Restaurant marketers have something new to worry about if they have to deal with a crisis, as Yum! Brands Inc. learned recently from a rat infestation at a franchised KFC-Taco Bell restaurant in New York City.
The Internet—a vital tool in giving restaurants a good image—had assumed the opposing role of helping to publicize a crisis that might have caused less brand damage only 10 or 20 years ago.
In nationwide TV news broadcasts, countless people watched a dozen or so rats scurry about the restaurant. But then the video, which was shot by a local TV crew, made its way to the Internet, and people worldwide were able to watch the infestation on YouTube and numerous blogs, where it can be replayed on demand indefinitely.
The days of dealing with temporary or purely “local” crises may well be over because bad news travels faster and more widely than ever and has greater staying power. And the way that marketers respond to such debacles can have a long-term effect on a brand’s strengths, crisis management experts say.
“We have a saying: Nothing’s faster than the speed of light than bad news on the Internet,” said Robert Passikoff, president of the New York-based Brand Keys consulting firm.
Brands are in a vulnerable position because consumers are savvier than they were during the pre-Internet era, he said, and they have more power to control a brand’s destiny.
“They’ve got access to information and exposure to information that the brands no longer control,” Passikoff said.
The longer a crisis goes unresolved, the more damage it can do to a brand’s image and its sales, experts agree. In March 2005 a woman claimed that she found a severed finger in a bowl of chili at a Wendy’s restaurant in San Jose, Calif. Police did not determine until May that it was an extortionist’s hoax. Wendy’s reported that 2 percent to 2.5 percent of its second-quarter decline in same-store sales that year was a result of the incident.
Applebee’s International Inc. faced a similar crisis that same year, when a woman sued the company, alleging she found a fingertip in her salad. Applebee’s quickly determined that her claim was not a hoax. An employee had severed the tip of his thumb, which may have been found in the salad. Applebee’s suffered no apparent damage to sales or its brand image as a result.
None of the chains involved in those incidents tried to cover up them up, a move that in this day of blogs and social-networking websites is useless to try.
“You can’t ignore it,” Passikoff said. “You’d look foolish.”
Nor can marketers afford to downplay a crisis, said Jonathan Bernstein, president of Bernstein Crisis Management of Sierra Madre, Calif.
“You have to be honest,” he said. “People recognize spin when they see it. The Internet and the ease by which information can be leaked from an organization or discovered inadvertently make it very difficult to get away with spin.”
The best way to manage a crisis is to take steps to prevent it in the first place, Bernstein said, but that doesn’t appear to be happening in corporate America.
“Ninety-five percent of businesses in this country are either unprepared [for a crisis] or are grossly underprepared,” he said. “Unfortunately, too many have the attitude that ‘we managed to get by so far, why should we do anything different?’”
Yum! Brands responded adequately to its crisis, experts agreed.
After the rat infestation was discovered, the company posted an apology on its website from Emil Brolick, Yum’s domestic president, and worked with franchisee ADF Cos. to close not only that location but several more of its units in New York until they were given a clean bill of health. Yum also hired world-renowned rat expert Bobby Corrigan to review the sanitation practices of franchisees in New York.
“They are now saying, and doing a very good job of saying, that they will go back and fix things,” Bernstein said. “They need to do a vulnerability analysis to determine why it happened or if somebody knew about it and take steps that it doesn’t happen again. Otherwise it’s just a ‘Band-Aid’ fix.”
Even when the situation is finally resolved, the fallout from the crisis will linger on the Internet.
“The Internet archives this stuff ad infinitum,” Bernstein said. “From now on when people talk about health threats or restaurant closings, [KFC and Taco Bell] are going to get mentioned.”
That’s the same assessment offered by Larry Smith, president of the Louisville, Ky.-based Institute for Crisis Management.
“It will be a joke that will go around for an awful long time, unfortunately,” he said.
Although Smith acknowledged that such Internet sites as YouTube can spread news quicker than ever before, he’s not convinced that the impact on a particular brand is greater than it was before the Internet became widely used.
“How much of what people get so worked up about probably doesn’t have a whole lot more impact than it did 50 years ago when it got into the newspapers of the country,” he said.
There are exceptions “like rats running around a restaurant that generate interest and curiosity and to some degree concern,” he added.
If Yum follows through on its promise to prevent another such incident from occurring, “they’ll snap back real quickly,” he said.
“One of the things we’ve learned is the American public is quick to forget and probably almost as quick to forgive if you admit a problem and set about to fix it,” Smith said. “Most American consumers will give you a second chance.”
Passikoff of Brand Keys agrees that when marketers move aggressively to fix a problem, “people are willing to give you the benefit of the doubt.”
But he also sees long-term problems for Taco Bell, which ranks low on Brand Keys’ Customer Loyalty Engagement Index.
The index measures the loyalty of actual customers for a variety or brands. Of 10 quick-service brands, Taco Bell was tied for eighth place with Jack in the Box.
“Being No. 8 is not real good,” Passikoff said. “It’s saying in terms of service and menu and all the usual attributes and benefits in the category that customers don’t think all that well of the brand.”
That’s where the problem lies, he contends.
“If you weren’t strong among your customers to begin with,” Passikoff said, “the bond that exists between you and the customers is not all that high. You have to slowly rebuild the brand and make it stronger and the [brand] messages more believable.”