The E. coli outbreak is an unusual situation for McDonald’s. The last serious public health issue in the U.S. associated with the burger giant happened more than 40 years ago.
However, thanks to collaboration with its suppliers and health agencies, the chain narrowed the source to slivered onions at a Taylor Farms facility in Colorado Springs. It also confirmed that its Quarter Pounder beef patties did not contain any E. coli. The brand is working on resupplying Quarter Pounders in impacted restaurants, but without the slivered onions.
So far, at least 75 people have reported illnesses and one person has died. McDonald’s cautioned that cases will go up, not because the bacteria is still in the supply chain, but because of greater awareness of what’s going on. Sales and traffic are down due to the incident, meaning McDonald’s has to rebuild trust with guests and find ways to boost visits and frequency going into the new year.
QSR recently sat down with Phil Kafarakis, CEO and president of the International Foodservice Manufacturers Association (IFMA), to gain more insight into how McDonald’s responded to the scandal. Drawing from his extensive experience, he highlights key lessons mid-sized companies can learn from industry giants in terms of supplier relationships, crisis communication, and regulatory preparedness, particularly with the upcoming FSMA 204 compliance deadline—a new law that will enforce requirements related to the traceability of certain high-risk foods.
How would you rate McDonald’s response to the E. coli outbreak?
I think I would say they handled it very well relative to the extent of the situation. They were very upfront and transparent about what happened. I think they were cautious because they needed to get all the facts straight. Working with the regulatory agencies, I think they hand-in-hand brought the information forward and have been very transparent about what happened with respect to the illnesses and who was involved. I think they immediately went into their supply chain protocols with respect to these type of situations. I know they have an incredibly buttoned-up supply chain and great manufacturing suppliers who I’m sure they immediately mobilized. As they got more information, they got more specific.
I think in the beginning, there was a little bit of like, ‘It’s taking them so long to comment,’ but I think they did it properly with the facts without making far-fetched assumptions. There was a conversation about the slivered onions from the beginning. There was a conversation about the beef patties. They ruled it out as they went. They didn’t put anything out there that wasn’t fact-based I would say.
What must it do to regain trust with the consumer?
I think they’re going to continue to message the fact that their supply chain is safe and that they’ve got a handle on it, which is really important. Traditionally, they’ve had some of that type of messaging in the past when they tried to connect with consumers, but to the quality of their food. So I think you’ll see them bring some of that back just to reassure them that their sources are good, their compliance techniques are appropriate, and they know how to manage these things.
Their CEO was compassionate and indicated that he was concerned about the health of the consumer and what was taking place in these areas. These are tough because I understand other QSRs started to react to this to make sure they were OK and being proactive, which I think might have spooked some people. But I think their slow sales will continue as we go to the holidays because of the trade outs.
What advice would you give mid-sized companies to prepare for such issues in the future?
My advice having in a previous life being a McDonald’s supplier, it’s not something you can do overnight. McDonald’s has an incredibly trusted relationship with their suppliers. They don’t rotate suppliers. They don’t have people come and go. They have redundancy in their supply base, but their major suppliers that understand McDonald’s processes thoroughly. They understand what it means to be connected to them. And that has come over many years of suppliers being indoctrinated into the McDonald’s way of doing things. So in this instance, they were able to draw on their supplier base very quickly with all the technology and resources they have. But it’s because they have such a connected, communicative process with their suppliers. If I was a mid-sized company, knowing that I supply some of these QSRs in regions, maybe, or smaller ones, I would be looking internally in my own processes to make sure that they’re completely and above compliance standards. Not only for the regulatory agencies, but for their customer that they serve.
Now is the time more than ever given that FSMA 204 is knocking on the door and compliance starts January 20. It’s been out there for almost 10 years for people to get ready. So this is the time to get organized, make sure all your ducks are in a row with respect to your food safety and regulatory requirements. Because I think it’s just going to become a more heightened, sensitive area.
Where can suppliers gather more educational resources?
We’re going into our President’s Conference next week, which is a very large gathering of all the trading partners, and we have a huge emphasis and focus on preparedness for FSMA 204, along with a workshop that we’re offering our members and attendees so that they’re again continuing to be prepared for what’s coming down the pike. You can find a lot of that information on our website, ifmaworld.com. We have information about the conference and we have information about the workshop that we’re doing and preparedness for this FSMA 204. Our membership is really important and we do have a mixed membership that now is starting to include mid-sized companies. Traditionally, we were just a big brand organization that was very insular, but we’ve expanded our membership and opened up the doors. We’re doing a lot more industry work and these type of mid-sized companies could benefit from being members and being part of the education platform.