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Chipotle, Bill Marler And Black Swan Events — How Much Money Do We Want To See Spent On Food Safety?

James B. Stewart at The New York Times wrote an article that ran under the headline, Chipotle’s New Mantra: Safe Food, Not Just Fresh, and it contained these comments from well-known plaintiff attorney, Bill Marler:

“I’ve been involved in every food-borne illness outbreak, small and large, since 1993,” said Bill Marler, a Seattle-based lawyer who specializes in representing victims of food-borne illnesses and has filed several recent cases against Chipotle. “I can’t think of any chain, restaurant or food manufacturer who’s ever reported that many outbreaks in just six months. Underlying that has to be a lack of controls.”

Bill Marler is smart and knowledgeable and, certainly, engaged — but, in this case, he is almost certainly wrong.

We have little doubt that in analyzing Chipotle’s operation, we would find areas for improvement. Indeed, already, Chipotle has found them on its own. On the production side, just as Natural Selection Foods did in the spinach crisis, Chipotle brought in Mansour Samadpour, chief executive of IEH Laboratories and Consulting Group, who we spoke to in a piece we titled, A Closer Look At Finished Product Testing. Chipotle is also shifting more food preparation out of the stores and into commissaries and utilizing a vaguely identified “sanitary kill step” on lettuce, tomatoes and cilantro. (editor’s Note: You can see our interview with Dr. Samadpour regarding his work with Chipotle right here.) 

This, however, does not mean that Chipotle’s controls were any weaker than those of other restaurant chains or flawed in some fundamental way.

The problem is that identified food safety outbreaks are extreme outliers, so rare in proportion to the amount of food consumed that there is no way to accurately predict their occurrence. One of the characteristics of so called “black swan events” is that only after the occurrence of such an event one rationalizes it could have been predicted.

Indeed the precise reason why Bill Marler — just one man — could have “been involved in every food-borne illness outbreak, small and large, since 1993” — is because, statistically, these outbreaks are virtually nonexistent.

Put it in perspective. The chance of winning the recent Powerball jackpot was only 1 in 292,201,338 — pretty steep. In contrast, the dietary guidelines call for people to consume roughly 19 servings of food a day. There are over 322 million Americans. Multiply today’s population by 19 servings and one gets about 6,134,226,350 servings of food — and this per day! Per year, we are talking roughly 2,239,000,000,000 — that is trillions of servings per year that we are talking about!

If we were to multiply that number by the 23 years that Bill Marler has “been involved in every food-borne illness outbreak, small and large, since 1993” we come up with roughly 51,497,000,000,000 — that is over 51 trillion servings of food in the USA.One can quibble — the number may be a little high as the population has grown or a little low as people eat more than their recommended serving number, etc.

The key though is that it is an enormous number, and Bill Marler couldn’t be involved in all the cases if even a small portion resulted in outbreaks of food-borne illness.

Now this is not to say that choices can’t be optimized toward one outcome or another. Chipotle is admirable as it is virtually the only large chain that has been for some time willing to pay extra to get product that it believes conforms to its values — others talk the talk but won’t pay up.

On the other hand, it is also true that one can only have one top priority at a time. And with its interest in artisanal, local and cooking in store, it is clear that Chipotle has not prioritized food safety as its Number One priority.

That sounds shocking, but we could say the same of almost everyone in the entire industry. At retail, we know many stores that cut fruit in the supermarket. Some do it for economic reasons — wanting an outlet for fruit approaching its useful life — some do it because they believe it tastes better or that the theatre of cutting in store will boost sales, There are many reasons.

But nobody who has visited a modern fresh-cut facility can believe that any store is cutting fruit in house because it has prioritized food safety. Indeed, it is the opposite. The supermarket chain that is cutting fruit in the store is specifically deciding that something else — money, flavor, theatre, whatever it believes — is more important than safety.

This is less shocking than it seems. When you have a very rare event, the occurrence of which is unpredictable in timetable, the high cost of preventing an incident leads to insufficient investment to prevent a problem.

This is why even in places where tornadoes are common, we still don’t build structures to withstand tornadoes. We can, but they are very expensive both in dollars and in design compromises. We just accept that every year roughly 80 people will die in America from tornadoes, with a total of almost 200 people in America dying from other storms.

Perhaps a more germane example is auto accidents. Driving is a very common activity, just like eating. It is exceedingly safe, if you look at the number of miles driven or trips taken. Yet over 30,000 people die in automotive accidents each year. Almost 100% of these deaths are preventable, as we know how to build cars that will withstand extreme impacts, and we can mandate lower speeds.

We specifically do not mandate these steps because of their cost. In contrast, the Centers for Disease Control and Prevention estimate that 3,000 people die as a result of foodborne illness — less than a tenth of auto accidents. If we don’t do it for autos, are we really going to demand that Burrito prices double to have an infinitesimal effect on food safety?

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.

Which is why a bad year does not indicate a lack of controls, as Bill Marler asserts.

Executives don’t feel they can talk about the situation realistically with consumers. So, Steve Ells, the founder and co-CEO of Chipotle, makes some unfortunate pronouncements and CNBC uses his comments in this headline: 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.

This is almost certainly not true, and in any case certainly nothing he would have any way of knowing to be true. Escherichia coli, typically abbreviated as E. coli is a diverse group of bacteria; some are harmless, and some can lead to kidney failure — but it is not uncommon. It lives in the intestines of humans and animals.

And pathogens are hard to find. It is not uncommon to test a field, get a positive and then retest a field and get no positives. Bob Whitaker, Ph.D., Chief Science & Technology Officer at the Produce Marketing Association, likes to point out that each acre of a spinach field has around 20 million spinach leaves. A typical field test will test 2,000 to 3,000 leaves. If a bird landed on one plant and caused contamination, the odds are not particularly good that bacteria from the bird’s feces will be found.

Although consumers may like absolute assurances, humility about our ability to manage food safety, in a consumer’s home or a restaurant, would be advisable and Chipotle would be contributing to the public interest by raising consumer literacy on food safety issues, rather than making bold claims it can’t substantiate.

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.

Again, though, this really doesn’t make sense. Ells didn’t send a letter to shareholders announcing that from now to eternity, they should expect lower returns. These costs are costs of production and will have to be covered by consumers.

Explaining to consumers that there is a cost to food safety would, in fact, be a useful contribution to the public weal.

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 wish them good fortune in the year to come.

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