Taco Bell Final Paper!

A History of Taco Bell In 1962, Glen Bell opened the doors to the first Taco Bell in Downey, CA. In 1964, the first Taco Bell franchise was purchased by Kermit Becky, a former member of the LA Police Department. (Taco Bell Corp.) The Taco Bell chain became a publicly traded company in 1969 and has continued to expand. In 1978, three years after Bell’s resignation as Chairman of the Board, PepsiCo showed tremendous interest in buying the Taco Bell Franchises. “The deal was some six months in the making and ended with Glen Bell as a major PepsiCo shareholder and millions richer”. (Taco Bell Corp.) In 1988, Taco Bell started its value menu initiative, which was an industry first and offered three tier pricing on its menus making Taco Bell an affordable alternative to other fast food restaurants. In 1997, Tricon Global Restaurants buys the Taco Bell franchise from PepsiCo and later that year “Taco Bell introduced its new multi-spot advertising campaign featuring the popular talking Chihuahua, and TacoBell.com was born”. (Taco Bell Corp.) Today Taco Bell has a vast franchise network with over 5800 restaurants in the U.S of which 80% are owned and operated by individual franchises. With over 1.8 billion in revenue in 2005 and over 175,000 employees, Taco Bell has come a long way since its inception in 1962. In addition to Taco Bell’s success, the corporation has faced some unfortunate situations over the years. Crisis I: E-coli outbreak. November- December 2006.

In late November of 2006, E. coli was discovered in the green onions at Taco Bell establishments in New Jersey. Shortly after, more E. coli bacteria were discovered in locations in New York, Pennsylvania, and Delaware. It was confirmed that more than 65 people were infected. The outbreak was described as the largest E. coli outbreak in the Northeast in numerous years. (Johnson, Alex, et al.) Due to the gravity of the issue, strict precautions were put in place. Numerous Taco Bell locations were closed in New Jersey, New York, Pennsylvania, and Delaware. In early December 2006, state and federal officials went to McClane Food Services in Southern New Jersey, which is the regional distribution center for Taco Bell. In addition to the preliminary tests performed on the green onions, the New Jersey health department tested them, as well. (NPR) While the outbreak was great, the intensity of the illness from the bacteria varied. In New Jersey, two individuals were in critical condition with hemolytic uremic syndrome, which can permanently harm the kidneys. Other victims were hospitalized and later realized, while others did not become sick but were infected when tested. (Serrano) By mid-December 2006, the Centers for Disease Control (CDC) stated that the E. coli outbreak was over. They also said that despite initial beliefs, the E. coli was linked to lettuce, and not green onions. Taco Bell then released a statement stating that the contaminated food had been discarded and the affected establishments were “resanitized”. At that point in time, the corporation shared their belief that their food was safe to consume. (Taco Bell Corp.) However, from a public relations point of view, Taco Bell should have done more

to assure the public. Fast food, poor PR, & consequences: “Taco Bell le duéle en la cartera.” The worst aspect of Taco Bell’s public relations strategy was their delay to address the issue. According to their first press release, the outbreak began November 29th. Their first press release addressing the problem was dated December 4th (Taco Bell Corp.). It took Taco Bell five days to address the issue. Had they addressed the problem immediately, Taco Bell could have prevented more customers from being ill from E. coli and prevented more lawsuits. Taco Bell president, Greg Creed finally addressed the situation December 14th in a commercial video addressed to the public after the situation was declared “over” by the CDC. (This video can be seen by going to our company> latest news> December 14, 2006. The video will be in the right hand corner as well as a company letter from Greg Creed.) Taco Bell restating the tragedy after it has happened makes the situation worse by allowing the public to remember the incident longer. Greg Creed as a speaker did not deliver the message in an ideal method. Immediately upon speaking one can tell that the president has an accent from a different country. American audiences must have someone that they can relate to. By using a representative from a different country, Taco Bell distanced themselves from their audience. This leaves the audience to ponder: As a foreigner, does the president even eat Taco Bell products? During the commercial, Creed’s displays a lack of facial expression. This shows

that the commercial was rehearsed but not genuine. In a time of crisis, the public needs a company figure that they can relate to. Taco Bell would have done better to use the northeast regional manager or a more charismatic figure to speak. Taco Bell also needed to address the issue as soon and as frequently as possible. Taco Bell was invited to participate on MSNBC to discuss the tragedy and declined the offer on December 5th. MSNBC would have offered Taco Bell an immediate free nationwide opportunity to reassure their customers in a truthful objective manner. Taco Bell’s negligence cost them big: twenty million dollars to be exact. Most of it was found in lost sales. During this crisis, YUM! Brand stocks had dropped 6 points on the NYSE and had incurred several lawsuits as a direct result of this tragedy (MSNBC). Prior planning prevents poor performance and keeps the profits in your pockets Taco Bell. Crisis II: Rats found in NYC store. February 2007 A little over a year later, Taco Bell was hit with a second crisis involving a rat infestation in a Taco Bell restaurant in Greenwich Village, New York City. The infestation was first noticed in early February 2007. A video, recorded by a customer and given to the media, was released showing the Taco Bell/ KFC restaurant completely infested with rats. According to a video clip from Fox 5 News, there was “evidence of rats in the food areas,” at this restaurant. The clip continues and states “one employee says that workers don’t wear gloves and that rats come into contact with food on a regular basis.” (Rats). After the health department saw this video clip on television, the restaurant was

closed indefinitely and health officials had meetings with the managers of the restaurant. This was also not the first time that this restaurant had health department violations. However, according to QSR magazine, the restaurant passed health inspection the Thursday before the crisis broke out. After sanitizing the store and getting a clean bill of health, owner of the Taco Bell franchise, YUM Brands issued a statement, “We want to assure our customers that nothing is more important to us than food safety and their health” (Minnick). However, brand experts think that it is going to be very difficult for Taco Bell to regain its reputation after two crises right in a row. Crisis II “Resolution:” Strike two, shame on you! No crisis is a small crisis. What happened in Greenwich Village over a short span before the company could even release a statement addressing the issue, the video of rats on the floor of the Taco Bell had already crossed through the internet and other news stations were reporting on this event as well. According to Ad Age reports 1,000 blogs had cited or spread the story and footage of the rats in the restaurant the day after the incident occurred. A search on Google News for “rats and Taco Bell” yielded 600 stories posted on websites all over. Yum! Brands eventually caught on, despite the fact that they were a late in responding to the rat crisis. It is a positive change that marketers are starting to understand the role of search in the distribution of information online. Yum! Brands saw the crisis as local, which was a huge miscalculation. “There’s nothing more viral on the negative side than rate”, said Pete Blackshaw, chief marketing

officer, Nielsen Buzzmetrics. “In the world of fast food, hygiene is the number 1 driver, and rats take it to the food hygiene on steroids level. Rats are Defcon 5.” Taco Bell finally put out their press release saying “there is no immediate threat” to consumers. One reviewer took this to mean that the company seems to be more interested in reopening its restaurants quickly rather than taking time to make sure that every Taco Bell in the country has been sanitized by employees and then inspected by health officials. The PR response to this the viewer stated “actions speak louder than words. Yum! Brands is putting out a message that profits come before people’s safety by rushing to reopen stores.

Works Cited

Hershberg, Peter. “Taco Bell, Connoisseurs of Damage Control.” Reprise Media. N.p., 1 Mar. 2007. Web. 5 Nov. 2009. . Johnson, Alex, et al. “Taco Bell Acts after E. Coli Outbreak.” MSNBC.com. MSNBC.com, 6 Dec. 2006. Web. 7 Nov. 2009. . Macarthur, Kate. “Taco Hell: Rodent Video Signals New Era in PR Crises.” Advertizing Age. N.p., 26 Feb. 2007. Web. 6 Nov. 2009. . Minnick, Fred. "Taco Bell Franchises Can't Discuss Rat Problem." QRS Magazine.com. NPR. “E. Coli Forces Taco Bell to Pull Green Onions.” NPR.org. NPR, 6 Dec. 2006. Web. 7 Nov. 2009. . “On the Money.” CNBC On the Money. MSNBC. MSNBC, n.p., Dec. 2006. Television. QRS Magazine, 26 Feb. 2007. Web. 4 Nov. 2009. <www.qrsmagazine.com>. "Rats Take Over KFC/Taco Bell." Youtube.com. Fox 5 News, 23 Feb. 2007. Web. 4 Nov. 2009. <www.youtube.com>. Serrano, Alfonso. “E. Coli Outbreak Linked to Taco Bell.” CBSNews.com. CBS

News, 4 Dec. 2006. Web. 7 Nov. 2009. . Taco Bell. A Message from Greg Creed. http://www.tacobell.com. N.p., n.d. Web. 7 Nov. 2009. Taco Bell Corp. “Our Company: Latest News.” TacoBell.com. Taco Bell Corp., 2009. Web. 7 Nov. 2009. .