It's Enough To Put Yourself Off Lunch

Fast food restaurants face special risks, some of which are not completely under their own control. In particular, a supplier with a massive positive feedback loop can cause things to go wrong, as the mad cow case demonstrates.

I recently had a breakfast meeting with a disaster recovery consultant at a fast food restaurant, and the conversation naturally drifted onto the special risks that fast food restaurants — and the companies that own or franchise them — face.

So what are the risks that you, as the president of a fast food restaurant chain face which are not faced by the broader business fraternity?

Let's start with the obvious. There are some fast food chains whose names I only know from the numbers of customers they have accidentally poisoned. It always surprises me that these chains are still in business. I doubt smaller operations can survive such circumstances. It says something about human nature that people still patronize these chains even after such events. Will I ever go to one of these chains to see whether their hygiene or cooking practices have improved? I rather doubt it.

So you keep your restaurant clean. Your staff wash their hands religiously at the approved times. None of your staff are suffering from any interesting communicable diseases. The food is properly refrigerated and cooked. What else can go wrong?

Mad Cows.

Forget about what causes Bovine Spongiform Encephalopathy (BSE), the correct name for Mad Cow disease. Look instead at the system that lead to hundreds of thousands of cows being slaughtered in the UK and a large number of people stopping eating beef.

The facts of the matter can be found on the UK government inquiry website, and their report makes interesting reading. A system had been set up whereby meat and bone meal from cows was used as a feed component for other cows. This meant that if one cow developed a disease which could be transmitted by this means, it would be transmitted to hundreds of other cows. The meat and bone meal from each of these cows would be fed to other cows, resulting in a large positive feedback loop. By the time BSE was identified as a new disease, 50,000 cattle were already infected.

Other factors, of course, made this worse: a long incubation period (five years before the symptoms become evident); clinical signs similar to other diseases; a low probability of striking so that it tended to affect a single cow in a herd. Finally the fact that it could be transmitted to humans (with an even longer incubation period). These all made it inevitable that the disease would not be detected until it was too late.

But the positive feedback loop was the real problem. It ensured that a potentially isolated incident — perhaps even a random genetic mutation — would have devastating widespread effects.

But if this is an article about the risks facing fast food restaurants, why am I talking about mad cows? Because this is an example of Supplier Risk — risks created by a dependency on a supplier. If the supplier hasn't decided to eliminate the risk, then one day it may be passed on to you.

Does this risk still exist? Are cattle farmers still feeding cattle any products derived from rendered cows? Is what the government says should be done what is actually being done? Do similar risks exist with chickens? With eggs? Will you find your restaurant empty one day because the food you serve is suddenly considered unsafe?

You can't afford to ignore your suppliers' risks. Their risk management decisions will be in their own best interests, not yours.

It's enough to put you off your lunch.

12 November 2004

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