In Poor Richard’s Almanac, Benjamin Franklin took a turn on a phrase and said, “The rotten Apple spoils his companion.” In his choice of the personal pronoun, Franklin makes it clear he’s not talking strictly about fruit. The saying turned up in many sermons of the day as a warning to stay away from sinners as they tended to be corrupting influences. In this spirit, two recent studies bring to mind the cost of one person’s potential negative impact on others.
The first study, published in the International Journal of Hospitality Management, found that a theoretical crisis at one restaurant made people hesitant to eat at other restaurants even though they were not directly involved in the event. The negative spillover effect was found to be greater from the bottom up than the top down, meaning a crisis at a small restaurant chain hurt the big-name brands more.
“This finding shows the power of small apples to spoil the whole barrel,” said Soobin Seo, an assistant professor at Washington State University’s Carson College of Business and lead author on the study. “This is a warning sign. It is not good news for restaurants overall when somebody else is in crisis.
“When people hear bad news about one automobile company, they can easily buy from another,” Seo said.
“But in the restaurant industry, even though the other brands did nothing wrong, customers feel hesitant after an outbreak, and it doesn’t hurt them if they do not go to out to eat for a few days. Crises are psychologically much more influential when it comes to restaurants, and that is why there are more financial impacts.”
Given the extent of the spillover, Seo advises restaurants to plan their response well ahead of any incident. “No matter what level of crisis, your responsibility or credibility, it’s always better to act immediately and honestly with the public: to have a proactive strategy to assure the safety of food,” she said.
The second study deals with the economic impact of the romaine lettuce outbreak in 2018 and was conducted by researchers at University of California, Davis. As those of us in the leafy greens community painfully recall, this incident began Nov. 20, 2018, when U.S. and Canadian health agencies issued advisories urging consumers to not eat romaine.
By Nov. 26, this advisory was updated to apply only to romaine produced on the Central Coast of California and on Dec. 13, 2018, one source of contaminated product was identified as being from a single farming operation in Santa Barbara County, which issued a recall. At this point, public health advisories were further restricted to encompass only the Salinas-Watsonville and Santa Maria growing regions.
Finally, on Jan. 9, 2019, the advisory was lifted. A total of 62 people were reported sickened across 16 states.
In their study, UC Davis researchers looked at the economic impact of this outbreak on all sectors of the supply chain, from growers, handlers and processors to distributors, foodservice operators and retailers. Combined losses among this group are estimated at $79.6 million. Sales volume for all romaine lettuce remained lower through retail and foodservice channels for 10-12 weeks following the lifting of the advisory.
In the end, total societal costs from this E. coli incident are estimated at $280 million to $350 million.
What do these two studies tell us? First of all, they remind us we’re all in this together. One failure, one company or one person can have significant (negative) impact across an entire industry. Each of us has a responsibility to ensure safe food. And this responsibility can have far-reaching consequences.
These studies also tell us it’s important for people to work together. As a foodservice buyer in 2006 during the watershed spinach outbreak, it became clear to me there was a need for wide-reaching action. This is why I joined a number of foodservice and retail companies who called for a common set of food safety standards, and it’s why the LGMA exists today.
In its conclusions, the UC Davis researchers who studied the romaine outbreak of 2018 said this, “The fact that an incident that may eventually be traced to one or a few farms roils the entire industry and imposes widespread losses is a clear prescription for industry-wide measures to address food safety.”
This is the exact benefit of a program like the LGMA. Findings from FDA’s investigation of the 2018 romaine outbreak created significant changes in food safety practices concerning open water sources under the LGMA.
Today, all members of the LGMA must follow specific protocols for testing and treating water that will be used in growing leafy greens. These new standards are verified by government audits conducted on farms that grow 90% of the lettuce consumed in the U.S.
Importantly, the LGMA is a system that holds all parties accountable. It continues to strive, together, to make lettuce and leafy greens safer not just to protect public health, but for the good of the entire industry.
Tim York is CEO of the California Leafy Greens Marketing Agreement.