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This report is to study the response of Taco Bell to E.coli outbreak from November to
December 2006 affecting people in six US states. Crisis management becomes an important
role to deal with the outbreak which involved communication strategy and many decisions
related ethical issues. Taco Bell was left with a major control challenge of convincing its
customers that its foods are safe to consume although the cause of the outbreak remains an
unknown. Many of Taco Bell’s reactions in this crisis were efficient and ethic, like the
company hired a private laboratory and cooperated with health government officials on the
investigation. Taco Bell showed their responsibility by temporary closing its restaurants,
paying customers’ medical bill. These potentially reflected the company ethical concerns.
Nevertheless, Taco Bell did not perfectly response to the crisis in terms of
communication and ethical aspects. Online media was approach too slow. Besides, there were
communication barriers on the commercial advertising because of representative. Taco Bell
also rejected to appear on public TV news; therefore, public might think that organisation is
guilty and trying to hide something. It was a lack of ethic that Taco bell showed their concern
on profit more than customers’ safety by quickly re-opening the restaurants when source of
E.coli was still mysterious.
Recommendations are based on the analysis to improve Taco Bell reputation which relate
to communication and ethical issues. During crisis phase, immediate response should be
approach along with using all available public media. They should also slow down re-opening
restaurant and wisely feeding information to the public. Post-crisis phase suggestions include
funding related research, educating people and improving food quality policy.
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1) Introduction
Taco Bell, a subsidiary of Yum Brands Inc is a leading Mexican style fast food
restaurant and one of the high earning profits in each year. Late of the year 2006, Taco Bell
restaurants had been hit the sanitizing crisis. There were many responses to its crisis aiming
to solve the problems and recover company’s reputation. The purpose of this business report
is to analyse the situation which basically bases on the study of Taco Bell written by Johnson,
Vanderwerff, Howenstein and Fromm (2007). Finally it will present the possible
recommendations which Taco Bell should take into account. The discussion will generally
focus on communication and ethical issues but this will not essentially intend to discuss on
business or marketing issues.
that Taco Bell chose the corrective action to ethically response this action by telling
the truth to the public.
Since the incident, Taco Bell tried to use external communication channels to
reassure their stakeholders. Veiga(2006) reports that Taco Bell had launched
advertising on many newspapers to persuade customers that its food is safe. There
were also seven releases were posted on the company’s website to report its actions.
In addition, Creed (2006b) reassures by publishing the letter that Taco Bell really
does care its customer and have established the standards to prevent this from
happening. All of these media could bring back Taco Bell’s reputation again and call
back their customers. YUM! 2006 annual report is also another channel that was used
to reassure their shareholder.
In addition, there was opening emergency free hotline to answer questions and
receive any information from their customers. Customer feedbacks are vital in
meeting their needs. Creed (2006b) say that toll-free at 1-800-TACO BELL is
available for clarifying any concern. This is an efficient response of using another
external media after crisis to clarify doubtful questions. Not only it positively affects
the brand image but this reaction would also be able to ensure stakeholders that the
company is responding in the right thing.
core ethical value (Durham 2010b). Taco Bell shows their responsibility by taking
an action of closure of those infected restaurants despite of losing profit. It might
unnecessary to close the infected restaurants if considering its own company’s
economic profit. For this action, Taco Bell could prevent customers from
contaminated foods. Thus, it could say that Taco Bell is doing an ethical conduct as a
good corporation concerning customers’ safety. It is not merely for economical
interests but also have a strong moral mind.
The positive image would appear to the public by this action because this response is
ethical. It exemplifies the compensatory justice of justice theory which compensation
should be provide to people for wrongs done to them (Aristotle referred by Durham
2010c). As a result, the effect of look after victims may win back its identity,
building up image as well as repairing its former reputation.
Besides, Taco Bell president, Greg Creed addressed the situation on 14th
December on commercial advertisement to the public which is also available on their
website (Taco Bell 2006a). At that time, CDC had already been announced that the
outbreak was over. The response to this problem by Taco Bell’s CEO was deemed too
slow and reluctant. Although using media, the commercial advertising, could help to
improve its public relations and brand’s image, it can also remind customers about the
outbreak even when it was already over.
increase the defensiveness from audiences. By using Mr. Creed, it could indirectly
create distance from the audiences leaving the wrong perception that he might not
really concern about food safety.
to go on free media but it was also a negative image to the company’s manner
because Ratigan criticized this issue on the news.
Particularly, the results of the investigation from 6th to 9th December were
different between FDA, CDC and private laboratory hired by Taco Bell; therefore,
the source of E.coli still unknown and it could confuse the customers. Later Taco
Bell still kept silence to clarify this point. Coombs (2007) states that inaccuracies
make an organization look inconsistent. The confirmed end of outbreak from CDC
officially came out on 14 December (Irvine 2006). According to ethical framework
of Utilitarianism, its theory says “the least amount of harm to the least amount of
people” (Durham 2010d). The way which Taco Bell chose is seems less concern on
ethic since during the uncertainty situation like this hastening to reopen the
restaurants could lead to more risky customers’ health.
4) Stakeholders Analysis
There are several primary stakeholders involve in this E.coli outbreak of Taco Bell.
Following by this analysis, the potential impact of stakeholders will be presented.
4.1 Shareholders
There was an economic concern on each shareholder. The investors want
confidence showing security of principal and ROI (Deetz referred by Durham
2010e). The incident was significantly sending the impact of confidence in Taco Bell.
The crisis had made the share price of Yum! drop by around 6 points after outbreak
and it remain that level until middle of January 2007(Johnson et al. 2007). The
uncertainty situation signally showed that Taco Bell would lose their profit, if they
could not resolve the problem. YUM (2007) reports that Taco Bell lost profit from
franchise and license fees as well as high marketing costs. Eventually, the response to
the crisis which had communicated with stakeholders was inefficient to considerably
assure their shareholders; therefore, it leads to withdrawal of YUM! brands share
resulting in falling share price.
On the other hand, the shareholders might did not want to involve the problem
which had such a negative image. Hence, to avoid this concern, withdraw investment
was another alternative for them. Durham (2010c) explains that people will maximize
the interest for individuals in Egoism. This shows that shareholders accordingly
adopted this idea in to their response.
4.2 Customers
There were many victims suffering on this incident after having meal at Taco
Bell restaurants. After closure of outbreak, over than 400 people were confirmed or
suspected case of E.coli from Taco Bell (Johnson et al. 2007). Therefore, customers’
loyalties were efficiently destroyed by threat of safety concern. Although Creed
(2006b) announced that their restaurants are completely safe for consuming, this
might be unsuccessful in short-term communication. Consequently, the customers
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would avoid consuming food at Taco Bell until being reassured in food safety. This
could explain by Justice Theory that people will make a decision based on costs and
benefits. Taco Bell sale fell by almost 20 percent during the outbreak (Johnson et al.
2007). To take a risk by having Taco Bell’s product is exactly not worth to their
health.
4.3 Suppliers
Many suppliers were investigated as it could be a source of E.coli. While Taco
Bell claims that the restaurants’ suppliers are an origin of E.coli (YUM 2007). This
shows that Taco Bell was evading their responsibility by provocations which refer to
another wrongful operation of suppliers. This action was clearer when supplier of
green onion had been cancelled to be the provider since green onion was identified a
potential source of E.coli (Johnson et al. 2007). Not only farm’s reputation was
damaged but the suppliers also lost their profit impacting their farmers and workers.
On this an ethic dilemma, Taco Bell chose to cut the green onion out of their
menu instead of re-sanitizing all farm processing. The ethical framework of
Deontology (categorical imperatives) states that ethical decisions are based on what
is right (good will) (Durham 2010c). Removed ingredient out of menu is a strong
action of caring customers which can quickly prevent infection and improve better
brand image. In another view, this action might be significantly to take an
opportunity to reduce cost of product.
4.4 Franchises
The outbreak directly impact to the Taco Bell franchises especially the
restaurants where an outbreak of illness associated with E.coli. Franchises were
severely facing drop down in sale resulting from poor communication to the
customers. YUM (2007) reports that overall store sales were down 5 percent during
December 2006. In addition, many franchises had been named in lawsuit asking for
responsibility. On this crisis, the franchise owners chose to transfer the liability to the
parent company or the suppliers without any concerning on company protocol
(Johnson et al. 2007). Clearly, the owners lacked of ethic. The response accords to
Evading Responsibility (provocation) that the owners pass all liability to other
stakeholders. They did not even go to visit their customers in hospitals until parent
company had a reaction to the policy.
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4.5 Government
Government health officials became involving in the epidemic E.coli of Taco
Bell as it harmed the citizen quality of life. FDA, CDC and USDA jointly detected
infection and quickly examined the E.coli outbreak (Johnson et al. 2007). Good
communication between the organizations found in this process that they well
supported each other for best performance. Without this response from officials,
Taco Bell might quietly hide this tragedy from public which is unethical. The
response accords to the ethical framework of Consesequentialist Theory
(Utilitarianism) which is to provide good human being with the least harmful to
amount of people (Durham 2010c). Besides, legislator became more aware of the
food safety policy leading to proposing new regulations for a whole country (Johnson
et al. 2007). This relates to the ethic that they showed the respect for human value
because of concerning of having protection to every people safety.
5) Conclusion
Taco Bell tried to show its responsibility through many actions to win back their
stakeholders. Taco Bell did not perfectly response to the outbreak in terms of communication
and ethical aspects. Although there were using external communication media, first announce
on their website is too late. There was lack of professional communicator in the reassuring
advertising impacting. Taco Bell showed it ethical responsibilities by shutting down infected
restaurants and looking after those victims. However, they reopened those restaurants too
immediate and this was unethical because this means profit is more important than
customers’ safety. Many stakeholders involved in this crisis and they differently showed
ethical and unethical responses because of dissimilar impacts and concerns. Based on all
these analysis, crisis communication and ethical aspects for Taco bell still require some
improvements and proactive plan after over outbreak to entirely restore its reputation.
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6) Recommendations
It’s important to restore the company’s image in the eyes of the stakeholders.
Following by the above analysis, there are several recommendations about crisis
communication and business ethics in the outbreak. The recommendation will separate
into 2 phases of the crisis which are during-crisis and post-crisis.
6.1 During-crisis
7) References
Coombs, W. T. 1995,Choosing the right words the development of guidelinges for the
selection of the “appropriate” crisis-response strategies, Management
Communication Quarterly: McQ(1986-1998), May 1995, Vol. 8, No. 4, pp. 452-453
Creed, G. 2006a. Our company: latest news: Taco Bell responds to E. coli incident,
media release 4 December, Taco Bell Corp., viewed on 19 January 2010,
<http://www.tacobell.com>
Creed, G. 2006b. An important message to our valued customers: Taco Bell food is safe
to eat, media release, 14 December, Taco Bell Corp., viewed on 19 January 2010,
<http://www.tacobell.com/_lib/pr/message01.pdf>
Dallas, T, 2006, All but 30 Taco Bells reopened after E.coli outbreak, media release, 13
December, A Time Warner Company, viewed on 10th Jan 2010
<http://edition.cnn.com/2006/health/12/13/e.coli.outbreak/index.html>
Durham, R 2010b, Why ethics?, summer session, lecture 7, University of New South
Wales
Durham, R 2010d, Professional ethics & Leadership, summer session, lecture 10,
University of New South Wales
Durham, R 2010e, Managing multiple roles & stakeholders, summer session, lecture 9,
University of New South Wales
Irvine, C. 2006, Our company: latest news: CDC informs Taco Bell E.Coli outbreak in
four states is over, media release, 14 December, Taco Bell Corp. viewed on 15
January 2010, <http://www.tacobell.com>
Ratigan, D. 2006, Taco Bell E.coli problem, media release, 6 December, CNBC, viewed on
15 January 2010, <http://www.msnbc.msn.com/id/21134540/vp/16169419#16169419>
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Schmidt T. 2006, Can Taco Bell win back its customers?, media release, 6 December
Time, viewed on 15 January 2010,
<http://www.time.com/time/nation/article/0,8599,1568264,00.html>
Taco Bell 2006a, Our company: latest news: the video message from Taco Bell president
Greg Creed , media release, 14 December, Taco Bell Corp., viewed on 15 January
2010, <http://www.tacobell.com/daniella_video/vid/061214gregcreed.flv>
Taco Bell 2006b, Our company: latest news, Taco Bell Corp., viewed on 15 January
2010, <http://www.tacobell.com>
Veiga, A 2006, Taco Bell reassures public, media release, 13 December, The Seattle
Times Company, viewed on 20 January 2010,
<http://seattletimes.nwsource.com/html/nationworld/2003474776_tacobell13.html>
YUM 2007, Yum! Brand 2006 annual customer mania report, Yum! Brand Inc.,
<http://www.yum.com/investors/annualreport/06annualreport/pdf/yum_ar06.pdf>
YUM 2009, ‘Responsibility: food safety and quality’, Yum! Brands Inc., viewed on 18
January 2010, <http://www.yum.com/company/nutrition.asp>