Taco Bell's Strategy... Under Attack!!!

As I read on KSL.com this morning, I found an interesting story about Taco Bell's law suit over their taco meat, claimed to be beef. The company was accused with using only 35% beef in their "beef," and is being sued to not advertise it as beef at all. The funny thing is, restaurants aren't even required to meet any level of beef content to even call it beef. Only food processors, like Taco Bell's supplier Tyson Foods Inc., are required to meet USDA standards for labeling products. Strangely, the class action lawsuit isn't asking for monetary damages, only for changes in the ad campaigns. Outsiders, including myself, believe this to be merely an attack on consumers' perception of the company, and thus Taco Bell's commanding position in the industry.

Applying to Porter's Five Forces, this directly affects buyer power. Taco Bell thrives because of extreme volume of sales. The primary driver in those enormous sales is price. However, whenever a consumer is face with a choice in fast food, price isn't the only consideration. Quality, at least for me, is a major driver, at least as important as price. If Taco Bell customers believe there is a problem in quality, market share will be lost.

Now comes the interesting part: Taco Bell's response. Taco Bell decided to, as we all know is necessary, spend lots of money to make money. This morning Taco Bell released full-page ads in the Wall Street Journal, USA Today, New York Times, and other newspapers, which obviously made it around the country riding in its own wake. As the article I found states, a full page ad in a single national newspaper could cost around $100,000, though Taco Bell didn't disclose the budget of the ad campaign. The ad states, "Thank you for suing us. Here's the truth about our seasoned beef." The point was to draw attention (which it obviously did), and to set the record straight. The ad states that the seasoned beef is actually 88% beef, not the accused 35%. The ad was intended to infuse confidence in Taco Bell's customers. I don't know what the results will be, but I do believe the campaign will succeed, even if the law suit doesn't (which would be absurd, considering the suit has little legal basis). Due to this aim of reassuring customers of Taco Bell's quality, Taco Bell's president Greg Creed believes this will actually help the company. My thoughts? I think he's right. This will actually strengthen Taco Bell's position in the industry, and could possibly build brand loyalty. This is, of course dependent on several things, including the results of the law suit. And, as always, this isn't an expert insiders view. It's only mine...
...From the Outside...