Executive Summary

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.

Five key stakeholders, namely shareholders, customers, suppliers, franchises and

government are identified potentially involving this outbreak. They received different impacts

from this crisis. Shareholders withdrew investment. Many customers avoided having Taco

Bell’s foods. Some suppliers may lose deal with Taco Bell impacting its workers. Franchises

were involved in prosecution. Government sent investigation teams on this outbreak. All of

these impacts could be influenced by ethic.

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.

2) The Crisis: E-coli outbreak November -December 2006

Negative image on Food quality have been collected since 1999. In 2006, Escherichia

coli (E.coli) was epidemic beginning from 17 November at New Jersey and acknowledged to

Taco Bell on 25 November. To response the crisis, communication strategy is a key success

to win back its stakeholders. Some responses from the Taco Bell involved ethical issues. In

this crisis also impacted many stakeholders such as shareholders, customers. Investigation

was organized through government and private laboratories hired by Taco Bell. There were

more than 400 confirmed cases from this E.coli outbreak. By the middle of December, the

Centers for Disease Control (CDC) announced that the E. coli outbreak was over (Johnson et

al, 2007).

3) Taco Bell’ responses to the crisis analysis

3.1 Public communication

After the incident of E. coli spreading out many states, Taco Bell had never

rejected occurring of outbreak under their franchises. Greg Creed, Taco Bell

president, released the first responses on 4 December through. Creed states that Taco

Bell franchises will cooperate with country health officials and voluntary closes

suspected restaurants (Creed 2006a). This shows that Taco Bell indirectly accepted

the incident and did not evade their responsibility. In the communication response to

crisis, DiSanza and Legge (referred by Durham 2010a) suggest that evading

responsibility and corrective action can protect the company’s reputation. It can say

that Taco Bell chose the corrective action to ethically response this action by telling

the truth to the public.

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Moreover, Greg Creed pointing out corporation’s attention has been

transferred from the interest of the company to the health and safety of the customers

and employees (Creed 2006a). It is important to note that the Taco Bell’s

announcement can meet the ethical framework of virtue theory. The term virtue

theory refers to being a good organization (Wilcox referred by Durham 2010 c). This

is an ethical response because customers would be better to acknowledge this

incident although they could avoid having meal at Taco Bell. Therefore, people could

see company’s first intention, whether they were possibly doing an ethical deed for

protecting Brand image.

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.

3.2 Shutting down the contaminated restaurant

Upon the infection issue happened to the food in Taco Bell Corporation, Taco

Bell has been closed 60 of its restaurant in New York, New Jersey, Pennsylvania and

Delaware on 4th December (Schmidt 2006). Responsibility and trustworthiness is a

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

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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.

3.3 Sanitizing the restaurants

Simultaneously, Taco Bell automatically got rid of all the existing foods and

also had a completed sanitizing of all the cooking equipments to ensure that every

necessary procedure is in place (Johnson et al. 2007). Focusing on the concept of

crisis management, solving the technical or human problems is significant (DiSanza

and Legge referred by Durham, 2010a). Taco Bell had proved this point by re-

sanitizing the restaurants. The main purpose of throwing out existing foods or

cleaning equipments is to solve the infected problem in Taco Bell. However, this is

also a part of organizational communication which stakeholders’ confidence such as

customers, shareholders can be reassured because it also increase the image of caring.

3.4 Investigating the problem

Taco bell individually hired private scientific laboratory to investigate the

source of E.coli in their restaurants and suppliers. After facing extent of the outbreak,

CDC and FDA became involved in an investigation (Johnson et al. 2007). It seems

that Taco Bell wanted to accelerate the result of the test and quickly close this

outbreak case because the government health officials could take longer time to

finish the investigation. Coombs (2007) notes that quick responses will reduce the

damage of crisis. However, this can still communicate to the stakeholder that Taco

Bell sincerely intended to pay attention on the problem. The stakeholder would feel

more positive to the restaurants that there is real action on the site.

3.5 Looking after victims

Taco Bell took responsibility on customers’ medical expenses. Dallas (2006)

reports that about 40 people have symptoms consistent with E.coli and 15 people

have been hospitalized. These people all are Taco Bell’s customers. Coomb (2007)

suggests that company should provide expression of concern and help for victims.

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

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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.

3.6 Slowly responding at the beginning crisis

Taco Bell delayed their response of the outbreak to the public. The outbreak

was officially confirmed on 29th November 2006 relating to Taco Bell restaurants

(Johnson et al. 2007). During the outbreak, many news outlets reported about the

spread of the E.coli to many states and the danger of E.coli to the whole country.

However, the first addressing of the outbreak was only posted on 4 th December 2006

on Taco Bell website: press release (Irvine 2006). This means that Taco Bell took 5

days to deal with the issue. One of the core ethical values is caring relating to social

responsibility (Durham 2010b) Taco Bell was significantly disregarded it that Taco

Bell had no immediately tackled the problem. Coombs (2007) claims that making

public safety is the first priority on initial crisis responses because a failure to address

public safety intensifies the damage from a crisis. Taco Bell could have prevented

more customers from being sick from E. coli and eventually prevented more

prosecutions rather than concerning more on profit.

Besides, Taco Bell president, Greg Creed addressed the situation on 14 th

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.

3.7 Verbal and non-verbal communication barriers

There are communication barriers in Taco Bell’s commercial video. Firstly,

Greg Creed, representative on the video, did not effectively deliver the message to

audiences. Mr. Creed’s accent is different from American. It seems that he might

come from different culture and country. To talk with American audiences, the

representative who does not closely relate to them or be the same stereotyping might

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.

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Furthermore, there are failures in non-verbal communication in the

commercial video. Creed’s face expression during the video did not show his any

emotion, genuine concern and caring intention but it looks like speaking along the

script. Many messages can be sent through non-verbal language especially in this

case body languages presented on commercial video. His postures and body

movements (kinetic aspect) such as placing arms do not look humble but look feeling

really irresponsible to the incident. Eyes movement shows his boring mood. The pace

and tone of last sentence (“Thank you”) sounds very not genuine. Formal cloth

makes the feeling of distance and doubtfulness which he might not even eat the

products of Taco Bell which are inexpensive.

3.8 Missing external communication

The company did not entirely utilize their external communication media

which they hold in their hand in the beginning time of crisis. The informative

approach is necessary because an E.coli is invisible to the eyes of everyone. Coombs

(2007) suggests that website is a new mass useful media to reach a wide array of

public quickly to address crisis concerns. Taco Bell official website is always

available to announce any news from the company; nevertheless, this communication

channel had not been used to deliver the messages to public at the initial crisis. While

YUM, parent company, did also have no any response from this incident or an

announcement from its website on that time.

Taco Bell refused an opportunity to go on public media. Ratigan (2006) from

CNBC notify that Taco Bell was invited to join on MSNBC to discuss the outbreak

on 3rd December but the offer was cancelled. The best way to protect the

organizational image is by modifying public perceptions of the responsibility for the

crisis (Coombs 1995, pp.453). Taco Bell missed this opportunity which was an

immediate free nationwide broadcasting media to reassure their customers what they

were going to solve. Coombs (2007) notes that avoiding talking to news media will

show the guilty and hiding behaviour of company. Not only they lost the opportunity

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.

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3.9 Early re-opening the restaurants

The restaurants were precipitately reopened the restaurants on 5 December

rather than to put the full safety of the public first during the crisis. Taco Bell just

started to temporarily shut down the restaurants on 4 December to investigate the

source of E.col (Johnson et al. 2007). Even though the source of E.coli was not

confirmed yet and the search still continued, many stores were reopened within a day.

This could reflect the Taco Bell’s intention and ethical value of caring that profit

each day is more important than people’s safety. Interestingly, one of the YUM’s

policy claims that food safety is the top priority at Yum! (YUM 2009). However, it

seems that food safety is not truly first priority for them like its action.

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.

3.10 Re-image plan

There was no such a proper re-image plan after the outbreak. According to the

Taco Bell release (Taco Bell 2006b), since the outbreak was over, Taco Bell

continued on their product campaigns again. Coombs (2007) claims in the post-crisis

phase, returning to business, reputation repair should be considered during this phase.

Taco Bell did assure their stakeholders but there was no showing any social

responsibility to the public such as social contributions.

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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 ShareholdersThere 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

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.

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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

a) Immediately responding to crisis (consumers)

First acknowledgement of the crisis should be addressed as soon as

possible including shutdown the restaurants. Taco Bell could have prevented

more customers from being sick from E. coli and eventually prevented more

prosecutions. Quicker action leads to fewer victims. Positive image will be

instead of negative as its showing caring responsibility.

b) Showing new process and reactions

Taco Bell should publish a commercial advertising that show their new

sanitizing process of food processing from farms to their kitchens and their

sanitizing policy to assure the customers. This will create a very good positive

image and it is better than a speech by president which could not show any real

action rather than words.

c) Using public media

Taco bell should send northeast regional manager or representative who

have a good characteristic, to wisely inform to the public media (news) that this

breakout was not just an accident on the part of the franchises, but rather an

unfortunate event which they had no control. The announcements should

acknowledge that the incident are taking a stand and trying to solve. This can

represent the sincere of company.

Website should be used because it is another efficient external

communication channel. Website should be the first place of providing

informative situation. This could show real concerned to the customers.

d) Delay reopening restaurants

To show the customers company’s responsibility, the restaurants which

were shut down should be re-opened again after officially confirm. This will

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prove Taco Bell’s ethical value that customers’ safety is in the high priority

concern.

6.2 Post-crisis

a) Funding an E.coli research

Taco Bell might turn the crisis into opportunity by donating funds to

research organizations which study on the remedy of E.coli infection that

threatens the health of human. Taco Bell may even be a host to raise money for

E.coli research. By reacting this way, Not only the research could find new

solutions to make food safer preventing future problems for Taco Bell’s supply

chain but it would also have strengthened the public image in consumers’

perception since Taco Bell can verify the public that the company truly pays

attention on health problem.

b) Providing supportive information

Taco Bell should develop an awareness campaign by educating

consumers about E.coli. If consumers understand that E.coli can be prevented

and Taco Bell’s food processing is in control, this will be able to reassure

customer confidence back again.

c) Improving food quality policy

Taco Bell should set more strict responses of food safety by randomly

checking food quality each franchise to assure that it will not happen again.

Furthermore, this policy should announce in the code of conduct of the

restaurant to show the customers.

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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

Coombs, W.T. 2007, Crisis management and communications, media release, 30 October, Institute for Public Relations, viewed on 20 January 2010, <http://www.instituteforpr.org/essential_knowledge/detail/crisis_management_and_communications>

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 2010a, Organisational communication, summer session, lecture 5, University of New South Wales

Durham, R 2010b, Why ethics?, summer session, lecture 7, University of New South Wales

Durham, R 2010c, Frameworks for ethical thinking, summer session, lecture 8, 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

Forgas, J. 1992, The psychology of social interaction, Maxwell Macmillan Publishing, pp. 59-76, Australia.

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>