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:
These factors put immense pressure on food companies to be competitive worldwide. Sometimes this pressure can trigger lapses in food safety compliance.
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).
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.
Although these results are alarming, the Johns Hopkins study did include food safety strategies to help restaurants avoid disaster:
These two strategies alone could significantly prevent or contain severe outbreaks.
The NIH also asserts that managers at food companies must:
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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