Taco Bell Rings up $60 Million for StarLink-Contaminated ShellsTaco Bell Rings up $60 Million for StarLink-Contaminated Shells
June 12, 2001
LOUISVILLE, Ky.--Tricon Global Restaurants Inc. (www.triconglobal.com), based here, announced June 8 that it will receive $60 million from the companies that supplied StarLink-contaminated taco shells that were sold to supermarkets last year. Tricon, which owns Taco Bell, Kentucky Fried Chicken and Pizza Hut, stated that this money will go to franchisees who may have lost sales due to "marketplace confusion" when supermarket taco shells using the Taco Bell brand and marketed by Northfield, Ill.-based Kraft Foods were recalled in September 2000. Terms of the agreement would not allow Tricon to disclose which suppliers were affected by this decision.
Tricon owns 20 percent of all Taco Bells, but it stated that it will not partake of the multi-million dollar deal so that franchisees can receive more of the settlement money. According to the company, Taco Bell franchisees may have lost revenue when the corporation substituted white-corn tacos for the yellow-corn shells at the restaurant level, even thought the shells in the fast food chain had not been found to contain the genetically modified (GM) corn. As of this year, there are 4,266 U.S. Taco Bell franchises, according to Entrepreneur.com. Notwithstanding other costs such as taxes, each franchise will receive approximately $14,000.
Currently, FRANMAC--the association representing U.S. Taco Bell franchisees--as well as Tricon and the taco shell suppliers plan to seek damages from those parties who are responsible for the introduction of StarLink into the U.S. food chain. Tricon would not elaborate on who the responsible parties were.
"We are pleased that this agreement will provide partial financial relief for our franchisees as a result of lost sales stemming from the StarLink situation last year," said David Novak, Tricon chairman and chief executive officer. "We're confident we're on the right strategic track to improve sales trends at Taco Bell and grow the business over the long-term."
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