When a customer claimed to have found a severed finger in a bowl of chilli served at a Wendy's fast-food franchise in California, the chain's sales fell by half in the San José area where the incident was reported. Wendy's brand and reputation were at risk, until the claim was exposed as a hoax in late April and the company, operator of America's third-biggest hamburger chain, was vindicated.
Yet the share price of Wendy's International, the parent company, rose steadily through March and April, despite the finger furore and downgrades from analysts. One reason was heavy buying by hedge funds, led by Pershing Square Capital. This week Pershing made its intentions public, saying that it was worried by market rumours that Wendy's might soon buy more fast-food brands, and arguing that the firm should be selling assets instead. Pershing's approach indicates rising pressure on American restaurant companies to perform, at a time when the industry's growth prospects look increasingly tough.
The hit on customers' wallets from higher petrol prices and rising interest rates will probably mean that year-on-year sales growth across the American restaurant industry slows to just 1% by the fourth quarter of 2005, down from a five-year historic average of 5.6%, say UBS, an investment bank, and Global Insight, a forecasting group. Looking further ahead, says UBS's David Palmer, the industry may have to stop relying on most of the long-term trends that were behind much of its recent growth.
Three-quarters of Americans already live within three miles of a McDonald's restaurant, leaving little scope for green-field growth. (Obesity is a growing issue in America, and with it come the threat of liability lawsuits against big restaurant chains and, perhaps, legal limits on advertising.) This week America's biggest food trade group, the Grocery Manufacturers' Association, was said to be preparing tougher guidelines on the marketing of food to children, in the hope of staving off statutory controls. Home cooking may also be making a comeback, helped by two factors. The percentage of women joining America's workforce may have peaked, and supermarket chains such as Wal-Mart have been forcing down retail food prices.
Expansion overseas is one option for American restaurant chains. Burger King, the privately owned number two hamburger chain, opened its first outlet in China last month, apparently aiming to maintain strong growth ahead of an initial public offering next year. McDonald's has 600 outlets in China and plans 400 more. But at home, the future seems to hold only an ever more competitive and cost-conscious restaurant industry. Fast-food chains are trying to poach customers from 'casual dining' chains (such as Applebee's Neighborhood Grill), while those chains are squeezing out independent restaurants unable to compete on cost or in marketing clout. Business conditions, not severed fingers, are the real threat to the weaker firms in the restaurant business.
The word 'hoax'(paragraph 1) probably means
A．truth.
B．joke.
C．revenge.
D．warn.