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Chipotle Announces Intent To Spend $10 Million On Food Safety And $50 Million On Marketing.
How Do The Choices We Make Define Us As A Culture?
But Is 15 Cents Per Consumer Enough To Tell Your Story?

We’ve written about Chipotle’s food safety travails in pieces such as Chipotle, Bill Marler And Black Swan Events — How Much Money Do We Want To See Spent On Food Safety? and Spinach Crisis Déjà vu: Dr. Mansour Samadpour Retained By Chipotle To Boost Food Safety Efforts: Increased Product Testing, Outsourced Processed Produce, And New In-Store Kill-Steps Are Part Of New Moves To Keep Customers Safe But Is Chipotle Over-Promising? Will Food Safety Be The Priority As Memories Fade?

We recently received a piece from a top food safety expert who questioned what the chain’s reactions said about our society and its values:

Tall Buildings, Food Safety and a Culture’s Priorities

A successful restaurant chain suffers a series of catastrophic food safety outbreaks during the late summer and fall of 2015 that sicken people in numerous states throughout the US. In 2016, it begins a campaign to repair its brand. No one in the industry questions this approach, and the company’s reaction to its problems is as laudable as it understandable.

There is no lack of sincerity on its part; it clearly wants to make things right and aims to do so with both a well-crafted public relations campaign and a newfound commitment to food safety.

In an age when Wall Street, not Main Street, often determines business outcomes, the company’s crisis control strategy is nothing less than what most Americans would expect of it. If a company must be saved, its brand must be saved, and if its brand is to be saved, its image must be changed, and in order for its image to be changed, a significant financial investment is required. So it is that an examination of the company’s reaction to its problems is less a commentary on its own priorities, than it is a commentary on our nation’s priorities.

A number of psychologists have suggested that “if you want to know what a culture values, look at its tallest buildings. In the Middle Ages, the churches were the tallest buildings; in the 1800s, the schools and the institutions of government were the tallest. Today, in America, it is the banks and the corporate buildings.”[3]

No one should begrudge a company the opportunity to make a profit; successful firms provide jobs, tax revenues, and opportunity in this country. But how a company invests its money is a reflection of the firm’s understanding of society’s expectations. What we finance as a nation says everything about our nation’s priorities.  Maybe simply looking at where the best and the brightest American talent chooses to work is a measure of those priorities. Today, far fewer talented young professionals are drawn to jobs that produce goods and services than they are to Wall Street, K Street, and Madison Avenue.

So it should come as no surprise that the restaurant chain announced earlier this year that it was planning a substantial marketing posh, specifically that it “expects to spend at least $50 million in the first quarter of 2016” alone on “marketing, promotion, and public relations efforts.”[1] This is aggressive, but not extraordinary. Consider that back in 2013, when 100 corporate communication executives from America’s biggest companies were surveyed, half reported “that they are responsible for a total public relations budget in excess of $100m.”[4] In the immortal words of 1990s tennis star Andre Agassi — who was himself at the time a shill for Canon’s public relations efforts — “Image is Everything!”

At the same time, the chain is “pulling out all the stops to win back diners, including $10 million in food-safety spending… to help its smaller suppliers produce safer meat and vegetables. The money will be used to provide help with education and the implementation of… new food-safety standards.”[2] We know that beyond the $10 million earmarked for supplier training and education, far more money is also being spent on lab testing and other food safety efforts. Yet, the company hasn’t quantified the other food safety efforts.

The $50 million and $10 million figures were widely reported in the media, but it may be a further commentary on our society’s priorities that no one in the popular or the trade press has questioned the ratio of those two huge monetary figures. Even the most powerful news ombudsmen did not take notice of the fact that media outlets are the beneficiaries of massive marketing and public relations budgets. So, whether intentional or not, it isn’t surprising that the press didn’t pick up on the ratio.

In fact, the way in which those two financial investments were reported by the press says a great deal about how they are perceived. Notice that the restaurant chain “expects to spend” money in repairing its image — suggesting something understandable and not the least bit extraordinary, while at the same time it is “pulling out all the stops” in improving its food safety training – suggesting a huge and monumental effort to prevent the problems that caused its damaged image in the first place. 

And this too says much about our nation’s priorities. The degree of focus that buyers pay to food safety pales in comparison to their oversight of quality. And this is an issue far broader than just food safety — as a society we spend huge amounts of money reacting to problems of all kinds, but a veritable pittance attempting to prevent them.

Like the analogy to tall buildings, if you want to know what a company values, look at how it spends its money. And companies invariably spend money providing consumers with what they want.

Many years ago, a brash food safety scientist asked a seasoned produce buyer from a major retailer why his company didn’t educate or inform their customers’ about consumer misperceptions of production practices. The buyer calmly explained to his young cohort, “Our job isn’t to educate people; our job is to find out what they want and get it for them.”

What threatened the restaurant chain described above was a series of foodborne illness outbreaks. What made the chain successful was its ability to respond to consumer demands. So why should we be surprised that it will invest more money in one month alone on public relations than it will in the next few years on food safety education for its suppliers? And who do we have to blame for that firm’s accurate reflection of society’s priorities? No one other than ourselves.

******

1 Galarza, Daniela. Chipotle’s Recovery Plan Explained in Five Easy Steps. Eater. 2 February, 2016.
2 Masunaga, Samantha, Shan Li, and James Rufus Koren. Chipotle hopes free burritos and new food-safety efforts will bring back customers. The Los Angeles Times. 8 February, 2016.
3 Phipher, Mary, Ph.D. The Shelter of Each Other: Rebuilding Our Families. Riverhead Books. New York. 2008. 
4 Sudhaman, Arud. Influence of 100 control PR Budgets Of More Than $6.5bn. The Holmes Report. 2 February, 2014. 

It is a thoughtful piece and well worth pondering. At first glance, it certainly seems as if our society would be better served with more spending on substance — in this case, enhancing food safety — as opposed to marketing.

Yet, it is not so obvious when one digs deeper…

Although, of course, one can always spend more, the question is whether spending more will produce a better outcome. On this we have little evidence. We would question the efficacy of spending even $10 million on educating smaller suppliers. Indeed that expenditure sounds to us more like marketing, an effort to persuade consumers that Chipotle uses lots of small, local producers, than a serious food safety effort. Our experience is that these smaller suppliers, to the extent they fail on food safety, do not do so out of ignorance, which could be ameliorated with additional education. They do so because of three things:

A) The cost of food safety efforts is often lower per unit as producers grow. So if testing water every day is essential for proper food safety practices, a farm of two acres can do the daily water test at half the cost per unit produced of a one acre farm. As farms grow, the advantage is daunting.

B) Dedicated food safety personnel put a priority on food safety. If there is a multi-tasking farmer trying to do a lot of things, the priority of, say, harvesting before it rains or the freeze sets in, leads to neglect of food safety efforts.  In other words, it is not that the producer doesn’t know the rules and needs more education; it is that playing by the rules imposes a cost on small producers — not getting the crops harvested before the freeze hits, for example — that is not true of larger operations with dedicated food safety personnel.

C) Self-interest is more of a conflict for smaller producers. Even if we were all to agree that fields showing evidence of animal intrusion ought not to be harvested for food that is going to be eaten raw – the execution of this rule has wildly different impacts on large and small producers and is so likely to be executed differently.  If Dole has a harvesting crew in Salinas, it is easy enough to direct the foreman to withdraw the equipment if he sees any evidence of animal intrusion. Dole doesn’t typically own the field and the foreman gets paid either way. Plus Dole has many diverse businesses and so can make money in many ways. A small farmer has his few acres of greens; he sees a pig run through the field. He has enormous incentive to turn a blind eye to that pig. This field is all he has; if he voluntarily turns it under, he may well go bankrupt.

None of these three points depend at all on ignorance — they depend on financial facts that more training will not alleviate.

We also do not see the marketing expenditure as excessive. The population of the United States is about 320 million. Divide a $50 million marketing expenditure by the population and one is only talking about spending about 15 cents per person. That is pretty reasonable if one has a message to get across.

Our biggest problem is not with the amount of marketing expenditure. It is, instead, with what is being communicated in the marketing. Basically, ever since Johnson & Johnson had its Tylenol Crisis back in 1982, the goal of companies with safety issues is the same:

Step One: Recall everything. There were seven deaths, all in Chicago, all as a result of capsules, yet the company recalled all Tylenol.

Step Two: Identify the cause. Because the contaminated bottles came from many different factories, yet all the deaths were in Chicago, production tampering was ruled out. Instead it appeared that the bottles on the shelves had been tampered with.

Step Three: Develop a prevention program. The company developed a new “triple-sealed” package.

Step Four: Reintroduce the product. Once the problem was solved, the company did heavy price promotion and marketing to reintroduce the product and gain back market share.

The Washington Post ran a piece, Tylenol’s Maker Shows How to Respond to Crisis, and it exemplified the praise that the company received:

Any business executive who has ever stumbled into a public relations ambush ought to appreciate the way Johnson & Johnson is responding to the Tylenol poisonings. …

This is no Three Mile Island accident in which the company's response did more damage than the original incident. There has been no Nixonian "modified limited hang-out" at the J&J headquarters in New Brunswick, N.J.

No one at the McNeil Consumer Products subsidiary has tried to pretend that nothing is wrong, as Firestone Tire and Rubber Co. officials did when the Firestone 500 tires were disintegrating. …

Rather than resist, Johnson & Johnson has carefully, one step at a time, escalated its actions to deal with the crisis. First it shut down the Tylenol capsule production line, then it withdrew all capsules from sale. McNeil executives went on ABC's Night Line and the other networks' morning news shows to promise the capsules would not return to the shelves until a tamper-proof package had been perfected.

Finally on Thursday, J&J offerred to exchange all Tylenol capsules for Tylenol tablets. More than 22 million bottles of Tylenol capsules are believed to be in consumers' medicine chests and on pharmacists' shelves, almost $80 million worth of the drug at retail prices. There may not be a drop of cyanide in any of those bottles, but all of them will be destroyed, the company decided on its own initiative.

Replacing the capsules with tablets will cost Johnson and Johnson tens of millions of dollars, a stunning amount even for a popular and profitable drug like Tylenol. …

From the day the deaths were linked to the poisoned Tylenol until the recall on Thursday, Johnson & Johnson has succeeded in portraying itself to the public as a company willing to do what's right regardless of cost.

Serving the public interest has simultaneously saved the company's reputation. …

This model is effective, but the pursuit of it can cause problems of its own. In 2007, we wrote a series of pieces because Taco Bell, wanting to use the Johnson & Johnson formula, declared that the problem was caused by green onions when that was actually uncertain:

Boskovich Sues Taco Bell

Taco Bell’s PR Fiasco

Taco Bell Makes Ready Pac Its Scapegoat

Equally Chipotle has made various changes, but has little certainty that the changes it has made will actually prevent future problems.

It hasn’t done seemingly logical things such as insisting that all produce be audited to GFSI standards and be PTI-compliant, nor has it announced changes in Key Performance Indicators to prioritize food safety.

Focusing on these types of steps… and then marketing to consumers about the changes that have been made makes perfect sense.

And we do not believe that talking seriously to one’s customers and prospects is trivial or unimportant. But in Chipotle’s case, top executives were sent out to “reassure” consumers, not to communicate the truth. So you wound up with headlines such as this which we discussed in our piece, Chipotle, Bill Marler And Black Swan Events – how Much Money Do We Want To See Spent On Food Safety?:

Chipotle Execs: There is no E coli in Chipotle Today:

"I will say though, that we can assure you today that there is no E. coli in Chipotle," Ells said.

And instead of talking seriously to consumers about the costs of effective food safety programs and thus educating its consumers, Chipotle made statements such as this:

Steve Ells also made a pronouncement claiming that only Chipotle itself would pay the costs of its new enhanced food safety program:

Chipotle will not raise prices to cover the cost of new food safety procedures put in place after an E. coli outbreak sickened more than 50 people, the company’s founder and CEO said Tuesday during a visit to Seattle.

CEO Steve Ells would not say how much the new testing along its supply chain and safety protocols inside its restaurants are costing the chain of more than 1,900 casual Mexican restaurants. Suppliers also would not be paying for all the new testing requirements started, he said.

“This is a cost that we will bear,” Ells told The Associated Press at the beginning of a day stopping by Seattle restaurants to talk to employees about new food safety rules.

So instead of marketing to consumers in a way that makes them more literate in these issues, that prepares them to understand the costs of effective food safety programs, Chipotle makes unreasonable assurances — “no E. Coli in Chipotle” and unreasonable promises “Chipotle will not raise prices to cover the cost of new food safety procedures.”

We hope Chipotle will invest all that is necessary and appropriate to maintain proper food safety standards. We then hope it will invest its marketing dollars to raise the sophistication level of its customers so they recognize and appreciate what value is created through these expenditures.

And as to that retailer who said: “Our job isn’t to educate people; our job is to find out what they want and get it for them.” Well, ignorant people will want unobtainable things. So they will want food that is both the safest and the cheapest.

Since no retailer can deliver this, smart retailers will want to raise the literacy of their consumers so that those consumers won’t be wooed by a cheaper competitor because they will understand the impossibility of doing the right job for a distressed price.

Marketing expenditures such as this are great investments for the companies that make them and serve broad societal interests in having a more informed populace as well.




Does Changing The Default Option Change What Kids Eat At Disney?
Dr. Marion Nestle Weighs In!
Is The Problem Who Funds The Research Or Research Design?

There is a mini-scandal in the nutrition research community as Disney pressed a scientific journal to pull a study it funded:

The Walt Disney Company urged an academic journal to withdraw a nutritional study of children’s meals at Disney World last fall — a study it had funded — amid a public backlash over corporate involvement in scientific research, according to newly obtained emails.

Disney wasn’t concerned about the study’s findings, but feared being publicly associated with one of its main authors, James Hill of the University of Colorado School of Medicine.

Hill’s work last summer drew an outcry among scientists who felt his project, funded by Coca-Cola, played down the impact of sugary drinks in obesity.

Normally it is considered important to publish all research to make sure the funders — or the researchers — are not cherry-picking those studies that prove their point. But that is not the case here. The study spoke well of Disney and its efforts to improve nutrition in kid’s meals, but Disney did not want to be associated with this particular researcher who became controversial on another project.

We have written about and engaged with Brian Wansink, Cornell University’s Professor of Marketing at the Dyson School, many times, including these:

Human Behavior And Perishable Foods

IMAGINE-NATION: Will The First Lady’s Sesame Street Campaign Reduce Produce Consumption?

Fortunately, he was one of the editors (along with Koert Van Ittersum, Professor of Marketing and Consumer Well Being at the University of Groningen in the Netherlands) of the first edition of a new journal, the Journal of the Association for Consumer Research. The issue was focused on The Behavioral Science of Eating, and Professor Wansink refused Disney’s request to withdraw the piece, pointing both to logistical and ethical difficulties.

The study was basically designed around these parameters: Disney changed its default options on kids’ meals so that, in theory at least, consumers would have to specifically request French Fries rather than carrots, apple slices, unsweetened apple sauce or grapes; the consumers would also have to specifically request soda rather than water, 100% juice or low-fat milk. Would offering this default option change what children eat and, if so, how? The abstract explains the study this way:

A retrospective study of kids’ meals purchased at Walt Disney World was conducted to determine acceptance rates for healthy sides and beverages. Purchase data from all 145 Walt Disney World restaurants were analyzed using a log-linear model and a Poisson regression.

Across all restaurants, 47.9% and 66.3% of guests accepted healthy default sides and beverages, respectively. Acceptance rates of sides and beverages were higher at quick-service restaurants (49.4% and 67.8%, respectively) compared to table-service restaurants (40.3% and 45.6%, respectively).

The healthy defaults reduced calories (21.4%), fat (43.9%), and sodium (43.4%) for kids’ meal sides and beverages. This study contributes by examining the use of kids’ meal healthy defaults in quick-service and table-service restaurant formats at the world’s largest theme park, a previously unstudied setting, and by providing the largest ever healthy default data set.

The results suggest that healthy defaults can shift food and beverage selection patterns toward healthier options.

Marion Nestle, Professor of Nutrition, Food Studies, and Public Health at New York University, has also often been featured on the Pundit, including in pieces such as these:

Marion Nestle, The Perishable Pundit And A Lawyer Named Stearns; We Need Civil Discourse To Advance Effective Public Policy

Marion Nestle, Organic Facts, And Why The Organic Trade Association's Numbers Don't Make Any Sense

Special Edition IX — Salmonella Saintpaul Outbreak…Concerns About FDA/CDC:
Pundit’s Mailbag — Plenty of FDA Incompetence to Go Around But TheProblem Is A Matter Of Politics, Says Marion Nestle, Esteemed Food Policy Professor

Industry Education Efforts Moderate The Damage, But The Media Can’t Resist EWG’s Annual ‘Dirty Dozen’ Stunt

Pundit’s Mailbag — Plenty of FDA Incompetence to Go Around But The Problem Is A Matter Of Politics, Says Marion Nestle, Esteemed Food Policy Professor

Will Our World Be Dominated By Junk Science And Sloppy Thinking?

So Much For Regulation: SEC Misses A Big One… Why Think FDA Will Do Better?

Importer Of Recalled Basil Sheds More Light On FDA Handling

And Dr. Nestle had quite an exchange with the authors of the study:

In 2006, the Walt Disney Company announced a new initiative to improve the nutritional quality of meals served to children at its theme parks. The company would be changing the default kids’ meals — the components that come without having to be ordered separately -- to include low-fat milk, juice, or water rather than soft drinks, and sides such as apple sauce or carrots rather than French fries. Parents who wanted sodas or fries for their children would have to ask for them, something many might not bother to do. Health groups had long advocated for this policy change (Wootan 2012).

As I commented to a reporter at the time, "going to Disney World is an excuse for eating junk food… Disney or its advisers must be feeling they have some responsibility” (Horovitz and Petrecca 2006). Indeed, the healthier defaults were part of a larger effort by Disney to deal with its contribution to obesity in America. After ticket prices, food is the second greatest source of revenue at Disney World.

Although reducing the amount of food consumed at the parks might help create a less “obesogenic” food environment, revenues might fall. But the default change might be revenue-neutral. By 2008, Disney could report that two-thirds of U.S. customers ordering kids’ meals had accepted the default, with no loss in sales. In Hong Kong Disney parks, nearly all customers accepted the default. The report, however, did not include data on the numbers or proportions of customers ordering kids’ meals (Walt Disney Company 2008).

Disney’s more recent summary of its child health initiatives states that it is funding investigators at the University of Colorado to conduct a more formal evaluation of use of the default options (Walt Disney Company 2015). The paper by Peters et al. (2016) in this issue of the Journal presents the results of that research. Their work confirms the ongoing effectiveness of the strategy. Nearly half the customers ordering kids’ meals accepted the healthy default side dishes and two-thirds accepted the healthier beverages. These choices resulted in significant reductions in the calories, fat, and sodium in purchased kids’ meals, but not sugar (Peters et al 2016).

The authors argue that gentle nudges like these are preferable to more coercive policies that smack of nanny-statism. Such reductions help, but are they enough to make a real difference? To answer this question, it would help to know what else the children were eating along with the drink and side dishes. Although the authors were given raw sales data, Disney did not permit them to use this information as part of the overall analysis. The company also refused to provide information about the number of children who visited the park or the number of kids’ meals sold.

These missing pieces raise red flags because this is a Disney-funded study that produced results that Disney can use to advertise itself as a company that cares about kids’ health, and to deflect attention from Disney World’s reputation as a junk-food paradise. Corporate funding of research introduces conflicts of interest and reduces the credibility of the results, not least because the biases inherent in such research are largely unconscious, unintentional, and unrecognized (Moore et al 2005)

The results of this study merit especially careful scrutiny. Taking them at face value, the default strategy worked well for the drink, but the sides are still a problem, and so are the sugars. They do not reveal much about what kids eat in a day at Walt Disney World.

Nudges like this default are an important part of strategies to counter childhood obesity. But are they enough to deal with the public health problem? To make a real difference, they need to be accompanied and supported by a range of policy approaches. Current thinking about such approaches recommends combining insights from behavioral research, economics, and public health to establish a food environment far more conducive to making the healthy choice not only an easy choice, but also the preferred choice.

Doing so is likely to require multiple actions — for example, regulation of nutrient content and marketing; incentives such as subsidies of healthier foods; disincentives such as taxes, warning labels, and nutritional rating systems for unhealthier foods; and education of adults and children (Hawkes et al 2015). Disney’s voluntary default is a small step in the direction of such policies, but many more are needed if we are to make real progress in reducing the prevalence of childhood obesity.

We found the study itself, moderate in its claims, and the researchers recognized many caveats in extrapolating the study. For example, Walt Disney World is a world unto itself. So whether consumers who accept something at Walt Disney World would accept it if there was active competition from other restaurants is unclear.

The basic gist of the study is to support arguments made in the book,  Nudge: Improving Decisions About Health, Wealth, and Happiness by Richard A. Thaler, Professor of Behavioral Science and Economics at the University of Chicago Booth School of Business, and Cass R. Sunstein, the Robert Walmsley University Professor at Harvard and Administrator of the White House Office of Information and Regulatory Affairs From 2009 to 2012.

The basic idea is that we can encourage improvements in people’s lives by structuring choices in certain ways. For example, if you give a memo to everyone in the company when they are hired saying ”let us know if you want to start contributing to a retirement plan,” you get very different participation rates then if every employee is automatically enrolled and the employees have to actively opt out. Equally in a cafeteria, things such as what a consumer sees first alters what is selected.

Dr. Nestle’s comments focus on two things: First is whether the nudge analyzed in this study is sufficient to deal with public health problems related to childhood obesity. The answer to that it is clearly not, and in fairness the researchers never said or implied that. They just said this default would move things in the right direction.

Second, Dr. Nestle is very concerned over the fact that Disney helped fund the study. Certainly we agree that the funding of research can create conscious or unconscious bias. But we are uncertain why Dr. Nestle has concluded that “corporate” sponsorship is uniquely malicious in this regard. After all, governments, foundations and union interests all have their own agendas as well.

We have written about research sponsored by many organizations. We wrote about the Robert Wood Johnson Foundation:

Study On Children And McDonald’s Does Little To Show Effect Of Advertising

And the Produce Safety Project --- “an initiative of The Pew Charitable Trust at Georgetown University”

Universities Adopt An Advocacy Role And The Media Fails To Disclose That Advocacy: How Are Legislators And The Public To Decide On Food Safety?.

Just to name two, we could name many more.

We see definite patterns in what kind of research results come out of research funded by different foundations and organizations. So it is not sufficient to point out that corporate sponsorship can bias researchers; there is always the issue of biting the hand that feeds you whether that hand is a corporation, a foundation, a union or an individual.

To us, this is a fact of life. Researchers need support and so there is always the prospect of bias, but as analysts and reviewers, this just makes reviewing the study design imperative.

The real problem with this study is that it falls into the trap of many studies, in which the researchers study what is easy to gather data on, even if the end result is meaningless.

In this case, the data tells us virtually nothing of value because it does not get to the issue being studied – how do changes in the default option impact what children actually consume?

Children at Walt Disney World do not generally order their own food. Nor are they restricted to eating the particular things included in the kids’ meals.

To give an anecdote: The Jr. Pundits are quite the fans of Disney, and they were the target age for Disney kids’ meals when this default option was established.

Now Jr. Pundit Primo, aka William, and Jr. Pundit Segundo, aka Matthew, happen to not drink soda, so even before this change, they went for water. So switching the default option had no impact on their drinking habits. But they were both quite the fans of French Fries. Fortunately, they love grapes, carrots and apple slices, so they gladly accepted the new default option.

So on this study, it would show that the default option reduced their calorie intake, but this would not be true. Although the Jr. Pundit’s wanted their carrots, grapes or apple slices, they also wanted French Fries, and we bought them separate side orders of Fries. This study, however, ONLY looks at the actual Kid’s meal, parents could buy their kids a side cheeseburger and it wouldn’t show up because it is not part of the kid’s meal. 

So the switch to the healthy default was a success if the criterion is “More Matters!” They did eat more fruits and vegetables than before. However, if the criterion is calorie reduction, the plan had the opposite effect. They still ate their French Fries, indeed because a full side order has more fries than was put on a kids’ meal, they ate more Fries than ever plus the calories from the apple slices, carrots and grapes!

In other words, the researchers assumed for the sake of the study that the kids ate the kids’ meal and nothing else. Since that is not necessarily true, we can draw no useful information from this study.

That would be true no matter who paid for the study.

 




Pundit's Mailbag — Staying Up-to-date On Chipotle: 
Does Marsden Appointment Mean It Was Meat? Will Chipotle Back Off Testing?
Complete Information vs Continuous Change

We have featured many pieces from Fred Stein, a food safety consultant with Safe Food Connection out of Florida, including these:

Pundit’s Mailbag — Salad Bars Are Tricky Business

Pundit’s Mailbag — At Your Service: Alan L. Siger, Consumers Produce Co. Don Harris, Wild Oats Markets Fred Stein, FRED International Paul Klutes, C.H. Robinson

Pundit’s Mailbag — Reaction To NRA’s Reaction

So it was nice to hear from him again after we ran our piece, Spinach Crisis Déjà vu: Dr. Mansour Samadpour Retained By Chipotle To Boost Food Safety Efforts: Increased Product Testing, Outsourced Processed Produce, And New In-Store Kill-Steps Are Part Of New Moves To Keep Customers Safe But Is Chipotle Over-Promising? Will Food Safety Be The Priority As Memories Fade?

Thank you so very much for providing us with the very up-to-date information on Chipotle, the interview with Dr. Mansour Samadpour, and your brilliant comments. 

Finally, thanks to you, we have the correct, complete, and up-to-the-minute information.

— Fred Stein, CFSP
Safe Food Connection
Delray Beach, Florida

We appreciate the kind words though, alas, “completeness” of knowledge is not something we suspect we will ever obtain.

Indeed the circumstances are forever changing. For example, not long after we published the piece, Chipotle hired a new food safety expert: Chipotle taps KSU Professor for Food-safety Post:

Five months after an E. coli outbreak linked to Chipotle Mexican Grill Inc. surfaced in the Pacific Northwest, the burrito maker has hired a new food safety czar.

Chipotle has tapped Kansas State University meat-science professor James Marsden, a renowned food safety expert, to oversee food safety across the 2,000-unit chain, according to people familiar with the matter. Previously, a number of officials looked after food safety in the company's supply chain and stores, these people said….

Mr. Marsden has been a member of the Kansas State University faculty since 1994. He has conducted research on the safety of meat products, including the control of the dangerous E. coli O157 strain in raw ground beef. He has written numerous publications and book chapters on food safety. In 2014, he was inducted into the Meat Industry Hall of Fame, an annual honor bestowed by leaders in the meat industry. He's also the father of actor James Marsden.

Almost simultaneously, word got out that Chipotle may not be committed to all the testing it had previously announced, The Wall Street Journal ran a piece titled, Chipotle Weighs Stepping Back From Some Food-Safety Changes:

Chipotle Mexican Grill Inc. is considering stepping back from some of the food-safety changes it touted just a month ago in the wake of a series of disease outbreaks, according to people familiar with the matter.

Last month, Chipotle said it was conducting high-resolution DNA-based testing of many ingredients. Now, the company is considering dialing back or eliminating pathogen testing on some ingredients, according to people familiar with the matter.

The company is now having its beef cooked before it arrives at some restaurants in vacuum-sealed bags, where it is then marinated and heated on a grill before being served, according to the people.

Pre-cooking beef could help ensure that E.coli is killed, if such contamination occurs again. Chipotle previously cited high-resolution testing as a key component of its food safety program.

In any case, Marsden is a meat expert and so his choice likely indicates that Chipotle believes that meat was the problem, though Federal authorities were leaking that they thought vegetables to blame.

So though “completeness” will not be obtained, “continuity” surely will.

Many thanks to Fred Stein for his kind words.

 




Pundit’s Mailbag — A Closer Look At Food Safety Probabilities: Regression Toward The Mean, Gambler’s Fallacy, The Law Of Large Numbers And The Fallacy Of The Calendar

Our piece Chipotle, Bill Marler And Black Swan Events – How Much Money Do we Want To see Spent On Food Safety? brought many notes, including this one:

Excellent article!  Regarding your two comments on probabilities:

“This puts businesses in a very difficult situation. The truth is these are low probability events; they occur unpredictably and therefore Chipotle, or any company, can have five outbreaks this year and then none for 100 years. The numbers are too small to be meaningful.”

And…

“It is very unclear the degree to which any of Chipotle’s efforts will reduce outbreaks of foodborne illness. If this year the company has none, company executives doubtless will proclaim victory and that this proves the efficacy of its efforts. But it might just prove that Lady Luck decided to visit Chipotle in 2016.”

We might refer to this as a “Regression toward the mean” 

—Robert F. Stovicek, PhD.
President
Primus Group
Santa Maria, California

If one listens to sports commentators speak, one will often hear the expectation for a regression toward the mean — “Joe is overdue for a hit!” In that one word “overdue” is the notion that things all fall into their appropriate level of performance at some point in time.

The Gambler’s Fallacy has this expectation as well: Since the odds of a fair coin being tossed “heads” 20 times in a row are astronomical, then if 19 tosses have turned up “heads,” the way to bet on the 20th is “tails.” But this is not true. The odds of each toss of the coin are exactly 50/50. The universe does not, in fact, keep records to make things even out.

Yet, the Law of Large Numbers is  “A principle of probability and statistics which states that as a sample size grows, its mean will get closer and closer to the average of the whole population.”

So it is important to note that the sportscaster is making a comment based on Joe’s known abilities and expected performance. So he is not saying that anybody who has struck out four times in a row is due for a hit; he is saying that Joe, a professional major league baseball player with a known capacity for hitting, is overdue for a hit. And the gambler is tossing a coin with known and specific odds – 50/50.

With food safety, the issue is somewhat different. We have no basis to expect food safety outbreaks over any period of time. So to say that one shipper is “overdue” for an outbreak is as silly as saying that one producer is “overdue” for a year without outbreaks. And we have reason to believe that incidents and outbreaks are not wholly random and that efforts we take can bias the outcomes, yet we have precious little knowledge of the degree to which we can bias the outcome.

Still, the issue is that we move to act based on short term results that may mean nothing at all. We quoted Bill Marler, the well known plaintiff’s attorney, as saying that in light of the many food safety outbreaks Chipotle had experienced, there “has to be a lack of controls,” but we have so little data it is impossible to say, for certain, that there was any such thing as a lack of controls.

There is something in the human mind that yearns to find purpose in each event, so if Company A had five outbreaks this year and company B did not, the urge is to find meaning in this, but if the numbers are very small, as the percentage of food borne illness outbreaks compared to food production are, this one-year of statistics tells us little… or nothing.

In business and in life we often fall victim to what we will call the Fallacy of the Calendar. Whether we are looking at food safety incidents or profitability or other aspects of life, we often place great emphasis on how things worked out over a year’s time. But a year is just the time it takes the earth to rotate around the sun, and it is not clear why we should care about outcomes in that period.

We suspect that panics over food safety lead to panicked responses that do not lead to optimal results, and many business opportunities are lost because of the arbitrary payback period selected. Here is an interesting thought: Would Gross Domestic Product (GDP) be higher if taxes were based on five-year cycles? We suspect so.

Many thanks to Dr. Stovicek for walking us down statistical lane.




Pundit's Mailbag — Thoughts On Global Warming And Wealth

Our piece on terrorism — Putting Aside Pesticide Residue Levels And Climate Change: Will The City Of Light Be A Beacon For The West To Combat ISIS? We Can Never Prosper If Our Civilization Crumbles — brought a complimentary note:

At times like these, your thinking and writing are too important for just this industry. Well said, and I agree with every word you wrote.

Doug Stoiber
Recruiting Consultant
Ag1Source
Hesston, Kansas

We have often appreciated Doug’s contributions to the Pundit, which have included many pieces such as these:

Pundit’s Mailbag — United Fresh And Others Weigh In On Booth Babes

Pundit's Mailbag — Pundit’s Critique Of New York Times’ Reporter Annie Lowrey’s Piece About Abe Gorelick And The Plight Of The ‘Long-term Unemployed’ Draws Notice Of Produce Industry Pros

Pundit’s Mailbag – The McDonald’s Study, Nanny-Stateism And The Role Of Industry Advocacy Groups In Promoting Big Government And Budget Deficits

Pundit’s Mailbag — Price Gouging And The Lessons Of Lincoln

Pundit’s Mailbag — Wal-Mart Dilemma: Add Labor or Reduce Complexity?

Aaw Shucks

But another Pundit contributor, Deidre Smyrnos, has also contributed many pieces including these:

Booth Babes: Al Jolson, The Supreme Court, Self-Promotion And How Context Can Make All The Difference

Pundit’s Mailbag — Sexism In The Produce Industry

Pundit’s Mailbag – “Booth Babes”, Professionalism and Hypocrisy: What Should PMA’s Policy Be?

Pundit’s Mailbag — Further Discussion On Sexism In The Produce Industry

Deidre was not as impressed:

There is certainly a degree of real correlation between the Refugee Crisis and Unrest in the Middle East (and elsewhere) and Climate Change – so let’s NOT put the serious threat and existence of Climate Change aside!

Take a look at this article.

—  Deidre Smyrnos
Viva Tierra Organic Inc.
Rye, New Hampshire

The issue of climate change and terrorism or, more broadly, the threat to our society from climate change and how we ought to react to it is an important topic. We will leave aside for the moment the question of whether climate change is man-made or if we can actually do anything about it in light of the fact that it is a global issue and it will be difficult to get meaningful cooperation from China and other countries.

When it comes to the idea that climate change has something to do with terrorism, it is important to remember that correlation is not causation. There may have been a drought in Syria, but there was also a more severe drought in Australia — and Australians didn’t decide to become terrorists.

This argument is similar to the argument every time there is a riot somewhere that it is caused by poverty — although the vast majority of the world’s population is poor and they are not rioting.

The bigger issue, though, is that even if everything said about climate change is true, it is not obvious that focusing on preventing climate change is the optimal path. By definition, focusing on climate change means spending money. So, even though oil, natural gas and coal are currently the cheapest fuels, some governments, including ours, heavily subsidize solar and wind power and electric cars to prevent climate change. Yet the reality is that the most important thing is accelerating economic growth.

If increased heat and water shortages cause bad behavior, we can ameliorate those issues in Australia with air conditioning and tanked-in water because Australia is affluent whereas Syria is poor.

If you look at things such as water levels rising, you could look at a piece we did titled, Reducing Carbon Vs. Increasing Wealth, which features a review of a book that The New York Times did by Bjorn Lomborg, who held the interview in a bar:

After looking at one too many projections of global-warming disasters — computer graphics of coasts swamped by rising seas, mounting death tolls from heat waves — I was ready for a reality check. Instead of imagining a warmer planet, I traveled to a place that has already felt the heat, accompanied by Bjorn Lomborg, the Danish political scientist and scourge of environmentalist orthodoxy.

It was not an arduous expedition. We went to an old wooden building near the Brooklyn Bridge that is home to the Bridge Cafe, which bills itself as “New York’s Oldest Drinking Establishment.” There’s been drinking in the building since the late 18th century, when it was erected on Water Street along the shore of Lower Manhattan.

Since record-keeping began in the 19th century, the sea level in New York has been rising about a foot per century, which happens to be about the same increase estimated to occur over the next century by the Intergovernmental Panel on Climate Change. The temperature has also risen as New York has been covered with asphalt and concrete, creating an “urban heat island” that’s estimated to have raised nighttime temperatures by 7 degrees Fahrenheit. The warming that has already occurred locally is on the same scale as what’s expected globally in the next century.

The impact of these changes on Lower Manhattan isn’t quite as striking as the computer graphics. We couldn’t see any evidence of the higher sea level near the Bridge Cafe, mainly because Water Street isn’t next to the water anymore. Dr. Lomborg and I had to walk over two-and-a-half blocks of landfill to reach the current shoreline.

The effect of the rising temperatures is more complicated to gauge. Hotter summer weather can indeed be fatal, as Al Gore likes us to remind audiences by citing the 35,000 deaths attributed to the 2003 heat wave in Europe. But there are a couple of confounding factors explained in Dr. Lomborg’s new book, “Cool It: The Skeptical Environmentalist's Guide to Global Warming.”

The first is that winter can be deadlier than summer. About seven times more deaths in Europe are attributed annually to cold weather (which aggravates circulatory and respiratory illness) than to hot weather, Dr. Lomborg notes, pointing to studies showing that a warmer planet would mean fewer temperature-related deaths in Europe and worldwide.

The second factor is that the weather matters a lot less than how people respond to it. Just because there are hotter summers in New York doesn’t mean that more people die — in fact, just the reverse has occurred. Researchers led by Robert Davis, a climatologist at the University of Virginia, concluded that the number of heat-related deaths in New York in the 1990s was only a third as high as in the 1960s. The main reason is simple, and evident as you walk into the Bridge Cafe on a warm afternoon: air-conditioning.

The lesson from our expedition is not that global warming is a trivial problem. Although Dr. Lomborg believes its dangers have been hyped, he agrees that global warming is real and will do more harm than good. He advocates a carbon tax and a treaty forcing nations to budget hefty increases for research into low-carbon energy technologies.

But the best strategy, he says, is to make the rest of the world as rich as New York, so that people elsewhere can afford to do things like shore up their coastlines and buy air conditioners. He calls Kyoto-style treaties to cut greenhouse-gas emissions a mistake because they cost too much and do too little too late. Even if the United States were to join in the Kyoto treaty, he notes, the cuts in emissions would merely postpone the projected rise in sea level by four years: from 2100 to 2104.

“We could spend all that money to cut emissions and end up with more land flooded next century because people would be poorer,” Dr. Lomborg said as we surveyed Manhattan’s expanded shoreline. “Wealth is a more important factor than sea-level rise in protecting you from the sea. You can draw maps showing 100 million people flooded out of their homes from global warming, but look at what’s happened here in New York. It’s the same story in Denmark and Holland — we’ve been gaining land as the sea rises.”

This is the crucial issue that those passionate about global warming want to ignore: If you wish to avoid bad outcomes, follow the policies that will increase wealth. This is easier and cheaper than trying to stave off changes in temperature.

Many thanks to both Doug Stoiber and Deidre Smyrnos for weighing in on this important question. 

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