Tag Archives: branding

Michael Koeris, Ph.D. and vice president of operations, Sample6, pathogen detection
FST Soapbox

The True Costs You Endure During a Food Recall

By Michael Koeris, Ph.D.
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Michael Koeris, Ph.D. and vice president of operations, Sample6, pathogen detection

When you think about the expense of a recall, you probably automatically focus on the costs to pull the affected product from shelves and reimburse customers. Yes, this can be an expensive undertaking. But the true, comprehensive cost of a recall involves immensely more than these obvious financial tolls. Do you fully understand the price to be paid when your organization is up against a food recall?

The recall process in the food manufacturing industry is a highly expensive one, averaging more than $10 million in costs to cover activities such as communicating the recall across the supply chain, retrieving and handling the recalled product, investigating the event and implementing corrective actions to prevent reoccurrence.

Of course, this average doesn’t address the possibility of litigation costs, decreased sales, reputational damage or brand crisis management, which can add up to millions—even billions— of dollars more. The public has become much more informed and aware of food safety events, and a single breach of trust could result in resounding losses to your brand. This makes it critical to understand the true costs you endure when faced with a food recall.

Immediate, Direct Costs

A recall can be a company-defining event. The vast majority of recalls are voluntary and a reflection of conscientious behavior by the retailers, wholesalers and producers, but that doesn’t mean you won’t incur serious expenses. The most obvious, immediate and direct ones include:

  • Pausing production to carry out recall response initiatives
  • Alerting necessary parties within and outside the organization, including regulatory agencies and relevant retailers
  • Managing the logistics of removing affected or mislabeled products
  • Examining the source of the recall, including issues with suppliers, equipment, processes or contamination prevention plans
  • Remediating the identified problems to prevent similar occurrences
  • Planning for expanded human resources to handle recall tasks in addition to routine operations

Again, these expenses could equate to millions of dollars from your bottom line, but the truth is they may be the most minor of your concerns in the face of a food recall.

Compliance Penalties

As you likely know by now, there’s a monumental shift happening in the regulatory arena. FSMA has enacted strict laws that place a greater emphasis on proactive and preventive approaches to food safety. In addition, the USDA has been focusing on strong enforcement of its guidelines for years.

For manufacturers, this means adjusting processes and procedures to comply with legal requirements for monitoring, testing, documentation, risk assessment and more. It is not enough for companies to have a plan for taking corrective action on contaminated products; they must also have a strong preventive plan in place to identify pathogens in the production environment before they affect the product and/or leave the facility. If your company undergoes an FDA or USDA audit or investigation that reveals noncompliance with government-mandated prevention efforts, you could be looking at significant consequences like criminal fines and forfeitures to the U.S. government.

FSMA laws and USDA regulations stipulate that depending on the nature of the violation, and whether the food is adulterated or misbranded, the FDA or USDA may consider regulatory actions, including:

  • Issuing advisory letters
  • Initiating court actions, such as seizure or injunction
  • Implementing administrative detention to gain control of adulterated or misbranded products
  • Mandating a recall of violative food
  • Suspending a facility’s food registration to prevent the shipment of food

Lawsuits and Litigation

According to the CDC, 48 million people get sick from foodborne illness each year, 128,000 are hospitalized and 3,000 die. If your organization is sued on the basis of a contaminated or unsafe product, you can expect to deal with attorney fees, court costs and settlements. In the worst cases, you may even need to pay damages to harmed consumers.

Yes, prosecutions are rare. But they are a reflection of a failure to protect consumers, as well as potential negligence or (in the rarest of cases) malicious intent. The financial effects of these reputational scars go well beyond obvious litigation expenses.

Lost Sales

Once a recall is ordered, a series of actions unfold that drastically impact your income. Manufacturers halt production, and retailers pull products from their shelves. Worse, a loss in consumer trust can initiate a long-lasting sales depression. Your customers want to know that the products they’re buying are safe. In response to a recall, they may change their purchasing, food preparation and consumption practices, or they may avoid the product for months or years after the recall has ended.

Insurance Impacts

Most food companies have recall insurance to protect their assets if a recall occurs. But, are you fully informed on what it means to work through a recall with your underwriter or how a recall affects your premiums? Is there a possibility of losing your insurance? It’s crucial to understand how your insurance is affected by a recall and what is contractually covered under your plan.

Brand Deterioration

Recalls are happening more frequently today than ever before, for reasons including stricter compliance regulations and supercharged government testing regimes using novel technologies like next-generation sequencing. This increased focus on testing by the government has led to a greater discovery rate of contamination, which is a good thing for the public. It means that improvements will be made to yield an even safer food production environment.

Nonetheless, recalls are alarming to your customers, and the last thing you want to risk is their trust in your brand. At the end of the day, your brand is your primary asset. It is a representation of who you are and how you do business. When recalls happen, customers lose faith in your brand, which comes with a hefty price tag for your company. If your brand deteriorates due to consumer mistrust, you’re risking business failure.

Unfortunately for the food industry, stories exposing scandals are a proven way to catch the public’s eye. Therefore, any news of a recall receives immediate and aggressive media coverage from both traditional and social media platforms. In the event of a recall, publicity is inevitable, and it’s an expense that spans every aspect from public relations management to eroded sales.

Jordan Anderson, PAR Technology Corp.
Retail Food Safety Forum

The Future of Food Service

By Jordan Anderson
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Jordan Anderson, PAR Technology Corp.

The food service industry has rapidly changed since Boulanger disputably opened up his doors to the first modern restaurant in Paris over 200 years ago. While soups, sandwiches and pasta dishes continue to be served, the ever-changing landscape of this industry continues to evolve and not only provide new dishes, but innovative practices to cultivate products and introduce technological advances that ultimately enhance the consumer experience.

Localization

In attempts to reduce waste and increase visibility, grocers are looking to localize their product assortments. Whether they garner these products from within their market or a predetermined radius, they can increase traceability best practices while appealing to local shoppers. An example of this would be regional grocery chains selling beer only from local breweries or vegetables from local farms.

In executing this strategy, grocers increase sales by appealing to local shoppers while reducing produce shrink due to shorter delivery times from farm to fork. While some may argue focusing on local offerings takes away focus from more profitable national brand names, keeping your local consumers’ best interests in mind ensures their happiness and strengthens their brand loyalty.

Healthier Foods

Healthy food and beverage options continue to drive demand in grocery stores. As clean eating and heart healthy diets become the responsible practice, grocers must increase their offerings surrounding this category. Companies such as H-E-B have introduced clear labeling to signify certain products were produced without high-fructose corn syrup, while others are removing junk food offerings from checkout lines.

One way grocers are making healthy foods more appealing is by reducing the price of fresh produce by implementing shorter delivery cycles. This strategy ensures food safety, the freshness of the products, and their aesthetic value on display shelves, too. While this makes them more appealing, it also reduces the risk of product spoilage and profit loss due to the perpetual freshness of the product coming in.

Digital Coupons

While paper coupons have been the industry norm for decades, more grocers are turning to digital offerings. Wegman’s recently introduced a mobile app that allows consumers to digitally clip coupons, look up recipes, and find where products are within their stores. With the popularity of mobile devices, this trend will continue to burgeon.

The switch to digital also helps grocers strategically place products and offerings to their customer base. They can optimize sales and marketing approaches this way while discovering patterns and trends in the buying cycle. This allows them to understand their customer base while simultaneously increasing sales.

The Future of Grocery

Like most people, I enjoy eating. However, unlike most people, I actually enjoy the grocery shopping process. Typically, I go hungry while envisioning the endless possibilities of what I could make for dinner. Of course, due to my hunger, I end up purchasing copious amounts of unnecessary items while overspending in an impressive and irresponsible manner.

Due to my rare affinity for grocery shopping, the current and future landscape of the grocery market is interesting to me. I know, pathetic, but we all must have our odd interests.

Walmart Scan & Go

Walmart has developed an app that allows buyers to skip the lines and enjoy a seamless shopping experience. The app allows buyers to scan their desired goods, while keeping a running total of the goods in their cart. Once done shopping, you simply click ‘pay’ and you can check out wherever you are standing. A Walmart employee must verify your receipt before leaving the store but that only takes a moment.

You may be asking yourself, “How do they know I scanned everything?” Well, the honor system comes into play here so just because you hate grocery shopping, don’t rip off the nice people of Walmart, no matter how rich you think they are.

The app is only available at three stores currently – but keep an eye out for a location near you!

Cart MRI

Scan & Go is great for convenience, but if you’re in even more of a rush then this technology is great. The product debuted at Euroshop this past year. This technology allows for buyers to simply push their cart through a device that scans everything within the cart. This technology adds up everything, allows you to pay, and you’re out the door. No more dealing with 10-minute waits or lane closures.

Additionally, the technology provides a touchscreen on the cart that informs you about your selected items, where other products are, and gives you suggestions that compliment your shopping experience.

Sip and Stroll

While the above technologies make the buying experience more convenient—how about something that allows customers to chill out?

As I stated before, most individuals hate grocery shopping. Nevertheless, what if you could have a beer or two while shopping?

Whole Foods first adopted this burgeoning trend. The company sought out on-premise liquor licenses so their patrons could enjoy a few drinks while they shop. This allows for a more relaxed shopping experience while also giving customers insight on different or new brands they may not be familiar with.

Plus, if we’re being honest, if the drinks are good enough… the customers may be more willing to splurge.

The Future of Convenience Stores

Ah, convenience stores, pleasantly reeking of greasy hotdogs, gasoline, and cigarette fumes from the miserable 17-year old cashier outside neglecting the line. That’s generally the perception, right?

Well, not anymore! Convenience stores are now becoming a popular destination for consumers everywhere.

C-stores are beginning to seek alternatives from the slimmer margins of gas and cigarettes. In 2016, the industry saw a 9.2% drop in fuel sales, however, in-store sales increased by 3.2%.

While electric cars and public transportation can explain the precipitous drop in fuel sales—the industry took note of the increased in-store sales. Discovering potential reasons why and how to sustain them.

As the general population becomes increasingly more health conscious, convenience stores are beginning to adapt. Trending now are plant-based protein bars, dried fruits and nuts, and upscale jerky.

“Protein is the new energy,” says Jeff Lenard, vice president of strategic industry initiatives for the National Association of Convenience Stores. The demand for grass-fed and cage-free offerings are increasing in demand. Leaving the industry to either adapt, or fall behind.

After protein inspired snacks, convenience stores are beginning to incorporate their own restaurant concepts within their stores. The Pride Stores, a small c-store chain in the greater Chicago area, hired a corporate chef and introduced two different concepts, one being taco themed. This allows for consumers to eat-in, spending more time in their stores, or carry out for their convenience.

If you haven’t noticed lately, more convenience stores are beginning to expand their offerings of beer. Craft beer and wine selections are becoming bountiful options within the aisles. The copious amount of microbreweries opening up nationwide has spiced up the masses taste buds and demand for these crafted beers has continued to steadily increase.

National and local brands allow consumers to enjoy their local favorites, or to discover a new personal favorite.

Vineyards have begun to spring up more than ever, too. While the west coast has long been notorious for their wine, the fad has begun to spread nationwide. Whether you want to try something from the west, or upstate, NY, convenience stores are now becoming a go-to for the moderate connoisseur.

Jordan Anderson, PAR Technology Corp.
FST Soapbox

Advocate for Change to Establish a Food Safety Culture

By Jordan Anderson
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Jordan Anderson, PAR Technology Corp.

Many times food companies will simply say, “We have to change our culture” or “We’ve always done things this way”, but this attitude will not remedy potential outbreaks or help develop food safety protocols.

As author and businessman Andy Grove once said, “Success breeds complacency. Complacency breeds failure. Only the paranoid survive.” This statement could not apply more to the food service and manufacturing industry.

The first step to change is convincing your organization from the top down to buy in; getting your executive team to accept the cultural change from manual paper-based approaches to digital food safety is paramount.

Common objections will be the investment and positive record of accomplishment. Taking a proactive and preventative approach to everyday food safety compliance will have a positive ROI over time while ensuring the utmost brand protection.

Presenting the potential damages of being linked to a foodborne outbreak is a great place to start. It typically will open the eyes and slightly intimidate each audience member. After all, executives and board members do not like to hear “profit loss”, “stock plunge”, and “tainted brand image”.

While this can all seem overwhelming, it does not have to be. Preparing a strategy and evaluating the processes needed to fulfill this goal will help alleviate the red tape to get this off the ground.

However, before we prepare a strategy, it is important to understand the basic premise behind food safety and how technology can enhance it.

In essence, food safety fundamentally revolves around individual human behavior. Human behavior in turn, is largely driven by culture. In order to successfully develop a food safety culture, an operation must possess impeccable leadership and incorporate the highest standards of food safety.

Most notably, the HACCP plan and individual processes created are a reflection of the human behavior that shapes and molds the culture of an organization. In large organizations, the challenges are often compounded by an increased number of locations and stakeholders (employees, suppliers, customers, etc.) Within these operations, food safety culture and human behavior can potentially become compromised due to the nature of the organization, or attitude and work ethic of the stakeholders.

Technology can assist in the development and maintenance of larger food safety cultures through the use of extensive and dynamic procedures. Human behavior can be shaped by the resources available in today’s food safety tool box. We can now overcome the arduous “pencil whipping” of safety checklists via handheld, wireless and cloud-based technologies. Such technologies are ubiquitous today in the form of apps downloaded from the internet, cell phones, reporting platforms and omnipresent communications.

History has shown that in challenged cultures, individuals often behave as though they are not a part of the whole, and operate as one, rather than as a team that is linked together under one vision and shared effort. However, during the processing, handling and storage of food, we need all stakeholders to act as a collective operation and function as one. The growing adoption of technology is the fundamental turning point that can help drive human behavior and food safety culture in a positive direction.

The introduction of FSMA has brought both challenges and opportunities to the food safety industry—the requirement to document and record actions of a larger food safety plan is one of them. Conceptually speaking, you are only as good as your records say you are. In this context, we are faced with both the challenge of maintaining a positive and efficient food safety culture, in addition to the burden of increased regulatory compliance.

However, FSMA and the innovative technological era have guided the industry to a crossroads of sorts. I suggest embracing the FSMA mentality and implementing food safety technology into your operations. This will not only protect and preserve your organization, but perhaps more importantly, it will define your food safety culture, and implement a positive change into your brand.