Kellogg’s, Wendy’s CEO blunders show perils of this economic moment
The food industry is on thin ice with consumers.
Two chief executives at food and beverage industry giants have recently landed themselves in the public opinion doghouse for their comments on the price of food.
WK Kellogg CEO Gary Pilnick said in a CNBC interview that his company has found success suggesting cereal as an affordable dinner. “If you think about the cost of cereal for a family versus what they otherwise might do, it’s going to be much more affordable,” Pilnick said. He pointed out that a bowl of cereal with fruit can cost less than $1 a bowl.
“Squawk on the Street” host Carl Quintanilla noted that that messaging might “land the wrong way,” though Pilnick quickly waved that away. “It’s actually landing really well right now,” he said.
That quickly changed.
Many news headlines compared Pilnick’s statements to “let them eat cake,” a flippant phrase wrongly attributed to Marie Antoinette. Users on forums like Reddit pointed out that cereal is no longer affordable, often clocking in at $6 a box for name-brand varieties like Kellogg’s. Additionally, cereal is not a nutritional substitute for a dinner with a protein, starch and vegetable, even if it is more affordable.
Pilnick’s ill-considered remark also smacks of former Nestlé CEO Peter Brabeck-Letmathe’s statement in the 2005 documentary “We Feed the World” that the notion of water a human right is an “extreme solution.”
Fast food chain Wendy’s also ran into internet ire when CEO Kirk Tanner said during an earnings call that the restaurants would roll out new menu boards that feature “dynamic pricing.”
It was a passing comment during a longer earnings call, but media outlets seized on the phrase and interpreted it to mean “surge pricing” — a supply-and-demand model that explains why you pay more for an Uber when it’s raining after an NFL game ends.
Customers were indignant at the idea of a Baconator jumping in price at lunch time. Wendy’s quickly walked back the remarks with a statement that read, in part: “This was misconstrued in some media reports as an intent to raise prices when demand is highest at our restaurants. We have no plans to do that and would not raise prices when our customers are visiting us most. Any features we may test in the future would be designed to benefit our customers and restaurant crew members.” The statement went on to stress that the dynamic pricing would offer discounts, not price bumps.
Let’s take a deeper look at why these CEO remarks, perhaps harmless on their face, landed so badly.
- The moment matters.
Consumers are tired. They’ve endured years of inflation and price increases blamed on supply issues and the cost of labor. The Wall Street Journal reported that food is taking up more of the average person’s budget now than it has in 30 years, with eating taking up 11.3% of disposable income. Couple this with record-breaking rents and mortgage rates, and people’s wallets are feeling stressed.
Additionally, food costs are something we all must grapple with every day. From grocery store shelves to the drive-through, we all know what food used to cost and what it costs now. Meanwhile, food companies are reaping record profits margins as those prices grow higher and higher.
In other words, this is a uniquely terrible point in history to get cute with the price of food. People want the stability of knowing how much a Dave’s Single with Cheese costs. They don’t want to be told that a box of sugary cereal is an economically wise choice for dinner over meat and veg. Americans are already selecting less nutritious options out of concern for the cost of healthy meals.
It’s a pervasive enough problem that President Joe Biden has even slammed grocery stores for food costs.
Yes, CEOs have an obligation to make money for their companies. That’s their job. But making these comments so plainly, even in seemingly friendly arenas like CNBC, can rub salt in wounds for average consumers when they don’t also acknowledge the very real pain behind the economic choices being made today.
- The messenger matters.
Neither Tanner nor Pilnick are average consumers.
The Guardian reported that Pilnick’s base salary is $1 million, with another $4 million in incentives. Tanner also has a base salary of $1 million, likely with additional incentives on top of that.
In other words, neither is going to be significantly impacted by changes in prices for a hamburger, nor have to eat a bowl of cereal out of financial necessity.
Messages coming from high-paid CEOs about price and thrift can come off as tone deaf. Plenty of people reading this story now have, at some point, had cereal for dinner, either because of its cost or because of its ease of preparation or both. It’s hardly a radical idea. Indeed, “Squawk Box” host Becky Quick admits in the same segment that as a busy mom, she eats cereal for dinner regularly. But it’s the tone and lifestyle of the messenger that makes the comments land so clunkily.
Kellogg’s marketing and social media posts could have made the breakfast-for-dinner point better than Pilnick could have.
- Nuance matters in media.
The media may be greatly reduced in power from its glory days, but it can still take a PR message and turn it out of control in a matter of moments.
Simply by using the synonym “surge pricing” instead of the term “dynamic pricing” Wendy’s Tanner used, the story took on a different slant. But in the absence of more information from Wendy’s about how the program would work, it wasn’t an absurd leap for the media to make. The two terms are often used synonymously.
But because Wendy’s didn’t have more data ready to provide right away, the story spun out of its control. The narrative of paying more for a burger in peak times was cemented. The clarifying statement came late to the game, after the negative press was done, and it ended up sounding like backpedaling, even if it was their intent all along.
And the “let them eat flakes” framing that many media chose for Pilnick amplified his messaging in the most damaging light possible.
The media still has tremendous power. And in the absence of information — or in the presence of one damning quote — stories can take on lives of their own.
Be sensitive to the moment. Choose your spokespeople wisely. And be ready to respond to the media quickly and decisively.
Allison Carter is editor-in-chief of PR Daily. Follow her on Twitter or LinkedIn.
