Can your restaurant bounce back from a crisis?

| by Travis Wagoner
Can your restaurant bounce back from a crisis?

Your brand is your restaurant's face — your representation to the world, so you must protect it.

Chipotle found that out when an E. coli outbreak that caused several of its customers in the Pacific Northwest to become ill, spread to infect consumers in up to nine states. The source of the problem appears to have been contained during a period in late October. In 42 of the 43 cases linked to Chipotle consumers reported visiting one of the restaurants in question between Oct. 13 and Oct. 30. One person reported having eaten at a Chipotle on Nov. 6.

In response to this incident, Chipotle stated it has taken aggressive steps to make sure its restaurants are as safe as possible. There have been no reported new cases in Washington or Oregon since Chipotle put its remediation plan into effect, said Steve Ells, chairman and co-CEO of Chipotle, in a press release.

"We take this incident very seriously because the safety of our food and wellbeing of our customers is always our highest priority," Ells said. "We are committed to taking any and all necessary actions to make sure our food is as safe as possible, and we are working diligently with the health agencies."

Chipotle's E. coli scare has sparked much discussion about brand protection and the importance of having a crisis management plan, which enables brands to protect and defend their restaurants when facing any event that may damage their reputations, according to Paula Hahn, a principal of Blink Visionary Crisis Management for the food channels. She said only 55 percent of U.S. businesses have a crisis plan.

"The camp of the other 45 percent is not a good place to be when the number of U.S. food products recalled has nearly doubled since 2002, according to a report by reinsurance company Swiss Re," Hahn said.

It appears to be even riskier if you're in the restaurant business. Anything can happen at anytime. Hahn cited the following examples of employee PR blunders that made headlines the past year:

  • Cooking meth in a Taco Bell
  • Standing in two tubs of shredded lettuce at a Burger King
  • Using a bun to wipe the floor then use on a burger in a Checkers
  • An inserting a finger in chili accusation at a Wendy's, or worse yet...
  • Stabbing a customer at a Del Taco register

Months before former Subway pitchman Jared Fogle was sentenced to more than 15 years in prison on charges of receiving child pornography and repeatedly having sex with minors, Subway's reputation took a big hit from Q1 to Q3.

Fogle’s home was raided in July as part of a child pornography investigation, and in August he pled guilty to having sex with minors and distributing child porn. Fogle rose to fame in 1999 for losing more than 200 pounds claiming he ate a diet of nothing but Subway sandwiches. He then became a national spokesman for Subway and traveled around the country making appearances about living a healthy lifestyle.

Subway paid a price just for the initial news. The Reputation Institute released a survey of consumer perception that measures exactly how the general public feels about the world’s best-known companies. Their study shows that Subway took a significant dive in corporate reputation, with a 6-point drop in score from earlier this year, which removed them from being considered a most reputable company altogether.

This confirms the idea that consumers and investors don’t just want great products — they want to believe a company shares their values, treats workers fairly and conducts business ethically. The Reputation Institutes studies have shown the following:

  • Link between reputation and stock price — Since 2008, companies with a stronger reputation outperform (2X) the market.
  • Better recovery after crisis — All firms drop 8 percent on average, more reputable firms bounce back faster and go higher.
  • Benefit of the doubt in a crisis — 54 percent give reputable companies the benefit of the doubt in a crisis versus 20 percent for less reputable companies.

So, what's a restaurant operator to do? asked Jennifer Villarreal, corporate communications manager at the Reputation Institute for advice.

Q: What are some tips to help restaurant brands bounce back from something that damages their reputation?

Villarreal: Corporate reputations, once damaged, take time to recover. It’s like any relationship; once trust is violated, you can’t immediately reclaim the emotional connection without some work to rebuild it.

Hits to a company’s reputation can range in severity. What is important for companies, including restaurant chains, is to proactively manage their reputations by assessing reputation risks on an ongoing basis through continuous measurement. That way, when a crisis emerges, companies are better positioned to respond, with data to inform them about what their customers think — and why.

Q: What are some ways to help restaurant brands handle a crisis?

Villarreal: First, follow the most basic rules of crisis communications: respond immediately, be totally transparent, apologize truthfully and then finally, take accountability.

Not every crisis is the same, meaning that every crisis must be handled individually. A customer finding a foreign object in their food doesn’t require the same response as a company’s ex-spokesperson being charged in a child pornography and sex scandal, as in the case of Subway. In the former case, a company could risk doing more reputational damage by elevating a regional story to national prominence. When the story is already global, however, there’s no benefit to hoping it blows over.

It’s also important to note that companies with strong reputations are better able to weather crisis situations and they recover more quickly when there’s a problem. That’s why it's so important to invest in building your corporate reputation before bad news strikes.

Q: What are the best and worst things restaurant brands can do in a crisis?

Villarreal:One of the worst things a company, including restaurants, can do is not respond in a timely manner. Even if the response is short, a company must respond quickly and strategically. Otherwise, companies let others — which could include the media, consumers, and the government — tell the story and shape the perceptions around their company, rather than being a key part in the development of the narrative.

Corporate communications executives must work closely with other company executives to carry out a crisis communications plan. The key to communicating in a crisis is to state the company’s position clearly, thoughtfully, consistently, and frequently, with a strategic focus on the stakeholders most influenced by the crisis. The most reputable companies place high importance on reputation risk management and communications planning in the event that a crisis emerges.

This work is increasingly important today. Our research has tracked a gradual change over time in how bonds form between buyers and brands. Today’s consumers care as much about how a company acts as the quality of the products it sells.

Topics: Business Strategy and Profitability, Customer Service / Experience, Food & Beverage, Insurance / Risk Management, Operations Management, Staffing & Training

Travis Wagoner

Travis Wagoner spent nearly 18 years in education as an alumni relations and communications director, coordinating numerous annual events and writing, editing and producing a quarterly, 72-plus-page magazine. Travis also was a ghostwriter for an insurance firm, writing about the Affordable Care Act. He holds a BA degree in communications/public relations from Xavier University.

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