When Is Beef Really Beef at Taco Bell?

January 25th, 2011

Taco Bell beef isn't beef? A class action lawsuit was filed against franchisor Taco Bell in the state of California claiming that the meat served in its restaurants is not "beef."

According to the filing, Taco Bell's 'meat product' actually contains less than 35% beef with the rest being "fillers and extenders." The meat mixture "does not meet the minimum requirements set by the U.S. Department of Agriculture to be labeled as "beef," according to the legal complaint.

The lawsuit on behalf of Taco Bell customer and California resident Amanda Obney does not seek monetary damages, but asks the court to order Taco Bell to be honest in its advertising. FoxNews.com

Taco Bell's spokesman defends the franchisor by saying, "Taco Bell prides itself on serving high quality Mexican inspired food with great value."

Full disclosure has been a sore subject in the franchising industry for decades. Should consumers be considered a 'special class' and receive something from a franchisor that franchisees have been seeking for years?

BMM

January 25, 2011 - 16:21pm

Taco Bell Replies Its Beef Is Same Quality as Supermarket Brands

IRVINE, Calif.— Greg Creed, president and chief concept officer at Taco Bell Corp. today issued this statement in response to the class action lawsuit against the franchisor of a chain of 5,600 Mexican-style restaurants. Creed declared, "At Taco Bell, we buy our beef from the same trusted brands you find in the supermarket, like Tyson Foods. We start with 100 percent USDA-inspected beef. Then we simmer it in our proprietary blend of seasonings and spices to give our seasoned beef its signature Taco Bell taste and texture. We are proud of the quality of our beef and identify all the seasoning and spice ingredients on our website. Unfortunately, the lawyers in this case elected to sue first and ask questions later— and got their 'facts' absolutely wrong. We plan to take legal action for the false statements being made about our food."

January 25, 2011 - 22:20pm

Smiles all round

I’ll be interested if we find out if Beastly, Alumni, Crowd, Methane, Portly & Smiles are taking Amanda for a costly ride.

Although;

Zuckerbrot said according to the USDA, “ground beef can have seasonings, but no water, phosphates, extenders, or binders added.” The meat from Taco Bell does not meet the minimum requirements set by the USDA, she said.

January 26, 2011 - 10:47am

Taco Bell may show how royalties are well spent

This story attacking the quality of a product is a nightmare for Taco Bell franchise owners. I suspect that this will be managed as well as can be by Taco Bell, which is an important function of why franchisees pay royalties.

Let's watch how this story progresses and how the company manages the message. It may be a testament on why buying a restaurant in a Taco Bell is better than buying one in a Taco Clueless.

January 28, 2011 - 05:14am

Now that is cruel

This is a case of sensational media when considered in the context of the entire food industry. But BMM’s cartoon of the day is typical of what consumers will see and what the franchisor now has to deal with.

Taco Bell can’t ‘out’ most of the rest of the industry and they have no choice but to face the class action but other than that what would you suggest? Wait for the clouds to pass while pumping some positive media?.While Taco Bell acts and we watch franchisees have to deal with it.

January 25, 2011 - 17:05pm

Oldsaw is it

always about you? Taco Bell's beef is now akin to a franchise relationship? You have go to be kidding.

January 26, 2011 - 10:28am

Consumers v Franchisees

The question is that if a company can stretch the truth that it is selling "beef" to consumers in a highly regulated market meant to protect consumers while it's actually selling something less than 30% meat, then how much would it stretch the truth in the Wild Wild West of selling franchises?

I think that is a reasonable question.

January 26, 2011 - 11:00am

Re: Consumers v Franchisees

Olsword's rhetoric is completely assumptive, baseless since the beef issue is alleged and the content and quality of Taco Bell's beef has no relationship with Taco Bell franchising activities. Oldsword should be roundly condemned for his self-serving attack on Taco Bell and Taco Bell franchisees, for shame, for shame.

Mr. Logic

January 26, 2011 - 08:29am

Affirming the Consequent

Oldsword so are we to conclude that there is a nexus of corruption between Taco Bell beef and Taco Bell franchising? If Taco Bell misleads consumers on the content of their beef, then they must be misleading purchasers of franchises is patently absurd and illogical.

Your ridiculous conflation is shameful and you owe Taco Bell an apology since you know nothing of their franchising activities and only what's been alleged about their beef.

Mr. Logic

January 25, 2011 - 17:20pm

Full disclosure has been a

Full disclosure has been a sore subject in the franchising industry for decades.

Yes it has. One question to ask is how would Concept X franchisor actually know if a franchisee was actually profitable given they do not know their financial structure. lease arrangements, sales per man hour etc. What they do know is via royalty and purchases how much product is going through the system, but that says nothing of profitability.

January 25, 2011 - 17:21pm

Full disclosure has been a

Full disclosure has been a sore subject in the franchising industry for decades.

Old Sword

January 25, 2011 - 18:01pm

Re: Full disclosure has been (Fuwa)

Fuwa, my franchisor required our annual P&L - soup to nuts. They also knew, having had approximately 30 sites themselves, the costs associated with a site AND approximately what gross revenue it took to finally hit real annual profitability (I have an email from my ops mgr stating the number) - of about $70,000. BTW, they also knew what the real average was for first year brand new sites and, thusly, how much the average franchisee loses in the first year.

Oh, forgot to mention, most of us were trained in one of the franchisor's sites. Many of us became friendly with the site mgr who told us the first year the site was open it grossed approx. $160,000, second yr approx $180,000 and third approx. $250,000. Interesting, considering they, thru their "loan consultant" they sent us all to, had us use $500,000+ as our first yr gross - that number just so happens to coincide with the gross revenue profitability number I alluded to in the first paragraph. It also just so happened to be the number that generated a high enough debt coverage ratio that the SBA needed to give us approval for the loan.

As I said, full disclosure.

January 25, 2011 - 18:23pm

Oldsaw is your beef 100% beef

or is it something akin to horse pucky?

Granville_Bean

January 25, 2011 - 17:23pm

Get a clue, will you

"Should consumers be considered a 'special class' and receive something from a franchisor that franchisees have been seeking for years?"

Hey Old Fool, consumers are ALREADY recognized as a different class than franchisees. Get a clue.

I have told you before that what you need to do (to get your way) is get the law changed so that franchise transactions are considered to be consumer transactions. Otherwise they are B2B transactions more akin to sophisticated investor deals.

Old Sword

January 25, 2011 - 18:26pm

Re: GB - I have more than a clue

Granville, I fully understand the laws need to be changed. Whatever I am doing away from this site remains away from this site. Not a fool, just someone who has read the SBA SOP's thoroughly and has confirmed that when a bank makes a SBA loan (in this case a franchise one), they are responsible for collecting - annually - the franchisee's P&L/tax return. Which means, Granville, that the larger lenders i.e BoA, Wells Fargo, etc. know what most franchises are grossing AND netting in their first, second, third yr of business. Since these larger banks do most SBA lending they have multiple loans out to many franchise systems. Thusly, they have the historical data at their fingertips to determine whether these "proven business models" actually throw off the revenues that are needed to meet minimum SBA lending guidelines (debt coverage ratio of approx 1.2-1.5x).

Second, those same SOP's require those same banks to perform a "reasonability analysis" on the assumptions of the projections used on the SBA loan application. Follow me here GB, if the banks have the historical data at their fingertips regarding "x" franchise system AND they are required to perform a "reasonability analysis" on those projections where the heck are they on this. Or, is the guaranteed profit from these loans so enticing that they conveniently look the other way. FYI, the first year average gross revenues for my franchise system for a brand new site (not resale) is $250,000. A number the franchisor stupidly published once in a newsletter and have since stopped publishing almost all revenue numbers of franchisees (they used to publish everyone's numbers monthly). However, the first year gross revenue projection provided to all of us was $500,000+ - notice the disparity, GB?. And you think the banks haven't figured this one out?

January 25, 2011 - 19:36pm

Taco Bell??

What the hell do most of these comments have to do about the story?

I'm guessing Oldsaw got tired of not having any soap box to preach his SBA sermon on, so he decided to create his own by interjecting a comment that he should've known the answer to.

So, let me ask you this (since we aren't staying on the topic of Taco Bell), why did you even open your store if you knew that first year sales were so bad? Would you have saved money by walking away at that point?

Old Sword

January 25, 2011 - 20:12pm

Re: Taco Bell

Jd, that is the "full disclosure" we are speaking of. No one knew what the real sales were. In fact, most of the franchisees still don't because they never read the newsletter which came out 1 1/2 years AFTER I signed - and since it was printed in only 1 issue, no one saw it. Had any of us known that the system was expected to lose over $100,000 in the first year (and most likely second) none of us would have bought in.

Its funny, you and "guest" seem to think its OK for a fraud to occur as long as no one finds it until after signing on. At that point, well, we signed didn't we? Even though it couldn't have been found out until after the franchisor actually admitted it in writing. And I simply made a quick little comment about disclosure, others jumped on the bandwagon.

January 25, 2011 - 20:23pm

Re: Re: Taco Bell

Oldsaw you seem to be a self-centered opportunistic bomb thrower who bought into a bad franchise and who needs someone to blame so you blame all of franchising. Quick little comment my @$$.

January 25, 2011 - 22:00pm

I don't think you understand the question...

You found out in training that the store you were at did $160k, $180k and $200k+ in it's first three years. So, at that point, did you examine things closer? Did you re-run your numbers, and would it have been cheaper to not even open your store, or at that point did you just figure you were better than that store you were training at?

Look at Granville's posts where he talks about knowing when to get out. People don't understand that, and I'm guessing that you didn't either, and decided to ignore those store sales.

Your added comment to the story added nothing, and had nothing to do with it, but you needed the 'soap box'

Old Sword

January 25, 2011 - 22:56pm

Never said it was mentioned

Never said it was mentioned to us right then and there. It was 2 yrs later. Again, full disclosure.

Granville_Bean

January 26, 2011 - 11:33am

AUV aint everything anyway

"You found out in training that the store you were at did $160k, $180k and $200k+ in it's first three years. "

He later says he didn't find out until later, but that isn't the point I am raising here. (Thought the first thing we usually ask when doing any kind of official visit let alone training is, "How much does this store do?") Different locations of the same 'concept' can vary greatly in sales voume even if all are well run. And running high volume, while better overall, has different challenges than running low volume.

It's not that hard to figure out what AUV is for most brands. You don't even have to ask the Zor, the info is out there in the industry. You can even often get at least approximate gross sales figures for individual units without asking the Zor or the Zee, from various commercial databases. But then WHAT DO YOU DO WITH THIS INFO???

One should NEVER just ASSUME that "the average unit does $500k, so will I".

January 25, 2011 - 20:15pm

Re: Taco Bell??

Don't you be calling him Oldsaw, even though his story is an old saw. Oldsaw is just disapointed he wasn't the star of CNBC's Behind the Counter: The Untold Story of Franchising.

Granville_Bean

January 25, 2011 - 22:00pm

Just another Barbara Jorgenson

The Old Fool is just another BJ Hurt Zee blah blah blah blah.

And as for Old Fool's fuzzy logic, axiomatically a fraud would only be discovered later, after money is lost. If it was discovered before it had happened it would merely have been an attempted fraud and no money would have been lost. Old Fool just likes to pose what he thinks are clever rhetorical questions, which really are not as clever as he thinks they are.

January 25, 2011 - 22:36pm

simply rude

For those self-opinionated insulting snobs who weren’t lucky or smarter than the average bear when it came to franchising and the existence of franchisor muggers or SBA manipulation it does get a bit personal when it takes so much of their life. It is easy to be an insulting snob if you haven’t been blanked and you cannot possibly appreciate the vast array of ramifications. Mostly contributors such as Barbara and Oldsword and most guests are firing off the same ‘be careful’ message to prospective investors and everyone seems to add their experience to the way they communicate. Sometimes people disagree and sometimes they might get annoyed and sometimes they might just be as painful as those they complain about. Although I cannot remember Barbara or Oldsword resorting to simply being rude or ever looking down their nose at anyone.

January 25, 2011 - 23:15pm

Re: simply rude

Oldsaw and Barbara Jorgensen have provided nothing actionable or useful for people who are going to invest in a franchise other than don't do it, watch out, be careful and zors are evil.

On the other hand Granville and Fuwa have offered sane and executable advice.

Old Sword

January 25, 2011 - 23:25pm

Re: re: simply rude

Like what, 'due diligence'? When even Debra Ritt, Asst Inspect Gen'l for Auditing for the SBA said even they can't get the real information? Tell me, how many 'consumers' were able to get the info regarding 35% beef? The franchisor knew though, didn't they?

January 25, 2011 - 23:56pm

Wronk

Oldsword has probably delved deeper into SBA loans in relation to franchising than any other contributor and if you had followed his comments for as long as he has been commenting he has made a substantial case in warning people. You mentioned Fuwa who is far from a fan of SBA loans in relation to franchising.

The fact is that most contributors that were here 1 and 2 and probably 4 and 5 years ago are substantially arguing mostly the same points. Granville’s ‘whine, whine … blah blah blah’ is legitimate rhetoric pointing out that investors need to be really, really smart. And it is strangely similar to Barbara has to say except Barbara is basically a softie.

However, if you have guidelines to how people must communicate what they feel is important to share and a list of your 'unwanted' feel free to publish it and please let us know when your on hours are so you are not annoyed.

January 26, 2011 - 01:56am

GB, Barb, Fuwa and Sword agree on basics

Ray: That's how I see it too.

Old Sword thinks that the industry and its lenders have a machine for bending financial information that it provides the SBA and franchisees. While stressing that man can find the truth if he works hard enough for it, Fuwa largely agrees that the Small Business Administration is bad because its practices distort the credit market, rewarding mediocre to bad business concepts.

Barbara J. talks about the incredible amount of work that has to go into proper due diligence and hiring knowledgable advisors in buying a franchise. Granville Bean agrees with this point but stresses due diligence to the point of actually working in a franchise for months before purchasing one. However, Granville gets irritated with Barbara making snap judgments on her emotions and not using enough clear and methodical thinking on issues. Bean is usually pretty good about focusing on arguments and avoiding personal attacks but Barbara's style, and not always her conclusions, gets under his skin.

Of the group, Fuwa (and our anonymous guest) are not bashful about calling people names. I suspect it is because Fuwa disappears for long stints so he may forget the culture here of civil discourse. Most likely "Guest" is new so he/she doesn't know that a long-standing community has to focus on business issues rather than ad hominem attacks.

January 26, 2011 - 04:21am

Wretched

There is no duty resting upon a citizen to suspect the honesty of those with whom he transacts business. Laws are made to protect the trusting as well as the suspicious…The rule of caveat emptor should not be relied upon to reward fraud and deception. FTC v. Standard Education Society, 302 U.S. 112 (1937)

And then [wo]man set forth unto the realms of the wretched shall inherit the dirt and the un-wretched shall inherit everything else. Otherwise known as now.

My apologies;

blah blah blah

Granville_Bean

January 26, 2011 - 11:13am

SBA

Ray said: "Oldsword has probably delved deeper into SBA loans... "

I don't like SBA loans. They shift risk to the taxpayer and prop up ventures that lack merit. We have never taken an SBA loan in 15 years as Zees. I have owned several other non-fran independant businesses and never taken an SBA loan for those either. If your business plan has merit and if you are qualified and credible, you don't need SBA.

I do find it odd the way people talk about the financials that SBA lenders are using. It is standard for ANY business lender to want to see a plan, to want to see pro forma financials for the proposed venture. This is not unique to SBA lenders. Whenever I have applied for a loan, if I am the borrower then those financials come from ME.

What did OS and others use for their pro forma financials, for themselves, never mind the bank whoever that was going to be? We merely give the bank the figures we have run for ourselves, we don't "keep two sets of books" one for us and one for the lender. Since they were getting the loan, why didn't they use their own figures for their loans? Or did they? When their businesses underperformed, which line items did they underperform on? To me they should know their first week or at least first month that a P&L problem was shaping up.

I have never expected anyone else, even a Zor, to make my financial projections for me. They are mine and mine alone. Perhaps this is why we didn't put the importance on what was in the FDD (called a UFOC the last time we looked at one) that other people on BMM have. Didn't need to. We primarily bought the rights to operate under a certain brand name. The rest was secondary.

Old Sword

January 26, 2011 - 11:51am

Re: SBA

"If your business plan has merit and if you are qualified and credible, you don't need SBA."

Precisely, GB. But since franchisors refuse to provide the real numbers most franchisees cannot determine if the numbers (usually given in some way to the franchisee) are real.

If banks didn't have the SBA they would REQUIRE PROOF that these systems generated the revenues stipulated on the pro forma by requiring historical data to back it up or they would never put their money on the line. Its not just the "business plan", its the "proven successful business model". Its "proven"? How. Show me the real money (numbers) of your "system" operators. Franchisors have them. BTW, so do the banks that do the SBA's bidding.

Granville_Bean

January 26, 2011 - 17:15pm

and if they don't...

OS sez: "Show me the real money (numbers) of your "system" operators. Franchisors have them. BTW, so do the banks that do the SBA's bidding."

If you need these in order to make a decision and they won't provide them, then DON'T SIGN and in particular DON'T PAY them a Franchise Fee. Problem solved.

Granville_Bean

January 26, 2011 - 22:21pm

BTW

OS said as to financial figures: "Franchisors have them. BTW, so do the banks that do the SBA's bidding."

Well duh hey. This was news to you?

January 27, 2011 - 22:15pm

relationship agreements; getting it, write

Quality relationship agreements rely on upfront, accurate and full disclosure including what both parties expect during and at the end of term. While typically franchise agreements tend not to be negotiable there might be an advantage were prospects to utilize experts in the field.

Old Sword

January 25, 2011 - 23:20pm

Re: Just another. . .

OK, GB, then is fraud bad or if a franchisor does it its ok with you? Simple question. Franchisors, and you know this Granville, know the real numbers - much like TB knows the real number is less than 35% beef. Are you for hiding the real information GB? All I have ever fought for is full disclosure. I thought name calling when there is no defense (such as banks hiding the info as well) would have been beneath you.

Granville_Bean

January 26, 2011 - 10:56am

same old same old

OS says (again): is fraud bad or if a franchisor does it its ok with you?

Oh jeez, not this sh*t yet again. Yet another rhetorical Q that he believes clefver, but fails on its premise: WHAT FRAUD? Fraud is against the law. If you discover a fraud, call the cops. CALLING a bad deal a fraud doesn't make it one. If you could prove an actual fraud, you wouldn't have to cry in your beer here, just sue for the damages on the fraud.

Disclosure is a real issue, how much is required, how much should be required, whether the disclusure that was made meets the standads for what is required. If the Old Failure could keep his discussion within those boundaries, it could be useful. But unfortunately whenever someone disagrees with him, his retort is some form of "Oh so you think FRAUD is okay".

I cannot recall ANYONE here, including myself, saying "fraud is okay". But OS skips a step and presumes something that didn't turn out well must be fraud. When actually the very issue is, IS IT fraud, not to presume that a fraud occurred and "so is that okay?" I remember when a colleague was representing a criminal case Defendant in a high profile local case. The woman had pulled a gun from her purse while driving and waved it at another driver. Her supporters were holding demonsrtations and asking people "Isn't self defense permitted?". But the question was rather "Was what she did self defense", and NOT "Is self defense allowed?" OS skips the same step. The Q is not "is fraud olay", it is "is this fraud".

January 26, 2011 - 08:31am

It's not a zee

that is suing. It's a consumer. Get your story straight.

January 26, 2011 - 00:10am

What's in TB's Tacos

According to Joe Mercola, a prominent blogger on nutrition (http://blogs.mercola.com/sites/vitalvotes/archive/2011/01/25/this-is-wh…), the meat in a TB taco is 36 % beef, with the remaining 64% "water, isolated oat product, salt, chili pepper, onion powder, tomato powder, oats (wheat), soy lecithin, sugar, spices, maltodextrin (a polysaccharide that is absorbed as glucose), soybean oil (anti-dusting agent), garlic powder, autolyzed yeast extract, citric acid, caramel color, cocoa powder, silicon dioxide (anti-caking agent), natural flavors, yeast, modified corn starch, natural smoke flavor, salt, sodium phosphate, less than 2 percent of beef broth, potassium phosphate, and potassium lactate." Got that from Gizmodo (http://gizmodo.com/5742413/this-is-what-really-hides-in-taco-bells-beef…), he says. You can see the label there for yourselves.

The vast majority of corn and soy in the U.S. is genetically modified, and you've seen that both are in the so-called meat filling. Natural flavors are usually not so natural. This chemical and GMO-laden concoction, along with the most-likely-GMO corn shell, is in my opinion not fit for human or animal consumption.

Granville_Bean

January 26, 2011 - 17:29pm

Taco Bell

FTB Fan said: "...the meat in a TB taco is 36 % beef, with the remaining 64% ..."

Taco Bell is my guilty pleasure. I just et me 4 crunchy tacos for lunch. Yeah, I know the taco meat come out of a gun. Hey pass me the meat gun please.....

January 27, 2011 - 20:03pm

Where's the beef?

This lawsuit is going to open up a can of worms for all QSR's. Do you really think that Taco Bell is the only chain to cut corners and do this? How about one chain in particular who sells "prime rib" sandwiches. Is it really "prime rib" cut? I think not. If you start dissecting most of the meat and chicken sold in these places, you would probably be surprised as to what is really in there. This is just the tip of the iceberg! BTW I still love to indulge in Taco Bell every now and then...oats and all. What do you expect for a buck?

January 26, 2011 - 07:12am

Does it really matter?

All these guys do it including Subway. Let's just be happy its not something else they found in there! See article:

http://thefranchisehound.com/2011/01/26/taco-bell-getting-beef-from-som…

January 26, 2011 - 11:24am

Oldsaw Lacks Credibility...

It is often frustrating on BMM when people hijack threads to promote their agenda or "hobby horse", but when someone like Oldsaw posts a legitimate news story and embeds a device for misdirection to his "hobby horse" it is beyond the pale.

Oldsaw's actions are not clever they are reprehensible. Condemn Oldsaw and shun him for his sinfulness.

January 28, 2011 - 15:22pm

Thank you for suing us.

Thank you for suing us. Here's the truth about our seasoned beef. Huffington Post

January 29, 2011 - 08:00am

No frankenfood in here

This is the first time I've heard the word "frankenfood," a word used in the Huffington Post piece.

"There is nothing really frankenfood in here," said Karen Ansel, a registered dietitian and spokeswoman for the American Dietetic Association.

LOL. Love it!

Bob Frankman

January 29, 2011 - 07:48am

Taco Bell replies there really is beef in its beef

Taco Bell's Chief Concept Officer <a href="http://www.tacobell.com/company/newsreleasearticle/Statement-Regarding-…; target="_blank">replies </a>that there's lots of beef in their beef. "Our seasoned beef recipe contains 88% quality USDA-inspected beef and 12% seasonings, spices, water and other ingredients that provide taste, texture and moisture," says CCO Greg Creed in a YouTube video.
<center>

<iframe allowfullscreen="" class="youtube-player" frameborder="0" height="283" src="http://www.youtube.com/embed/ah05FEWcJWM?rel=0" title="YouTube video player" type="text/html" width="450"></iframe>
</center>

Hey, is that an Aussie accent I hear? And here I thought Taco Bell's Mexican-style quick service restaurants served American style was strictly an American thing that was only appreciated in America.