How the fast food chain got out of the crisis - learn from others' crisis management

Large companies often find themselves in the spotlight whether they like it or not. Sometimes it happens for reasons that are completely unforeseen. With the high impact that publicity can have on a business, the question of how to engage with both the mainstream media and social media has moved up the agenda for many companies. Learning more about the digital landscape through continuous media monitoring is a first step to becoming better at managing publicity and marketing.

Crises are a constant companion in today's business world and can have a major impact on both a company's reputation and financial stability. Effective communication around a crisis is as important as the crisis management itself. Properly managed crisis communication can help a company put the crisis behind it quickly, while attempts to hide or minimise the crisis often make the situation worse.

What is a crisis?

In principle, any scenario can trigger a business crisis that requires communication from the organisation. You might ask yourself: What is a crisis? Let's take a closer look at some common examples:

Financial - could be a profit warning or financial loss with the announcement of failed investments or closure of business units, stores or other part of the business.

Personnel - changes in the workforce that may affect the business or reputation such as layoffs, strikes, redundancies or controversial behaviour.

Organisational - malfunctions or inaccuracies resulting from organisational procedures.

Technological - technical failure leading to interruptions that cause reduced functionality or loss of functionality.

Confrontation - individuals confront an organisation due to unmet needs, demands or dissatisfaction with the organisation's operations.

Cyberattack - cybercriminals or hackers exploiting digital vulnerabilities in an organisation's security to gain access to the company's data and sometimes even succeed in extorting money from the company.

Anything that can disrupt or jeopardise business continuity can result in a crisis that requires communication with customers and the public.

Learning from others' mistakes and successes

An easy way for business leaders to learn more about crisis management is to learn from the crisis management successes and failures of companies and authorities that have recently been in the news. Below we list three examples from major US companies, electric car giant Tesla, fast food chain KFC and Wells Fargo.

Tesla

Business leaders who refuse to speak to the media or have no PR staff put their organisations at a disadvantage when a crisis occurs by not being able to tell their side of the story in an emergency, crisis or scandal. Likewise if they do not answer key questions from journalists.

Tesla dismantled its PR department in 2020. Now, news organisations are using the company's silence as an additional point to highlight when doing features and writing articles about the automaker. For example, when a report showed that the company is reducing its workforce by 10%, CNN reported that "Tesla, which has no public relations staff, did not respond to a request for comment on that report...". However, the company's founder Elon Musk instead took to social media to explain the need for the cuts. Musk wrote on X: "About every five years, we need to reorganise and streamline the company for the next phase of growth" in response to posts where reactions were strong following the layoffs.

Social media certainly opens up and enables engagement from citizens and consumers, who also act as crisis communicators with their own perspectives. However, it is important to be aware that traditional media generally have a greater impact, largely because social media can contribute to an uncontrolled spread of information where false rumours and incorrect information occur frequently.

KFC

The KFC restaurant chain in the UK found itself in a difficult situation when it ran out of chicken. Having built its brand on its fried chicken, this was a crisis the company probably hadn't planned for. But KFC's marketing team quickly stepped in and managed to turn the situation into something positive. By releasing videos, posting on social media and buying full-page ads in newspapers, they managed to apologise for the shortage in a light-hearted way, while showing humility. The most famous advert from the 2018 chicken crisis features an empty pack from the fast food chain with the letters KFC replaced by FCK (referring to a common English swear word), and an accompanying text starting with the words "We're sorry".

The KFC chicken crisis is a good example of why a crisis communication plan is important. In this case, the company chose to face customers with the facts and tell them how they could improve their services going forward. One scenario that many industries should plan for is delivery problems that affect customers.

Wells Fargo

The account scandal at Wells Fargo is one for the history books. In 2011, the bank's sales targets were so hard to meet that money from real customer accounts was being moved into fake accounts set up to make it look like new accounts had been opened. Up-selling, i.e. getting customers to open more accounts in conjunction with other banking activities, was a key part of Wells Fargo's strategy. To meet its targets, the bank's employees created almost two million fake accounts over a couple of years.

Although the Wall Street Journal and the Los Angeles Times had already reported in 2011 and 2013 on the bank's strategy, the ambitious targets and the pressure put on employees, it was not until 2016 that the scandal became public knowledge. The initial reaction of management at the time was to blame employees further down the hierarchy. But as media coverage increased and more details of the affected accounts came to light, the blame was eventually shifted to the senior management team for allowing the creation of fake accounts to continue.

Wells Fargo's then-CEO John Stumpf resigned and senior management was replaced. Given the scale of the crisis and the way management reacted, trust was lost. In addition to the damage to Wells Fargo's reputation, the bank had to pay over $3 billion to regulators. The litigation went on for years. The lesson here is clear: when warning bells ring, leaders must listen and act. Despite clear evidence of serious wrongdoing, Wells Fargo was allowed to continue business as usual.

For those who wish to learn more about the scandal, the documentary "The Wagon Wheel" is available on Netflix under the documentary series "Dirty Money".

Pepsi

In 1996, Pepsi launched a loyalty programme where customers could earn 'Pepsi Points' which could be exchanged for physical items. A television commercial for the loyalty programme showed a young person flying to school in a vertical take-off McDonnell Douglas AV-8B Harrier II jet, valued at $37.4 million at the time. The advert stated that the plane was available to Pepsi lovers who managed to collect 7 million Pepsi Points.

A man named John D.R. Leonard soon discovered that you didn't actually have to drink Pepsi to collect points, but that you could also buy points directly from Pepsi for 10 cents per point. Leonard therefore sent 15 Pepsi labels (according to the rules of the competition) and a cheque for $700,008.50 ($700,000 for the plane and $8.5 for postage and administration) to Pepsi and tried to buy the jet. Pepsi rejected the offer, stating that the offer was only for humour and that points could not be redeemed for a jet.

Dissatisfied with the response, Leonard sued Pepsi in the hope of getting the company to stand by the fighter jet promise. However, the court ruled that the advert was clearly in jest and that it was unlikely that anyone would believe that it was possible to land a fighter jet at a school. In conclusion, Pepsi won the lawsuit. However, Leonard got to keep his money, as Pepsi never cashed his cheque. Pepsi continued to air its commercial but changed the cost of the jet to 700 million Pepsi Points and added the text "Just Kidding" to clarify that it was all a joke .

Even the Pentagon got involved in the case, stating that a Harrier jet could not be sold to civilians without "demilitarisation". For this particular aircraft, this meant that it could no longer take off or land vertically. The Pepsi case illustrates how a seemingly innocent, humorous campaign can have unexpected consequences and blow up into something bigger. It is easy for companies to find themselves in a David and Goliath situation and it can be difficult to emerge victorious.

Crisis communication plan

Although crisis communication can be quite reactive, it is good to have a plan in place before you need to use it to make the process easier for your employees. Crisis management plans focus on the company's response and how it communicates a crisis to its stakeholders. These steps ensure that information reaches employees, partners, customers, the media, the public and all other valuable stakeholders. Most importantly, a crisis communication plan helps ensure the rapid dissemination of accurate information and a consistent message across all company platforms during a crisis. The message depends largely on the nature of the crisis and how all parties are affected by it.

Some examples of what should be included in a crisis communication plan:

1. designate crisis team and roles
Identify who will be on the crisis team (e.g., communications officer, CEO, general counsel, IT manager), and designate clear responsibilities for each member of the team, as well as who will approve information and statements before they reach the public.

2. spokesperson
When the company makes a mistake, the best thing you can do is apologise and be human. The most effective way is to appoint a spokesperson to speak for the brand. After all, it is much easier to relate to one person than to a group of lawyers. This person could be the CEO, a company director or anyone else you feel is best placed to represent the company. It is important to choose a good communicator as their behaviour will influence how your key stakeholders will react to the situation. If they can make your company seem human and your mistakes manageable, it will play an important role in maintaining stakeholder support.

3. identify potential crises
Describe the most common types of crises that could occur (e.g. product failures, data breaches, natural disasters, PR scandals). Based on these scenarios, carry out a risk assessment and prioritise crises according to their likelihood and the impact they could have on your business.

4. target audiences
Customise messages for the needs and concerns of each target audience. This applies internally to employees, management and shareholders, as well as externally to customers, media, the public and suppliers.

5. communication channels
Make sure you have the right channels defined and decide which external and internal channels work best for each specific audience and situation. It is good to know whether a digital meeting or an email is the most effective channel for a message. It can also be useful to have backup channels in case the primary ones fail, for example during a malware crisis.

6. Key messages
Prepare templates and drafts for press releases and messages that can be quickly adapted in a crisis. Messages should be consistent, transparent and tailored to the target audience to avoid misunderstandings. Also, ensure that the tone of communication is characterised by empathy and openness, without giving out too much information or creating speculation.

7. monitoring
Monitor what is being said about the organisation in real time, both internally and externally, including on social media and in traditional media. Report the evolution of the crisis internally and provide regular updates to key people. Adjust communications as the situation evolves and consider changes following feedback from stakeholders. For good inspiration on media monitoring tools, you can read our previous article on media monitoring tools.

8. post-crisis management
Conduct an evaluation of how the crisis was handled and whether the objectives of the communication plan were achieved. Document lessons learnt to improve future crisis management and update the plan. Restoring a company's reputation may be required after a crisis, and to regain trust, additional communication and PR efforts may be needed.

Crises are a reality for businesses in today's world, but with the right preparation and strategy, they can be managed in the best possible way.