America’s Nine Most Damaged Brands

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6. Sotheby’s

In fiscal 2013, famed auction house Sotheby’s reported nearly $854 million in revenue and $130 million in net income, both up from the year before. However, these results were not good enough for renowned investor Dan Loeb, who waged a vicious battle against Sotheby’s board of directors. An October letter from Loeb to chairman and CEO William Ruprecht accused Sotheby’s of wasteful spending and failing to stay competitive in the global art market. In one incident, senior management was accused of running up a multi-hundred thousand dollar tab at a restaurant in New York City. Although the company eventually agreed to name Loeb and two associates to its board, this was only after emails between board members emerged that exposed similar sentiments from directors, such as the board being “too chummy”; that Sotheby’s was at risk of “getting killed in the market” by rival Christie’s; and that spending levels were out of control.

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7. McDonald’s

Like the entire fast-food industry, McDonald’s Corp. (NYSE: MCD) has had to adjust to an increasingly health-conscious consumer base in the wake of record obesity rates. McDonald’s also has been at the center of the ongoing minimum wage debate in the United States, with fast-food workers striking across the country this past year, demanding livable wages. While supporters argue that a higher minimum wage is necessary to help workers afford a decent living without public subsidies, opponents contend a higher wage could limit job growth and even lead to job losses. McDonald’s own contributions to the debate were highly criticized. It provided employees with what many called unrealistic budget advice, and recommended employees sign up for food stamp benefits. McDonald’s brand value dropped 5% between 2012 and 2013, according to Interbrand. It remains, however, the world’s most valuable brand among fast-food restaurants, valued at more than $90 billion.

8. Frontier Airlines

Discount air travel company Frontier Airlines was the best-rated airline in Airfarewatchdog.com’s 2013 ranking. Its reputation, however, took a hit after the airline began charging $20 to $50 fees for overhead carry-on luggage that were once free for travelers who purchased tickets on the airline’s website. It also began charging for nonalcoholic beverages. Despite the public backlash, the company’s strategy is to further reduce fares and make up the lost revenue by charging fees for services that are typically complimentary for customers. Frontier has launched a marketing campaign to explain the new fee structure. So far, however, customer reviews of the new strategy have not been kind. Spirit Airlines, another low-cost carrier that charges for basic amenities, is often cited as being exceptionally disliked by consumers.

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9. Paula Deen

Despite receiving $75 million to $100 million in private equity funding for her company, Paula Deen Ventures, in February, celebrity chef Paula Deen’s brand may be so damaged that a complete comeback is out of reach. Few celebrities faced more controversy than Deen, who admitted she had used racial slurs in the past. This is according to court documents from last year when a former manager at one of her restaurants sued Deen for race discrimination. Shortly after the admission, the Food Network cancelled Deen’s popular show, “Paula Deen’s Home Cooking.” Her statements cost her millions of dollars in endorsements and salary from the Food Network. Although the lawsuit was dismissed, she lost endorsement deals with Sears, Smithfield Foods and home shopping channel QVC. One of her restaurants, Uncle Bubba’s Seafood & Oyster House, which she co-owed with her brother, was also the subject of the race-discrimination lawsuit and was abruptly closed last month.