New Study Details the Costs to Restaurants from Foodborne Illness

With headlines announcing foodborne illness outbreaks almost weekly, it’s pretty much common knowledge to those in the food industry that just one negative event at a restaurant can result in devastating losses including money, market share, and brand reputation. Now, with a recent study from Johns Hopkins University, research data not only confirms these common sense fears, but provides financial calculation of the damage. Ironically, the report was published only days after the CDC warned consumers about chopped romaine lettuce grown in Arizona.

According to the National Institutes of Health (NIH), several factors are contributing to the escalating number of microbiological outbreaks:

• A globalized food trade
• Extensive production
• Complex supply chains
• Volume of international food trade

These factors put immense pressure on food companies to be competitive worldwide. Sometimes this pressure can trigger lapses in food safety compliance.

The Johns Hopkins Study

It is within this context that Dr. Bruce Lee and his team conducted their study at the Johns Hopkins Bloomberg School of Public Health. Using a computer simulation model based on restaurant outbreaks reported by the CDC between 2010 and 2015, the investigators assessed how a range of outbreak situations could impact a restaurant's bottom line.

The analysis was broken down by pathogens (including listeria, norovirus, hepatitis A, E. coli, and salmonella), by restaurant type (fast food, fast casual, casual, and fine dining), and scenario (e.g., small outbreaks with no lawsuits or large outbreaks with extensive legal fees).

The Alarming Costs of an Outbreak

In summary, the Hopkins report concluded that a single foodborne outbreak could cost a restaurant millions of dollars in lost revenue, fines, lawsuits, legal fees, insurance premium increases, inspection costs, staff retraining, and lost market share. That’s quite the list.

Source: National Restaurant Association

According to Dr. Lee, as quoted in U.S. News and World Report, “Many restaurants may not realize how much even just a single foodborne illness outbreak can cost them and affect their bottom line.” For example, a fast food restaurant could accrue $4,000 in costs for one outbreak that sickens five people who do not file lawsuits. The same restaurant, however, could pay upwards of $2 million for an outbreak affecting 250 people that resulted in legal fines and fees.

Food Safety Strategies to Avoid Disaster

Although these results are alarming, the Johns Hopkins study did include food safety strategies to help restaurants avoid disaster:

• Require employees to complete online food safety training programs (which cost only $15 per person)
• Provide time off for workers recovering from an infectious illness (which may cost up to $3,400 per week)

These two strategies alone could significantly prevent or contain severe outbreaks.

The NIH also asserts that managers at food companies must:

• Understand global food safety issues
• Monitor changing conditions in business
• Consider the effects of transportation on their food products
• Promote food safety by working with governmental agencies and professional associations

Invest in Safety Strategies, Save on Costs

As the Johns Hopkins study makes clear in dollar figures, foodborne illness can severely compromise a restaurant's annual profits, and in some cases require temporary or permanent closure. Economic analysis shows that it’s much cheaper to invest in prevention and control than to bear the enormous potential costs after an outbreak occurs.

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