he didn’t know where Babrowski was going. That suggested she has a destination in her sights.

Which, perhaps, brings us back to Wendy’s. The company is being led on what it insists is an interim basis by Kerrii Anderson, its former CFO. She has the financial chops that please Wall Street, which all but lynched her predecessor as CEO, Jack Schussler. What she lacks is operational experience. Indeed, she’s the first chief in the company’s history to have worked her way to the top post through anything but operations.

And that’s Babrowski’s specialty, though she also has experience in overseeing marketing, menu-product development and the franchise operations of major geographic territories. As president of McDonald’s Asian, Middle Eastern and African turf, she was responsible for more units than Wendy’s has worldwide.

Her most notable achievement at McDonald’s—and what some might also call the blackest mark against her—was the development and rollout of Made For You, a high-tech prep system that took the chain out of a batch-cooking mode and squarely into the mass customization—a longtime signature of Wendy’s. By conservative estimates, the set-up cost the McDonald’s system a quarter of a billion dollars. And as was reported in this space a week ago, McDonald’s is currently leapfrogging away from that “platform” in a two-phase overhaul.

Now Wendy’s is in the midst of a prep-system re-do. It’s trading out its grills for high-speed two-sided versions, as executives never fail to stress in their confabs with financial analysts. They typically also note that the chain is adapting other high-tech systems for maximizing unit efficiency.

It may not be a rehab on the scale of Made For You, but Wendy’s is still Number Three in the burger-chain size rankings. How many CEO candidates out there have experience in a retrofit of that scope, using technology that advanced, specifically for a grill-based quick-service restaurant chain?

The bigger question about Babrowski is why she was passed over by both McDonald’s and RadioShack for the top job. If you’ve ever seen her address gatherings like the Women’s Foodservice Forum, or observed her in action at headquarters, you’ve likely witnessed her considerable leadership skills. She’s spent enough time in the trade to have ketchup in her veins, an intangible steeped-in-the-business sense that would no doubt have pleased the likes of Dave Thomas, Jim Near and Gordon Teeter.

McDonald’s and Radio Shack didn’t reveal any reasons for choosing someone over her. But in both instances, the winning candidate was more experienced, with a deeper background in finance, and just more time logged on earth. Babrowski is 49 years old. Skinner is 61. Day, the man who edged her out at RadioShack and said he’ll assume her duties there, is 54.

But Wendy’s would have the option of a more rounded, fire-hardened Babrowski, who’s actually worked as a CEO for a company out of favor with Wall Street. She was only at RadioShack’s control switches for six months, but during that time she was the one who signed off on the company’s dismal financial statements, and no doubt had to deal with irate shareholders. All of that street schooling would likely serve her well at Wendy’s.

And what of Anderson, who appears to be serving the Number Three chain well? Wendy’s has said she’s serving on a interim basis, but chairman Jim Picket has stated publicly that Anderson is in the running for the permanent posting. Would the company risk her loss to bring in Babrowski? Or might Anderson be willing to step back into her CFO role, shoring up what seems to be the least developed aspect of Babrowski’s management abilities?

Babrowski won’t leave RadioShack until the end of the month. And after that, time will tell.


  1. Very interesting!

    Definately major shuffling in the top ranks at both Wendy's and McDonald's. Last week started with rumors that Alvarez (McDonald's) was going to be assigned new responsibilities, and then just a day later an "unexpected" rezignation from Alvarez?

  2. Actually, you mean Roberts. Alvarez is the guy who stayed--and, ironically, put himself in line for the job that Roberts supposedly wanted.