The Portland Business Journal reports that foodborne illnesses present a serious public health problem and a significant potential liability for the restaurant and hospitality industry. Even though there is debate over the accuracy of foodborne illness statistics from the government, nonprofit organizations and food industry trade groups, there is no debate that foodborne illness outbreaks are a serious problem that can threaten both the public’s and the industry’s health.
Approximately 400 to 500 foodborne illness outbreaks are reported each year, and an outbreak’s impact on a restaurant and hospitality business’s finances and reputation can be devastating. An outbreak’s impact on a restaurant and hospitality business’s finances can be devastating because substantial monetary damages may be awarded in an outbreak case — especially when a specific pathogen or illness is alleged. And an outbreak’s impact on a restaurant and hospitality business’s reputation can be devastating because outbreak stories are widely reported by the media and alarm consumers. Ultimately, preparation for a foodborne illness outbreak before it happens is essential to any restaurant and hospitality business’ survival because a haphazard, flawed or delayed response could result in irreparable harm to a business.
One obvious threat that a foodborne illness outbreak poses to the restaurant and hospitality industry is the threat of litigation. In large outbreaks, it is our experience that lawsuits are often filed immediately. Plaintiff’s attorneys are armed with several causes of action in which to allege claims against restaurant and hospitality industry defendants after an outbreak occurs. Commonly alleged claims include negligence, breach of warranty and strict product liability. Also, there have been increasing efforts by plaintiff’s counsel to seek class-action status for victims of large outbreaks who may not have had severe illnesses.
Although the majority of foodborne illness claims settle before trial, one government study revealed that a jury is more likely to hold a restaurant and hospitality business liable — and liable for a greater amount — if a specific pathogen or illness is alleged at trial. A 2001 report by the U.S. Department of Agriculture, Economic Research Service analyzed jury verdicts and damages awards in 175 foodborne illness cases from 1988 to 1997. The study showed that in cases where the alleged illness came from a specified pathogen, plaintiffs won 41.7 percent of the time and received an average award of $82,333. Whereas in cases where the illness was caused by an unspecified pathogen, plaintiffs prevailed only 22 percent of the time and received average awards of just $4,554.
A second obvious threat that a foodborne illness outbreak poses to a restaurant and hospitality business is the threat of damage to the business’s reputation, even if such damage cannot be quantified. The media is quick to pick up outbreak stories, and outbreak reports can alarm consumers. Quick reporting regarding an outbreak’s potential sources should be expected when an outbreak occurs, and restaurant and hospitality businesses should be prepared to handle themselves in front of the media.
An outbreak’s impact on a restaurant and hospitality business’s finances and reputation is not necessarily dependent on the business’s degree of fault. Restaurant and hospitality businesses may be susceptible to damages due to a foodborne illness outbreak whether they are legally responsible for it or not. Even if a restaurant business cannot be deemed legally responsible for an outbreak, its brand may be irreparably tarnished if it is connected to the outbreak in any way. Moreover, transaction costs in outbreak situations are often considerable, from attorney fees to time lost from usual business activities.
For the above reasons, the importance of planning for an outbreak cannot be overstated. An immediate but well-crafted response by a restaurant and hospitality business is integral to preventing irreparable business injury following an outbreak. A restaurant and hospitality business should have an outbreak response team in place long before it is needed. This team is different than a “crisis management team,” which many companies use. If there is an outbreak, a restaurant and hospitality business’s outbreak response team should cooperate with the media and any government food safety officials to minimize the business’s exposure.
The outbreak response team should consist of inside and outside experts in the areas of food safety, epidemiology, media relations, insurance and law. It is critical that a restaurant and hospitality business’s team be able to respond immediately to any report linking the business to an outbreak. But that does not mean that every member of the team needs to be involved in every aspect of the outbreak response. A successful response requires a coordinated effort.
Ultimately, the most effective thing that a restaurant and hospitality business can do to protect itself from the threats of a foodborne illness outbreak is to prepare for it.