KOC4362 CRISIS MANAGEMENT IN ORGANISATION

ASSIGNMENT 2 : CASE STUDY

JACK IN THE BOX E. COLI OUTBREAK -

LESSONS LEARNED THE HARD WAY

LECTURER :

NAME MATRIKS NUMBER

Wan Muhammad Aiman Amin bin Wan Mohd Amin 208929

CONTENTS
 PAGE

1.0 INTRODUCTION

2.0 THE ORGANIZATION – JACK IN THE BOX

3.0 TIMELINE OF CRISIS – E COLI CRISIS

4.0 SWOT ANALYSIS

5.0 CONCLUSION

REFERENCE

1.0 INTRODUCTION
 Crisis communication is something every public affairs officer will deal with
at one time or another. It refers to the dissemination of information by an
organization to address a crisis that impacts customers and/or the organization's
reputation. And a crisis communication plan is a set of guidelines used to prepare
a business for an emergency or unexpected event. These plans include steps to
take when a crisis first emerges, how to communicate with the public, and how to
prevent the issue from occurring again.

Crisis communication plans focus on the company's response and how it

will communicate a crisis to its stakeholders. These steps ensure information
reaches employees, partners, customers, media, the general public, and any
other valuable stakeholders.

Most importantly, a crisis communication plan helps guarantee a quick

release of information, as well as a consistent message on all company platforms
during a time of crisis. That message depends largely on what the crisis involves
and how all parties are affected by it.

We chose a fast food chain company,

Jack in the Box that went through a crisis named
E coli Crisis in 1993. We will analyze how the
company react and how their gain the
customers confidence back.

2.0 THE ORGANIZATION – JACK IN THE BOX

Jack in the Box  is an American  fast-food restaurant  chain founded in

February 21, 1951, by Robert O. Peterson in San Diego, California. The chain
has over 2,200 locations, primarily serving the West Coast of the United States.
Areas outside the West Coast, are Phoenix, Salt Lake City, Denver,
Albuquerque, El Paso, Dallas-Fort Worth, Houston, Austin, San Antonio,
Oklahoma City, Baton Rouge, Nashville, Charlotte, Kansas City, St. Louis,
Indianapolis, Redding, and Cincinnati as well as one in Guam. 

Jack in the Box food items includes a variety of chicken tenders

and French fries along with hamburger and cheeseburger sandwiches. Although
best known for its hamburgers, Jack in the Box's most popular product is its taco,
which it has sold since the first restaurant in the 1950s. As of 2017, the company
sold 554 million tacos a year. Besides tacos, other Americanized foods from
ethnic cuisines that Jack in the Box offers include egg rolls, breakfast burritos,
and poppers. 

Jack in the Box business strategies are rooted in two foundational principles:

(i) Shape a High-Performance Culture - When we serve our people and our
franchisees well, we will maximize the guest experience for all who
interact with the brand.
(ii) Leverage Innovation and Technology Platforms - Taking our history of
strong innovation on menu and operations and placing that same forward
thinking on digital and technology development.

Jack in the Box uses these principles as a guide while executing on four strategic
pillars:

a. Build Brand Loyalty by transforming our restaurant design, improving the

image of existing restaurants, and enhancing the digital experience for our
guests.
b. Drive Operations Excellence by evolving training efforts in our restaurants,
execution of our brand standard systems, and improving speed and
consistency.
c. Grow Restaurant Profits by developing and implementing financial
fundamentals, influencing pricing with a dynamic model, and building our
data advantage.
 d. Expand Our Brands Reach by creating modular and flexible restaurant
designs, building company-operated stores to help seed growth, fostering
growth capital, and increasing franchise candidate and restaurant site lead
generations.

Jack in the Box total revenue in 2022 was USD402.8 million.

3.0 TIMELINE OF CRISIS – E COLI CRISIS

Like all organizations, big, medium or small, Jack in the Box did go through
crisis. Let us look at the Coli crisis that occurred in Jack in the Box.

March 1, 1992 the Washington State Board of Health mandated that the internal
cook temperature for ground beef should be 155 degrees, not the 140 degrees
that all other of the 49 states used based on the Federal Food Code. Washington
was ahead of the curve because health officials had investigated an earlier
outbreak linked to undercooked ground beef. Officials reached out to all
restaurants in the State with the new standards. Although Jack in the Box leaders
initially claimed that they knew nothing of the changes - and perhaps they did not
directly - but the new standards were found in files in the corporate headquarters
in San Diego.

June 18, 1992 - five months before the Jack in the Box E. coli outbreak struck its
hometown of San Diego and seven months before it would hit the Pacific
Northwest, Wendy Cochinella, the shift leader at the Arlington, Washington
restaurant faxed the below “IN THE SUGGESTION BOX” to Jack in the Box
corporate headquarters in San Diego :

“I think regular patties should cook longer. They don’t get

done and we have customer complaints.”

“If we change this we will be making our burgers done and edible.”
Wendy and the Jack in the Box food safety team received the following
communication from superiors:

We have researched your suggestion and determined that with the

variability of our grill temperatures (350° – 400°) the two-minute
cook time is appropriate. If the patties are cooked longer than two
minutes, they tend to become tough. To ensure that you are
meeting quality expectations for regular patties, please ensure that
the grill temperature is correct and grill personnel are using proper
procedures.”

And, the rest is history - a tragic history.  Weeks after the outbreak was
announced Jack in the Box changed the cook time from two minutes to two
minutes and fifteen seconds - yes, fifteen seconds. If only Wendy’s suggestion
was followed things might be different because E. coli O157:H7 bacteria can
survive at 140 degrees for two minutes, but not at 155.

January 12, 1993 - Phil Tarr, a pediatric gastroenterologist at the University of

Washington and Seattle's Children's Hospital, filed a report with the Washington
State Department of Health about a perceived cluster of children with bloody
diarrhea and Hemolytic Uremic Syndrome  likely caused by E. coli O157:H7.

Health inspectors traced the contamination to Jack in the Box fast food

restaurants' "Monster Burger" which had been on a special promotion and sold at
a discounted price.

January 15, 1993 - The Washington State Health Department alerted Robert
Nugent, president of Jack in the Box, that the E. coli outbreak they had been
informed of two days earlier, was at least partly attributed to hamburgers
purchased at Jack in the Box restaurants (Sellnow and Ulmer, 1995). "Within a
month, three children in the Seattle area, all under three, died of E. coli 0157:H7
poisoning - the strain linked to Jack in the Box" (p. 138).
One child had eaten at Jack in the Box, it was thought another was infected by a
child who became ill after eating at Jack in the
Box, and a cause for the third child's infection
was unknown. In total, 400 people were
infected with the bacteria in Washington
State, Idaho and Nevada. "As a result of this
crisis, the Jack in the Box fast-food chain was
not only in danger of losing sales, the
company's very existence was threatened by
the crisis as well" (p. 138).

January 18, 1993 – Department Of Health

officials went public with an announcement about the source of the outbreak at
the state lab. After that press conference, Jack in the Box agreed to stop serving
hamburgers and to quarantine the meat patties. Although not accepting blame for
the crisis, Jack in the Box tried to bolster their credibility by announcing in their
first press release.

January 21, 1993 - Jack in the Box took some responsibility for the crisis by
announcing that the source of the problem was, in fact, contaminated meat. They
explained they were reluctant to speculate before results from state tests came
back which now indicated the problem was due to contaminated hamburger.
Jack in the Box now pointed the finger at their meat supplier. Robert Nugent also
pointed the finger at the Washington Health Department and their apparent lack
of passing out information in regards to new regulations.

January 22, 1993 - Jack in the Box pledged "to do everything that is morally right
for those individuals who had experienced illness after eating at Jack in the Box
restaurants as well as their families."
February 6, shares of
Foodmaker, Jack in the Box’s
parent company,
plummeted, and the Securities
and Exchange Commission
suspended trading of the
stock for a short period of time.
February 5, 1993, Robert Nugent addressed the situation before the U.S.
Senate Subcommittee on Agricultural Research, Forestry, Conservation, and
General Legislation. He began by explaining that he was “shocked and horrified”
that such a crisis could happen at his company.
However, he quickly focused his attention on clearing Jack in the Box from
guilt by emphasizing the uncertainty surrounding the crisis. This stance involved
the argument that some of the illnesses were not directly related to Jack in the
Box. Nugent explained:

Although it is unclear as to the source of an illness linked to

undercooked beef, Jack in the Box announced today that it has
taken measures to ensure all menu items are prepared in
accordance with an advisory issued yesterday by the
Washington State Department of Health.
 February 6, 1993 shares of Foodmaker, Jack in the Box’s parent company,
plummeted, and the Securities and Exchange Commission suspended trading of
the stock for a short period of time.

February 12, 1993 - Jack in the Box dropped their criticism of the Washington
State Health Department's information distribution procedures and further
emphasized their explanation of corrective measures.

A total of 171 people required hospitalization. The majority of those who

presented symptoms and were clinically diagnosed were children under 10 years
old. Of the infected children, 45 required hospitalization – 38 had serious kidney
problems and 21 required dialysis.

In 1993, attorney William Bill Marler represented the then nine-year-old

Brianne Kiner in litigation against Jack in the Box securing a $15.6 million
settlement. Marler than represented hundreds of other victims of the outbreak in
a class-action suit against Jack in the Box, settling for over $50 million. At the
time, it was the largest-ever payout related to foodborne illness.

Subsequent investigations by the Centers for Disease Control and

Prevention (CDC) identified five slaughterhouses in the United States and one in
Canada as "the likely sources of the contaminated lots of meat."  Jack in the Box
agreed to accept $58.5 million from nine beef suppliers to settle the lawsuit, in
February 1998.

4.0 S.W.O.T ANALYSIS

In SWOT Analysis of Jack in the Box, the strengths and weaknesses are
the internal factors whereas opportunities and threats are the external factors.

4.1 Strength – What did the organisation do well?,

 The strengths of Jack in the Box looks at the key aspects of its
business which gives it competitive advantage in the market. Some
important factors in a brand's strengths include its financial position,
experienced workforce, product uniqueness & intangible assets like brand
value.
With 2,200 location across US, Jack in the Box is famous for quick
customized meals available 18-24 hours a day. Young hip crowd creates
an enjoyable environment at its location. It’s on-the-go convenience for
customers preferring drive-thru or take-out options and they offer
efficiency of service and high-quality of food.

4.2 Weakness – What were the problems and challenges faced by the organisation?
Jack in the Box weaknesses are their two major crisis which were
controversy regarding alleged horse meat sold as beef and the e-coli
breakout.

4.3 Opportunities – What were some of the opportunities or outcomes that came out of the crisis?

When the crisis happened many things rise up and this is the
opportunity of Jack in the Box to revamp and back on track. The most
important thing was they did not adhere to the Washington State Board of
Health mandate that the internal cook temperature for ground beef should
be 155 degrees, not the 140 degrees that all other of the 49 states used
based on the Federal Food Code. Jack in the Box claimed they did not
received the information but it was found out later that the memo was at
the headquarters and nobody read it.

Jack in the Box should also straightened some administrative

departments in the headquarters and make sure everybody is doing their
job to make sure this incident would not occur again in future.
 Jack in the Box also introduced Healthier menu options with low
calories that may attract more new customers and regain the existing loyal
ones.

5.0 CONCLUSION

Today, the company is rebounding _ Foodmaker is turning a profit as customers

are returning, drawn to Jack in the Box by the reappearance of its once-famous clown
mascot.

. Context:
● The 1993 Jack in the Box
E. coli outbreak occurred
when the Escherichia coli
O157:H7 bacterium
(originating from
contaminated beef patties)
killed four
children and infected 732
people across four states.
● The outbreak involved 73
Jack in the Box restaurants in
California, Idaho,
Washington, and Nevada,
and has been described as
"far and away the most
infamous food poison
outbreak in contemporary
history."
● The majority of the
affected were under 10 years
old. Four children died and
178 others were left with
permanent injury including
kidney and brain damage.
● The Crisis developed fast,
stocks fell, and ridicule
escalated.
2. What did they do to solve
it?
The Company blamed:
1. Other fast food restaurants
that the customers ate at.
They said Jack in the Box
wasn't the only fast food
restaurant the consumers
ate at, they could've gotten E.
coli from somewhere else.
2. The Washington Health
Department
They claimed they did not
pass out information on the
new food regulations.
3. Meat Supplier
Jack in the Box sued Vons
Companies Inc., seeking full
recovery of losses and
damages.

Ulmer, R.R., Sellnow, T.L. (2000) Consistent Questions of Ambiguity in Organizational

Crisis Communication: Jack in the Box as a Case Study. Journal of Business Ethics 25,
https://doi.org/10.1023/A:1006183805499

Soeder, J. 1993. Anatomy of an avoidable tragedy. Restaurant Hospitality 77(3): 34.

 "Jack in the Box gets $58 mil in E. coli case". Hawaii, Inc. The Star Bulletin. February
25, 1998.

Detwiler, Darin (2020). Food Safety: Past, Present, and Predictions (1st ed.).

Cambridge, MA: Elsevier Academic Press. ISBN 9780128182192.

"Food Safety and the Civil Justice System" (PDF). Washington, D.C.: American
Association for Justice. 2015.

 "Brianne Kiner - The 1993 Jack in the Box E. coli Outbreak". billmarler.com.

https://prezi.com/p/aubnrzxef2ay/jack-in-the-box-management-presentation/