With a minimum of fanfare, the law firm of Beasley Allen withdrew its class action suit against Taco Bell, the number 6 fast food company in the United States, this past Tuesday. The suit, filed in January, had alleged that the meat used by the company was actually “taco meat filling.” Therefore, according to the suit, Taco Bell should stop calling its taco meat beef because it wasn’t. Taco Bell countered with a brilliant campaign in which it thanked the law firm for suing them and posted the ingredients of it taco beef on its website and explained why each product was in its beef filling.
The company increased its advertising during February and March, culminating in Taco Bell offering its Crunchwrap Supreme Taco for 88¢ each during the week on March 5th.
On Wednesday, Taco Bell took out ads in major market newspapers proclaiming victory relative to the dropped lawsuit. In the ads, Taco Bell got in a final dig at the lawyers with – “You got it wrong, and you’re probably feeling pretty bad right about now. But you know what always helps? Saying to everyone, ‘I’m sorry.’ C’mon, you can do it!”
While gloating probably feels good to Yum Brands, which is the parent company of Taco Bell, they would probably best be served by keeping quiet. The law suit caused a drop in same store sales and caused the company to spend more than $3 million to $4 million in advertising to defend the brand name. Frankly, it is impossible for me to not imagine stockholders wanting to sue the law firm that brought this frivolous suit by claiming that damage has been done to the brand and somebody has to pay. But you risk more brand damage by constantly reminding the public of the charge you are defending against. In short, Taco Bell should conscentrate on selling their product, not their victory. Winning quietly and walking away with a win, for Taco Bell, is the best course of action to take. They should just make another taco give-away, this time in victory and call it a day. That will have the best long term results for their stockholders.