Experts Handicap Yum Brands' PR Fallout

Many a brand has bounced back from health-related and other PR crises--Tylenol being the classic case study. But what are the dynamics when a brand is faced with two public crises in rapid succession, exacerbated by the relatively new phenomenon of Internet video?

Yum Brands Inc., parent of Taco Bell and KFC, is about to find out.

Still recovering from the impact of the late-2006 E. coli outbreak that sickened more than 70 Taco Bell customers in four states, Yum Brands must now try to minimize damage to both brands in the wake of a widely disseminated video of rats scurrying around in a KFC/Taco Bell restaurant in New York's Greenwich Village.

Brand consultants and PR crisis management experts last week agreed that Yum seems to be taking the right initial damage control steps. But while some said that the effects could be short-lived, at least one expressed concern about long-term damage to the brand.

Crisis management guru Jim Lukaszewski of The Lukaszewski Group in White Plains, N.Y. says speed of response is most critical, and that the impact is likely to be largely localized and of short duration. "These are fundamentally good companies, and they'll do whatever is necessary to correct the problem," he says. "In the vast majority of cases, if you fix the problem, that fixes the market."

Today's consumers have been educated about such incidents, and they put them in context and make their own decisions, he adds. "From a marketing standpoint, it's hard to stampede or get people riled up. If the [restaurant] opened tomorrow, and the problems had been dealt with, there would be people eating breakfast there."

But Jennifer Sheehy, vice president/crisis prevention and management for Boston-based Cone, a division of Omnicom Group, believes the Internet's power should not be underestimated. "What would've been an incident isolated to one area, with limited repercussions for the brands, is now being spread all over the country, even the world," she says, adding that the publicity and effects of this situation would have been less severe and widespread if the E. coli incident had not preceded it.

Robert Passikoff, president of the Brand Keys consultancy, expresses concern about Taco Bell's prospects, even with thorough, appropriate crisis management. He points out that Brand Keys' soon-to-be-released Customer Loyalty Engagement Index for 2007 shows that of 10 quick-serve chain brands analyzed, Taco Bell is near the bottom, tied with Jack-in-the-Box for eighth place. The study surveys actual customers of brands, not the public at large.

"We're not talking about some fly-by-night company that doesn't pay attention, and some of this is just bad luck," he says of Taco Bell. "People couldn't directly point a finger at Taco Bell as being responsible in the case of the E. coli situation. But now you have this video of rats. That kind of visceral image goes to the heart of brand psychology. How do you wipe that out of people's memories? If you are a strong and resonant brand, you could more easily survive this. But customer loyalty for this brand was not that strong to begin with."

How should Taco Bell respond? "Maybe they should think about changing their name," he says.

Passikoff is more optimistic about KFC's chances because it placed fifth on the Brand Keys' customer loyalty rankings.