Quantitative Market Research - Should Wendys Offer Bitcoin Payment

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Running head: INNOVATING WENDY’S PRICING
Innovating Wendy’s Pricing:
Introducing Bitcoin Payment
Jill Zakrzewski
Boston University
MET AD 856 Group 1
2/29/2016

Innovating Wendy’s Pricing: Introducing Bitcoin Payment 2
Executive Summary
Wendy’s International, Inc. looks to drive new innovation in the fast food space. This
report analyzes quantitative and qualitative data to determine if Bitcoin acceptance will impact
profits by attracting new customers and reducing operating expense. While some small
restaurants have had early success with the introduction of Bitcoin payment options, it is yet to
be seen if nationwide chains will create the same buzz. The Marketing Research Problem is to
determine if the typical Wendy’s customer is a Bitcoin user. The Management Decision
Problem is to determine if a trial Bitcoin program should be executed to gain further insights into
the benefits and risks involved.
Wendy’s Innovation & Strategy group tests the following hypothesis with this report:
Wendy’s typical customer is the same demographic as the typical Bitcoin user. Research
analysis finds this hypothesis to be false. Wendy’s typical customer is not representative of the
Bitcoin user population. However, the average Bitcoin user falls within a portion of Wendy’s
total customer base. This overlap is the sweet spot for an innovative rebranding of Wendy’s
pricing platforms. While introducing Bitcoin won’t satisfy a need for the greater Wendy’s
customer base, it may certainly attract new market share from the average Bitcoin demographic.

Innovating Wendy’s Platforms: Introducing Bitcoin Payment
Wendy’s International, Inc. looks to drive new innovation in the fast food space. Since
the death of founder Dave Thomas in early 2002, Wendy’s has been challenged to rebrand in
order to continue competing with industry leaders McDonald’s and Burger King. (Malhotra &
Dash, 2011) The company created a new area of marketing in 2006 to address this need by
establishing an Innovation and Strategy group comprised of Research and Development,
Strategic Insights, and Operations Innovation. (Malhotra & Dash, 2011) These teams are tasked
with rolling out a strategic growth plan that focuses on “Doing What’s Right for the Customers.”
(Malhotra & Dash, 2011)
This report analyzes what’s right for the Wendy’s customer by projecting the impact of
new innovation in the company’s payment platform. Qualitative and quantitative research
analyzes the market implications of accepting cryptocurrency Bitcoin as payment throughout the
Wendy’s chain. Thousands of businesses now accept Bitcoins as payment. (Yelowitz & Wilson,
2015) Wendy’s Innovation and Strategy group must determine if this new pricing platform will
be embraced by their customers.
BACKGROUND
Bitcoin is an unregulated, global digital currency. Created in 2009, Bitcoins are mined
using software that confirms encrypted transactions using a distributed consensus system.
(Bitcoin, 2016) Once mined, Bitcoins may be traded and stored using secure digital keys that
access an individual’s public Bitcoin addresses. (CoinDesk, 2015),(Yelowitz & Wilson, 2015)
Bitcoins can be used as payment digitally by using a Bitcoin merchant solution online, or they
can by processed in a brick and mortar shop by using a QR Code. (Bitcoin Wiki, 2016) This

alternative currency has the potential to replace traditional forms of payment in today’s digital
world.
There are currently over 13.4 million Bitcoins in circulation with a market value of $4.6
billion. (Yelowitz & Wilson, 2015) Although there is still question about the future of
cryptocurrencies, many businesses are drawn to their benefits. Roger Wu, cofounder of the
native advertising and storytelling platform Cooperatize.com, notes fives major factors why the
company began accepting Bitcoin: (Say, 2014)
1. Lower transaction costs as compared to other clearinghouses like credit card
companies, PayPal, and Western Union
2. Theoretically less risk than fiat currency due to its unregulated, global nature
3. Security against data breaches due to its anonymous public and private key
encryption
4. Publicity associated with the newness and excitement surrounding Bitcoin usage
5. Future ability to brand currency using the Bitcoin protocol, which drives customer
loyalty
Within the restaurant industry, a growing number of quick-serve restaurants, bakeries,
coffee shops, and bars are experimenting with Bitcoin processing. (Blank, 2014) North Carolina
doughnut shop Rise gained positive attention from local media and prospective Bitcoin users
when allowing Bitcoin payments in February 2014. (Blank, 2014) The shop expects five Bitcoin
transactions per day, and they found that new customers were attracted to the store just to use
their Bitcoins. On the first day of accepting the currency, one customer purchased $100 worth of
doughnuts using Bitcoin. (Blank, 2014) Vegan bakery Sweet to Lick in Long Island, New York

experienced a similar increase in publicity after accepting bitcoins. Owner Michael Sabet notes
that “it really has been a conversation piece.” (Blank, 2014)
In addition to increased publicity, these small eateries are benefitting from reduced
transaction expenses. Rise uses third-party provider CoinBase to convert Bitcoin into U.S.
dollars and deposit them into the company’s bank account daily. The transaction fee is only 1
percent, which is much cheaper than the point of sale credit card transactions that typically cost
2.75 percent. (Blank, 2014) Sweet to Lick keeps their Bitcoin payments in the digital currency,
thereby keeping costs down to less than 5 cents per transaction. (Blank, 2014) The growing
popularity of Bitcoin and its benefits to business make it an interesting prospect for the Wendy’s
chain.
PROBLEM DEFINITION
The objective of this research is to determine if Wendy’s should implement a Bitcoin
payment process. While some small restaurants have had early success with the introduction of
Bitcoin payment options, it is yet to be seen if nationwide chains will create the same buzz. The
Marketing Research Problem is to determine if the typical Wendy’s customer is a Bitcoin user.
The Management Decision Problem is to determine if a trial Bitcoin program should be executed
to gain further insights into the benefits and risks involved.
There are many factors to consider before launching a Bitcoin program. The ultimate
consideration is how such a program would affect the bottom line. The excitement around
Bitcoin and its comparatively low operating expense compared to credit card transactions make
this a promising proposal to increase revenue. On the other hand, introducing a new currency
poses challenges including compatibility with existing accounting systems, which may initially

increase expense. These considerations will be quantified in forthcoming analyses after this
research on market potential is processed.
In addition to the question of market reach, there is a concern that Bitcoin is perceived as
an unstable currency given its heavy fluctuation converting to the US dollar. Many Bitcoin
investors perceive the opposite. They perceive the US dollar as an unstable currency given the
national debt and Federal Reserve decisions to execute Quantitative Easing 1 and 2. Therefore,
there is a growing trend to accept a decentralized, deregulated currency. (Smart, 2014) A report
on whether or not to employ Bitcoin payment would be remiss to not mention the economic
impacts of this new currency. However, the extent of this report focuses on the market usage of
Bitcoin, and not on its political implications.
APPROACH
Wendy’s typical customer is the same demographic as the typical Bitcoin user. If the results
show this hypothesis to be true, then implementing a Bitcoin payment option may help retain
customers while simultaneously driving down transaction fees. If the hypothesis is found to be
false, then there are two potential scenarios to consider. The first scenario is that implementing a
Bitcoin option has limited effect on sales, and therefore it is not worth the investment of time and
resources. The second scenario is that implementing a Bitcoin option becomes a competitive
advantage and attracts a new customer demographic that drives revenue. All options are
considered while analyzing the research data.
There are two sets of data required to test the hypothesis: (1) average demographics of
Wendy’s customers, and (2) average demographics of Bitcoin users. Secondary data is used to

analyze both sets of demographics. The targeted demographics for comparing average user
include:
• Gender
• Age
• Income
If these three data sets are sufficiently similar, then it will be concluded that the average Bitcoin
user falls within Wendy’s target demographic.
RESEARCH DESIGN
This analysis is comprised of both exploratory research and conclusive research.
Exploratory research is collected to provide further insights into how Bitcoin is currently being
utilized in the restaurant industry. Conclusive research is gathered using descriptive research
techniques, which in this case is the use of survey data. Combining multiple types of research
help to reduce potential sources of error in data gathering and analysis.
Wendy’s demographics data are collected from an internally conducted 2008 online
commitment study. (Malhotra & Dash, 2011) Although this study is almost a decade old, it is
assumed that Wendy’s basic target audience has not changed significantly during this time. To
be considered a Wendy’s customer for the purpose of this report, only survey respondents who
indicated that they have been to Wendy’s within the past 4 weeks are considered. Data are
analyzed using SPSS software using frequency and cross-tabulation methods.
Bitcoin user data was collected in a global 2015 survey with nearly 4,000 responses.
(CoinDesk, 2015) To reference accuracy of this survey, it is compared to an unrelated 2014
study conducted by a different organization. The 2014 results compiled of over 500 responses
align with the demographic findings in the 2015 study. (ZeroHedge, 2014) Additional insights

on the Bitcoin user was collected using exploratory research gathered from online studies,
articles, and blogs.
DATA COLLECTION
Wendy’s demographics data (gender, age, and income) were analyzed using SPSS
software (see Appendix 1). For comparison, statistics for competitors McDonald’s and Burger
King were also studied (See Appendices 2 and 3). Table I compiles the statistics using data for
customers who have visited each store at least once in the past four weeks.
Table I. Demographic comparison of Wendy’s, McDonald’s and Burger King.
Wendy’s
Customers
McDonald’s
Customers
Burger King
Customers
#
Respondents
Percent
#
Respondents
Percent
#
Respondents
Percent
Gender
Male 305 48.3% 402 44.1% 312 50.4%
Female 327 51.7% 510 55.9% 307 49.6%
Age
18-24 227 35.9% 342 37.5% 231 37.3%
25-34 214 33.9% 297 32.6% 210 33.9%
35-44 191 30.2% 273 29.9% 178 28.8%
Income
< $25,000 73 12.7% 141 16.9% 90 15.9%
$25,000 to
$49,999
191 33.2% 277 33.1% 185 32.7%
$50,000 to
$99,999
249 43.3% 335 40.1% 236 41.8%
≥$100,000 62 10.8% 83 9.9% 54 9.6%
Data on Bitcoin user demographics was taken from a 2015 study by CoinDesk.
These data are compared with demographic data of Wendy’s customers on Table II. The average
Bitcoin user is a 32.7 year old, white (66 percent) male (93 percent) who is non-religious (61

percent) with a full-time job (43 percent) and is in a relationship (56 percent). (CoinDesk,
2015),(ZeroHedge, 2014) While the data on income is spread more evenly than income of the
Wendy’s customers, it is noted that Bitcoin users tend to be high-income earners. TP's Annie-
Rose Strasser writes the following: (Gongloff, 2014)
"In order to buy the sometimes wildly expensive currency, Bitcoin users
need to be wealthy. And they can afford to put their wealth into a currency
that isn’t widely accepted or even recognized. Plus, they move easily
through the financial and digital space — the process of 'mining' bitcoins
demands it.... The sum total of these things — advanced knowledge of
computer science, wealth — are also markings of the young, white male."
Although many users are tech-savvy, the majority are not seen as being ‘early adopters.’ Three
quarters of respondents began getting involved with Bitcoin after May 2013, and one third of
respondents didn’t start until 2014. (CoinDesk, 2015)
Table II. Demographic comparison of Wendy’s customers and Bitcoin users.
Wendy's Customers Bitcoin Users
Gender
Male 48.3% 93.0%
Female 51.7% 6.0%
Age
18-24 35.9% 21.2%
25-34 33.9% 50.6%
35-44 30.2% 28.2%
Income
< $25,000 12.7% 23.8%
$25,000 to $49,999 33.2% 24.5%
$50,000 to $99,999 43.3% 26.8%
≥$100,000 10.8% 24.9%

DATA ANALYSIS
While some Bitcoin users may be Wendy’s customers, Wendy’s customers are not
representative of Bitcoin users. Wendy’s demographic is split evenly between genders, whereas
Bitcoin users are almost exclusively male. At best, the implementation of Bitcoin processing
will only attract half of Wendy’s gender dynamics. Furthermore, a majority of Bitcoin users are
under 35 years old. The survey data collected from Wendy’s did not include respondents under
the age of 18 or over the age of 45. However, it is projected that Wendy’s age distribution is
much wider than that of Bitcoin users, which is largely made up of men aged 25 to 35 years old.
The majority of Wendy’s customers live in households with an annual income between
$25,000 and $50,000 as depicted in Appendix 1. Bitcoin users tend to be higher earners, with
half of survey respondents earning over $50,000 annual and one fourth earning over $100,000
annually. The Bitcoin user base accounts for only a limited portion of Wendy’s overall customer
demographics in terms of gender, age, and income.
To best understand how Wendy’s compares to major competitors in the market,
demographics data for McDonald’s and Burger King were analyzed. There was no significant
difference in gender breakdown amongst the three competitors. McDonald’s and Burger King
both skew to slightly lower age brackets than Wendy’s, which suggests that they may have a
slightly greater impact if either competitor chooses to implement Bitcoin capability. Wendy’s
skews slightly higher than both McDonald’s and Burger King in terms of income bracket,
suggesting that Wendy’s may better serve their high-income customers with the convenience of
Bitcoin payment processing. Overall, there were no significant differences in demographics
between Wendy’s and its major competitors.

REPORTING
Wendy’s typical customer is the same demographic as the typical Bitcoin user. Research
analysis finds this hypothesis to be false. Wendy’s typical customer is not representative of the
Bitcoin user population. However, the average Bitcoin user definitely falls into a portion of
Wendy’s total customer base. This overlap is the sweet spot for an innovative rebranding of
Wendy’s pricing platforms. While introducing Bitcoin won’t satisfy a need for the greater
Wendy’s customer base, it may certainly attract new market share from the average Bitcoin
demographic.
As Bitcoin continues to grow in popularity, Wendy’s must analyze changing trends in the
user community. For example, there is some traction over the past two years for engaging more
females to invest in the cryptocurrency. Education about acquiring and trading Bitcoin is now
widely available, which may also push the user demographics to a broader scale. Although
Bitcoin users represent only a sliver of Wendy’s total customer base, it is expected that the user
community will continue to grow. Wendy’s should consider the implementation of a small-scale
Bitcoin program as an early competitive advantage over McDonald’s and Burger King.
ACTION PLAN
Although the Bitcoin user is not representative of Wendy’s total customer base, there is
an opportunity for localized promotion of Bitcoin acceptance. It is recommended to run a trial
Bitcoin program starting in one restaurant. The program should have defined outcomes,
including sales trends and reductions in operating expense that are attributed to Bitcoin usage.
From this trial, Wendy’s Innovation and Strategy team will gain a better understanding of the

market, the effect on sales, and the operational expense for implementing a wide-spread Bitcoin
payment program.
Data show the regional distribution of Bitcoin users to have major groupings in
California, Utah, Oregon, Washington, Nevada, New Hampshire, and Vermont. (CoinDesk,
2015) It is therefore recommended to run the trial program at the Wendy’s restaurant located at
782 South Bascom Avenue, San Jose, California (see Figure 1). This Silicon Valley restaurant is
a prime location for attracting the tech enthusiasts that comprise a large portion of the Bitcoin
user demographic. If the trial is successful, then it is recommended that Wendy’s take a tiered
approach in launching Bitcoin payment options starting with other major metropolitan areas in
the above mentioned states.
Figure 1. Recommended Wendy’s location for trial Bitcoin program in Silicon Valley.
The implementation of a small-scale Bitcoin program can be managed cost-effectively.
Major costs to run this trial fall into five categories:

• Further research and design work to develop Bitcoin program on a small scale
• Implementation of Bitcoin payment scanners in one store
• Local advertising of Bitcoin payment option
• Training the restaurant staff to accept Bitcoin payment
• Training the accounting staff to integrate Bitcoin in financial documentation
Of the abovementioned items, the most critical is following generally accepted accounting
principles and consolidating tax statements. The simplest of the items is local advertising of
Bitcoin acceptance, which may be as simple as placing a small “Bitcoin Accepted” sign near the
registers.
Due to the unstable nature of Bitcoin, further research is necessary to draft a business
continuity plan. The conversion of Bitcoin to U.S. dollars fluctuates, so Wendy’s will need
Subject Matter Experts to manage this uncertainty. The next step is to gather best business
practices and lessons learned from countries with unstable currencies. This information will help
secure Wendy’s profits while using an innovative yet speculative payment option.

SOURCES
Bitcoin. (2016). How does Bitcoin work? Bitcoin. Accessed from https://bitcoin.org/en/how-it-
works
Bitcoin Wiki. (2016). How to accept Bitcoin, for small businesses. Bitcoin Wiki. Accessed from
https://en.bitcoin.it/wiki/How_to_accept_Bitcoin,_for_small_businesses
Blank, C. (2014). Are Bitcoins Legit? QSR Magazine. Accessed from
https://www.qsrmagazine.com/exclusives/are-bitcoins-legit
CoinDesk. (2015). How to Store Your Bitcoins. CoinDesk. Accessed from
http://www.coindesk.com/information/how-to-store-your-bitcoins/
CoinDesk. (2015). Who Really Uses Bitcoin? CoinDesk. Accessed from
http://www.coindesk.com/research/who-really-uses-bitcoin/
CoinDesk. (2015). New CoinDesk Report Reveals Who Really Uses Bitcoin. CoinDesk.
Accessed from http://www.coindesk.com/new-coindesk-report-reveals-who-really-uses-
bitcoin/
Gongloff, M. (2014). Bitcoin Is Apparently a Rich, White, Male Disaster. Huffington Post.
Accessed from http://www.huffingtonpost.com/2014/02/28/bitcoin-user-demographics-
libertarian-men_n_4874727.html
Malhotra, N., Dash, S. (2011). Marketing Research: An Applied Orientation Sixth Edition. India:
Dorling Kindersley Pvt. Ltd.
Say, M. (2014). Why We Accept Bitcoin. Forbes. Accessed from
http://www.forbes.com/sites/groupthink/2014/02/13/why-we-accept-
bitcoin/#2a3c10c5130b

Smart, E. (2014). Why Bitcoin Value vs. The US Dollar Doesn’t Matter (and Never Will).
CCN.LA. Accessed from https://www.cryptocoinsnews.com/why-bitcoin-value-doesnt-
matter/
Yelowitz, A., Wilson, M. (2015). Characteristics of Bitcoin users: an analysis of Google search
data. Applied Economics Letters, 22(13), pages 1030-1036. Accessed from
http://www.tandfonline.com/doi/pdf/10.1080/13504851.2014.995359
ZeroHedge. (2014). The Demographics of BitCoin. ZeroHedge. Accessed from
http://www.zerohedge.com/news/2013-03-10/demographics-bitcoin

Appendix 1: Wendy’s data compiled using SPSS software.

Appendix 2: McDonald’s data compiled using SPSS software.

Appendix 3: Burger King data compiled using SPSS software.

Appendix 4: Age of Bitcoin Users (CoinDesk, 2015).

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