Taco Bell In Brand Crisis over e.Coli

Taco Bell is heading for a brand crisis amid episodes of food poisoning at some of its restaurants. As Taco Bell announced it has removed green onions from its restaurants, investors sold shares in the fast food restaurant with, as Businessweek put it "their eyes on recent worrisome developments."

"In an abundance of caution, we've decided to pull all green onions from our restaurants until we know conclusively whether they are the cause of the E.coli outbreak," said Taco Bell president Greg Creed in a press release Dec. 6. "Taco Bell's first concern is the health and safety of our customers and employees."

"We think Taco Bell and Yum are cooperating fully with health officials in regard to this serious matter," said Standard & Poor's equity analyst Mark Basham in a research note Dec. 6. "At this point we believe it will have only a temporary impact on operations, but we will continue to monitor the situation for further developments."

While the actual health risk is short-term, winning customers back after such a health scare may be another matter. Wendy's restaurants lost millions as customers stayed away after the discovery of a finger in some chili. With the threat of a mysterious (to most consumers) and potentially deadly health risk, consumers will probably stay away in droves. Taco Bell's best strategy may be to go into marketing-hiding for a little bit (after they announce a clean bill of health), then slowly woo customers back via promotion after some time (and the memory of the outbreak) has passed.