Food safety & brand rep­u­ta­tion

The brand, the con­sumer and the man­age­ment of a rep­u­ta­tion cri­sis

Executive Magazine - - Contents - By Na­bila Rah­hal and Thomas Schellen

When Le­banon’s health min­istry last year em­barked on a proac­tive na­tional food safety cam­paign, it dis­rupted in­dus­tries that by all in­di­ca­tions had been com­pla­cent for far too long. In­spec­tions of es­tab­lish­ments in all parts of the cit­i­zens’ food sup­ply chain re­vealed prac­tices rang­ing from bad to re­pul­sive to out­right crim­i­nal — such as un­safe stor­age of per­ish­ables, non sep­a­ra­tion of waste bins from food prepa­ra­tion ar­eas, and sale of spoilt foods.

Whether such vi­o­la­tions of both of­fi­cial stan­dards and com­mon sense are con­cen­trated in spe­cific seg­ments of the food in­dus­try, and whether the long­stand­ing lax­ness of su­per­vi­sion caused the en­trench­ment of po­ten­tially dis­as­trous prac­tices in food sec­tor es­tab­lish­ments, are ques­tions that can­not be an­swered con­clu­sively at this point.

It also has yet to emerge whether the per­sonal cru­sad­ing of Min­is­ter of Health Wael Abu Faour, laud­able as the act is, can be so­lid­i­fied into a reg­u­la­tory and su­per­vi­sory pres­ence that will award the Le­banese con­sumers with a uni­ver­sally en­hanced level of food safety.

What can al­ready be said, how­ever, is that some brand own­ers in the Le­banese hos­pi­tal­ity in­dus­try are now pay­ing much greater at­ten­tion to the need for cri­sis readi­ness. This in­creased at­ten­tion, claims the chief ex­ec­u­tive of Road­ster Diner Don­ald Dac­cache, at his firm en­tails both a new food safety plan and rep­u­ta­tion man­age­ment in case of a cri­sis.

Road­ster Diner, a suc­cess­ful lo­cal chain of ca­sual restau­rants, was among the hand­ful of branded com­pa­nies that were named by Abu Faour in Novem­ber as safety vi­o­la­tors. Ac­cord­ing to the min­is­ter’s pub­li­cized list, a tested chicken prod­uct from one Road­ster Diner was in vi­o­la­tion of stan­dards. Dac­cache ad­mits man­age­ment was hit un­pre­pared by this. “We didn’t have a cri­sis man­age­ment team at the time and, as we were very sur­prised [by the sit­u­a­tion], tended to be re­ac­tive,” he says.

Im­me­di­ately, the re­ac­tive method did not per­form all that well for the com­pany. There were some blips and mis­un­der­stand­ings in com­mu­ni­ca­tion. Neg­a­tive word of mouth spread faster than the pos­i­tive one and Dac­cache says, “we felt that we were hit fi­nan­cially and at a rep­u­ta­tion level.”

Rep­u­ta­tion risk is a para­mount is­sue for any com­pany that de­rives most of its value from brand eq­uity — and ac­cord­ing to Dac­cache the brand and the peo­ple rep­re­sented “at least 70 per­cent” of the (dou­ble digit) mil­lions of dol­lars he paid for a con­trol­ling stake in Road­ster Diner in 2013 in an in­trafam­ily takeover.

De­spite the ex­panded im­por­tance of brand rep­u­ta­tion and height­ened im­pact po­ten­tial of as­so­ci­ated risks, cri­sis man­age­ment is not yet a com­mon ca­pa­bil­ity in Le­banon, says Na­dine Ye­hya, pro­fes­sor of mar­ket­ing at the Amer­i­can Uni­ver­sity of Beirut. She ex­plains that the lack of plans or teams for cri­sis man­age­ment is due to the in­fre­quency at which lo­cal com­pa­nies and busi­ness own­ers have been chal­lenged by me­dia or con­sumers.

“Whereas com­pa­nies in the US have strate­gies in place to deal with all crises that might arise in their line of work, re­ac­tions [of Le­banese com­pa­nies] are more re­spon­sive to crises and some­times they are quite emo­tional, even though that is not the case with large well struc­tured cor­po­ra­tions but more with smaller restau­rants,” Ye­hya says. She adds, how­ever, that con­sumers are be­com­ing more at­tuned to chal­leng­ing cor­po­ra­tions and de­mand­ing their rights from them along­side in­creased at­ten­tion that the me­dia is giv­ing sto­ries re­lated to cor­po­ra­tions and brands.

HOW TO RE­ACT

Ye­hya ex­plains that there are sev­eral re­sponses which are most com­monly used by cri­sis man­age­ment teams to pro­tect a brand’s im­age af­ter neg­a­tive news has been shared through me­dia out­lets. Shes adds that, to­day, with the preva­lence of so­cial me­dia, con­sumers can reach a cor­po­ra­tion di­rectly, which is an as­pect that cri­sis man­age­ment has to take into con­sid­er­a­tion.

One re­sponse, ac­cord­ing to Ye­hya, is the “no com­ment” ap­proach, where the cor­po­ra­tion keeps a low pro­file un­til the neg­a­tive news is forgotten by the con­sumer. Speak­ing about Le­banon’s re­cent food safety scare, Ye­hya says: “At first, peo­ple were im­pressed with the min­is­ter’s cam­paign but with time, they got tired or ‘burnt out’, from a con­sumers’ per­spec­tive. They don’t want to over­think ev­ery as­pect of their lives and want to go back to their com­fort zones, away from high ag­i­ta­tion. That’s why many cor­po­ra­tions use the ‘no com­ment’ ap­proach and wait un­til the storm has passed.”

Ac­cord­ing to Dac­cache, this method of step­ping back from emo­tional and re­ac­tive re­sponses worked for the com­pany and as the neg­a­tive buzz sub­sided, the year-on-year con­trac­tion in rev­enues mod­er­ated to about four

per­cent by Fe­bru­ary, com­pared to the nearly 10 per­cent con­trac­tion in the first month af­ter ac­cu­sa­tions made the rounds in Novem­ber.

As Ye­hya also points out, how­ever, not com­ment­ing has its own dan­gers. She warns that one of th­ese dan­gers is that con­sumers would come to be­lieve that cor­po­ra­tions have some­thing they are try­ing to hide, es­pe­cially when com­mu­ni­ca­tion is via so­cial me­dia where ‘no com­ments’ are per­ceived as shirk­ing.

An­other restau­rant chain, Kababji, which of­fers tra­di­tional Le­banese food, says that it coun­tered be­ing men­tioned in Abu Faour’s list of food safety vi­o­la­tors head-on via so­cial net­works. “Through our so­cial me­dia chan­nels, we com­mu­ni­cated with our cus­tomers di­rectly, as­sur­ing them that we were in­ves­ti­gat­ing the is­sue. This was very im­por­tant to us be­cause some­times there are mis­per­cep­tions or mis­in­for­ma­tion,” says Boudy Bous­tany, head of mar­ket­ing at Kababji.

Ac­cord­ing to him, Kababji re­ceived min­i­mal neg­a­tive com­ments from con­sumers and the brand was barely af­fected by the up­roar over the food safety cam­paign launched by Min­is­ter Abu Faour. As Bous­tany de­scribes it, “The first thing we did was val­i­date the in­for­ma­tion from the source, get­ting the de­tails from the min­istry on what ex­actly the is­sue was. Then, we went through our en­tire sup­ply chain to see if there was a glitch in our sys­tem and set a mar­ket­ing strat­egy with our team. Fi­nally, we com­mu­ni­cated with our cus­tomers in a trans­par­ent man­ner and moved on with our usual strat­egy of fo­cus­ing on qual­ity and cus­tomer ex­pe­ri­ence.”

Kababji’s ap­proach mir­rors what Ye­hya lists as best prac­tices in cri­sis man­age­ment, where a cor­po­ra­tion should start its re­sponse with self ex­am­i­na­tion, as­sess­ment of what changes are needed, devel­op­ment of a change strat­egy and then com­mu­ni­ca­tion of the im­proved pro­cesses to stake­hold­ers, along with giv­ing re­as­sur­ance that the com­pany’s pri­mary con­cern is about qual­ity and the con­sumer.

LEARN­ING FROM THE CRI­SIS

Both Kababji and Road­ster stand out as brands in an en­vi­ron­ment where the vast ma­jor­ity of restau­rant op­er­a­tors are much less de­fined. Each of the two eater­ies has in­vested in build­ing a com­mu­nity, and loyal con­sumers de­fended them on so­cial me­dia chan­nels when the al­le­ga­tions against them were first aired.

Road­ster, which has more restau­rants and which ac­cord­ing to Dac­cache started think­ing in brand devel­op­ment terms about 10 years ago, has an edge in the brand jour­ney when judg­ing from the num­ber of its so­cial me­dia fol­low­ers on Face­book — over 168,000 — about three times that of Kababji.

This in turn im­plies that Road­ster would have more to lose than many other hos­pi­tal­ity com­pa­nies if its brand sus­tains sig­nif­i­cant dam­age from a food safety cri­sis or other rep­u­ta­tion im­ped­i­ment.

Dac­cache claims that in ad­di­tion to the lack of cri­sis man­age­ment pre­pared­ness a sec­ond sur­prise fac­tor in Road­ster’s ex­pe­ri­ence with the food scan­dal was that the com­pany had pre­vi­ously felt rather se­cure in their food safety stan­dards, as it had es­tab­lished and cer­ti­fied pro­cesses in place and main­tained ISO 22000 cer­ti­fi­ca­tion, a de­riv­a­tive of ISO 9000 deal­ing with food safety.

The main lessons that Road­ster in­ter­nal­ized from the re­cent cri­sis, ac­cord­ing to Dac­cache, were to avoid re­ac­tive be­hav­ior and al­ways have an up to date cri­sis man­age­ment plan and com­mu­ni­ca­tions strat­egy. The com­pany ad­dressed th­ese needs by bring­ing a public re­la­tions com­pany on board with a rep­u­ta­tion for cri­sis man­age­ment skills.

Be­sides th­ese in­sights, he and his team felt a “def­i­nite push” on the food safety level. “We have a very solid strong sys­tem but, in Beirut, you have lots of chal­lenges, and so we have to per­son­ally do the job of car­ry­ing out safety checks on many lev­els,” Dac­cache says. He cites prob­lems of wa­ter pol­lu­tion all through­out the food chain and sup­pli­ers with fake cer­ti­fi­ca­tion as ex­am­ples of such chal­lenges.

Pro­ce­dures for check­ing the safety of fresh pro­duce have been stepped up and Road­ster is look­ing into es­tab­lish­ing its own food safety lab­o­ra­tory for its cur­rent and even­tual in­com­ing brands, he adds. How­ever, a plan for do­nat­ing a food lab to the gov­ern­ment was a mis­com­mu­ni­ca­tion, Dac­cache ex­plains. He even puts a pos­i­tive an­gle on the health min­istry’s new vigor for in­spec­tions by say­ing, “I think what the min­is­ter did is quite good in terms of shak­ing the peo­ple up.”

In dollar terms, Road­ster has ded­i­cated 40 per­cent of its mar­ket­ing bud­get — $500,000 — since Novem­ber to com­mu­ni­cate about food safety. How­ever, the food safety and com­mu­ni­ca­tions pro­gram are still in the plan­ning phase. “Get­ting back on track needs a lot of time and we are get­ting pre­pared for full com­mu­ni­ca­tion,” Dac­cache ex­plains. He adds that full im­ple­men­ta­tion of all planned new con­trols at the in­tended pace will take one to two years.

In the end, the ex­po­sure to food safety prob­lems suf­fered by size­able lo­cal brands such as Road­ster and Kababji may help the en­tire sec­tor — in­clud­ing many un­branded play­ers — un­der­stand the se­ri­ous­ness of the need to im­prove. “We will re­act to this pro­fes­sion­ally,” Dac­cache em­pha­sizes, “and we take our busi­ness ex­tremely se­ri­ously. What­ever tips this cri­sis could give us to be­come bet­ter, we are open to cri­tiques and learn­ing.”

“WHAT THE MIN­IS­TER DID IS QUITE GOOD IN TERMS OF SHAK­ING THE PEO­PLE UP”

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