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Serving peace of mind

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

by Nabila Rahhal

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. 

[pullquote]“We didn’t have a crisis management team at the time and, as we were very surprised [by the situation], tended to be reactive”[/pullquote]

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 intra-family 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. 

[pullquote]“At first, people were impressed with the minister’s campaign but with time, they got tired or ‘burnt out’, from a consumers’ perspective”[/pullquote]

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. 

[pullquote]“Through our social media channels, we communicated with our customers directly, assuring them that we were investigating the issue”[/pullquote]

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. 

[pullquote]“I think what the minister did is quite good in terms of shaking the people up”[/pullquote]

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.”

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Nabila Rahhal

Nabila is Executive's hospitality, tourism and retail editor. She also covers other topics she's interested in such as education and mental health. Prior to joining Executive, she worked as a teacher for eight years in Beirut. Nabila holds a Masters in Educational Psychology from the American University of Beirut. Send mail

Thomas Schellen

Thomas Schellen is Executive's editor-at-large. He has been reporting on Middle Eastern business and economy for over 20 years. Send mail

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