October/November, 2008

Cover & Feature Stories

Is Food Safety Your Weakest Link?

You would have to be living under a rock these past few years—or even these past few months—to work in the food retailing business and not realize you should be on top of the food safety issue.

The risk of selling contaminated food as a result of its production is obvious. The massive national publicity given to the recent Salmonella Saintpaul outbreak, attributed initially to tomatoes and then to jalapeño and Serrano peppers, has made food safety top of mind. Most delis use fresh produce in sandwich programs and other foods, so the safety of fresh produce and other ingredients is of immediate concern. However, deli-specific product has also been implicated recently—with harsh results.

Although it has been a decade since the 1998-99 Sara Lee Bil Mar hot dog listeria outbreak, which saw 80 identified people sickened,

15 deaths and no less than six miscarriages, memories of the event were recently rekindled by a Canadian listeria outbreak traced to Toronto-based Maple Leaf Foods. The outbreak was ongoing at press time, but as of Sept. 2, 2008, the Public Health Agency of Canada claims this outbreak was responsible for 38 confirmed cases, 21 suspect cases, and 12 deaths with seven more under investigation.

Simultaneously the Canadian Food Inspection Agency has warned consumers not to consume fresh cheeses manufactured by Fromages La Chaudière Inc., because the cheeses are believed to be linked to a Salmonella outbreak that has caused at least one death.

Although there are different standards in Canada and the United States, 19 possible deaths is a very serious matter, reconfirming the importance of vetting suppliers to ensure safety.

As deli departments move into foodservice, offering everything from Asian noodle bars to in-store barbecue operations, they are assuming more of the characteristics of restaurants. And this is creating a host of legal, reputational and operational challenges for deli operators.

 

Legal Challenges

No food retailer wants its customers to get sick. Nowadays the legal implications of a customer getting sick vary dramatically depending on how it occurred. Fifty years ago, most jurisdictions required an injured party in a food safety case to prove that someone had been negligent along the food chain—a hefty burden indeed, but a standard notion in products liability law. In 1963, a famous California case, Greenman v. Yuba Power Products Inc., established that persons and companies can be held “strictly liable” for certain actions causing harm even if they were not negligent.

Today, according to U.S. law, if people get sick from food, the food is always the source of civil liability. It is not necessary to prove negligence.

Generally, primary liability sits with the producer. So if a supermarket sells a bag of fresh-cut spinach and a consumer gets sick, then the producer—in this case the fresh-cut processor—has primary liability. While the supermarket is still legally responsible for the product it sells, its responsibility would usually be secondary to the producer. This means the lawyers won’t typically sue the retailer if the producer is known and solvent. Only if the producer is insolvent and thus incapable of paying a judgment does a supermarket typically get sued.

The foodservice end of things, though, is completely different. If there is a food safety outbreak at a restaurant, then the restaurant is typically deemed the producer of the product, and therefore, primarily liable and the one to sue. If a deli department is selling pre-packaged product, it is functioning as a retailer and has secondary liability. If, however, it is cooking, assembling or repacking product, it becomes more like a restaurant and will typically be held liable for any illnesses resulting from that product.

So if a supermarket sells a bag of fresh-cut spinach and the customer gets sick, the fresh-cut producer is liable. If the deli department opens the same bag, puts the spinach leaves on paninis and customers get sick from eating the paninis, the retailer has primary liability.

Now, of course, the retailer can sue the supplier. But that requires proving the product in question was the cause—not always easy when you sell a whole sandwich—and the producer actually caused the problem as opposed to, say, cross-contamination in the deli department. A lawsuit would still be open to challenge the retailer’s negligence by failing to follow instructions to wash or cook a product.

 

Reputational Challenges

Legal liability is a problem usually covered by insurance. A more difficult loss to deal with is the reputational problem that a food safety outbreak can create. Just as legal liability tends to pass to the producers, apparently consumers and the media do not hold retailers responsible to any great extent for selling a packaged product from a reputable vendor that happens to have a food safety issue.

On the other hand, restaurants get pilloried in the press when people are sickened by the food they served, and consumers, of course, can get quite nervous. Although the Chi-Chi’s chain was already operating under Chapter 11 of the U.S. bankruptcy code when it was hit by a Hepatitis A outbreak traced back to green onions in 2003-and the outbreak had nothing to do with the cleanliness of the staff or restaurants—the reputational hit was too much and foreclosed any possibility of saving the chain in the United States.

Because deli foodservice operations typically conduct business under the name of the supermarket as opposed to a packaged branded product, a food safety outbreak in the deli is typically far more serious than merely selling a contaminated package. An outbreak puts at risk the reputation not only of the deli department, but also the whole chain. As such, the entire deli foodservice operation is more akin to selling private label than branded product.

 

Operational Challenges

Deli operations struggle on three separate fronts to make sure food is safe for consumers. First, everything starts with effective procurement, but delis have a problem. Many operate like restaurants but procure like supermarkets. Although retailers have various food safety requirements, especially of private label producers, few retailers have the procedures or resources to do much more than get indemnifications or audit certificates from vendors. Many delis have just recently started to buy items such as fresh produce directly, as the quantities used in deli foodservice operations have increased and the product is differentiated from what is sold at retail. For example, retailers now buy Romaine whole leaves for sandwich programs rather than Romaine heads sold in produce.

Often these items are relatively small volume and purchased through a distributor or wholesaler—sometimes with unknown standards or competency to judge food safety practices. In addition, the deli is an unusual department because many products come in as branded products—say, the meats and cheeses used for slicing. Yet these same items are then used not only for slicing to sell to consumers, but also for slicing to create a “raw material” for a foodservice product such as a sandwich. This, in effect, becomes a private label product, but few chains apply their more rigorous private label standards to the vetting of suppliers of these products.

Second, deli operators need to wrestle with important issues regarding food safety training for employees, developing schedules and procedures for cleaning equipment and avoiding cross-contamination. These efforts can easily get push-back from management—both store level and executive—which, while sympathetic to the goal of food safety, may not fully appreciate the costs involved in doing these things well. Man hours for training, the need to shut down various services before the store closes to allow for thorough cleaning, or the authorization of man-hours to work after the store closes—all this can try the patience of those who see the expense and can’t quantify the return-on-investment.

Third, the deli has special obligations to provide consumer education and information regarding food safety as its products often pose special vulnerabilities. Leave fresh apples in the trunk of a hot car for five hours and, in all likelihood, one just has shortened the shelf life of the fruit or perhaps lessened its eating quality. Leave the wrong deli product in that environment and one has given pathogens an opportunity to multiply—a recipe for food-borne illness.

Plus, few consumers come in contact anymore with staff outside of service departments such the deli. If consumers are going to be educated by staff, it won’t be by the butchers, but by deli staff or nobody.

So in light the seriousness of the problem and the enormity and diversity of the challenges to be found in executing a food safety program, what is a progressive deli and retail foodservice operator to do?

 

Five Hard Truths

Obtaining world-class food safety in any operation involves multifaceted initiatives. It may be a cliché, but it is certainly true: No food safety chain is stronger than its weakest link. Here are five hard truths for developing and implementing a world-class food safety program:

 

1. It starts at the top.

The fundamental problem with most food safety programs is that neither employees nor vendors believe the retailer is serious. It is so easy to give speeches in vendor meetings, assuring that “nothing is more important than the safety of our customers,” and so much more difficult to give up margin by paying more for product from top-quality producers and manufacturers. It is so easy to tell employees to put “consumer safety first,” and so difficult to decide to fund extra man-hours for employee training.

These tradeoffs and many others are not hypothetical—they are real and come up every day. It will be hard enough to deal with lower employees in the organization who want to cut corners for short-term gains if the CEO, board and company ownership are not genuinely committed.

 

2. Quality assurance (QA) has to have real authority and a real budget.

In all too many organizations, food safety is declared to be the most important initiative, and the responsibility for execution of this crucial initiative is then given to a person with no authority and no budget.

Buyers and operational executives will always have conflicts. They need to keep the shelves full, maintain margins, etc. Food safety standards will conflict with all these goals at certain times.

One important solution is to take many decisions out of the hands of people with these conflicts. Typically this takes the form of a QA department and, crucially, this department’s approval must be required before: a) any supplier can be given a vendor number, and b) any supplier can use a new or subcontracted facility, farm, ranch, etc.

Ideally the office is staffed sufficiently to allow for actual visits to companies and facilities before they are approved by the buyer’s own food safety experts. If the buying organization is too small for this, it must still staff sufficiently to set standards for acceptable third-party audits and to review those audits.

The crucial part is that QA must always rank higher in the corporate pecking order than procurement and no short cuts can be allowed. The long-established vendor of scallions was just wiped out in a fire. Nobody else is on the “approved” list. Shame on the procurement department for not splitting the business and certifying a secondary supplier. Perhaps heads should roll. But not one scallion is getting on that Mexican food bar until the company and facility are approved.

 

3. Receiving and accounting have to be part of the program.

Whatever procurement standards are set up, if receiving and accounting are not part of the program, you can count on them to be circumvented. Just recently Austin, TX-based Whole Foods Market had a situation whereby a long time beef supplier was sold and started contracting out to a new facility for slaughtering. The new facility had a long and controversial history of food safety issues.

Whole Foods had a policy in place to approve such facilities before receiving beef from them. Although the vendor seems to have violated this policy, it did not defraud Whole Foods. The production facility name was indicated on each box of product. Unfortunately Whole Foods had no procedure in place to cross check box identifications and paper work against its approved facility list, so the product got through.

Another common problem is that retail buyers look to circumvent a company’s own food safety standards. A common way of doing this is by asking an approved supplier, with a vendor number, to buy and resell product from an unapproved source in exchange for a brokerage. Accounting can’t just pay bills that have been approved by the buyers; it has to take responsibility for making sure vendors attest that all the product supplied has been sourced from approved facilities. Then agreements with vendors must include serious penalties for submitting fraudulent documentation.

 

4. The food safety program has to tie into culture and compensation plans.

When selling commodity products, vendors often tell a story such as this: A big meeting is held, and the vice president gives a speech explaining that food safety is the top priority of the chain and now wants special higher standards than the industry norm. The vendor responds cooperatively, pointing out its ability and desire to form an aligned supply chain with production and processing specially designed for the retailer and its high standards. All is handshakes and smiles, at which point the VP leaves the meeting to have the details put together by the buyer or category manager, who turns to the vendor and repeats food safety is certainly the top priority, but “how are we going to take advantage of those market dips?”

It is this attitude that makes vendors feel chains are insincere in their statements that food safety is the overwhelming priority in procurement. It is a truism in management that companies get what they pay for. If bonuses, promotions or raises are given without regard to food safety practices, it sends the not-so-subtle message that regardless of what the company executives say, what they really value is a fat bottom line.

In food safety, attitude is crucial because even after QA vetting, countless decisions must be made that impact food safety. Two vendors may both have met the standards to be approved suppliers by the QA department, but it doesn’t mean they are equal when it comes to food safety. The executive challenge is to build a culture, and compensation plans are part of creating that culture, which makes the buyer think it is better to pay a little extra to get the best food safety program.

 

5. Third-party audits at retail are essential—and compensation of store level employees should be tied to these as well.

Food safety is a farm-to-fork proposition, and even perfect procurement doesn’t guarantee safe food. Not only do vendors need audits, but retailers must also have the integrity to audit themselves. Food safety leaders, such as Publix, use companies like Steritech Group, in Charlotte, NC, to perform audits regularly. A top restaurant, such as Cheesecake Factory, has its third-party auditor, Everclean Services, Atoura, CA, visit every single restaurant every single month.

These services provide continuing education for associates, emphasizing the importance of calibrating a thermometer, checking the cooler temperature, hand-washing, glove use, etc. The programs are ideal for dealing with a rapid-turnover labor pool. Such services also perform full food safety audits and report back to management, which uses the information to guide training and corrective action at store level.  DB