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SPECIAL EDITION V:Salmonella/Tomato Crisis Continues For Most Of Mexico

Subway Still Measuring
Impact Of Tomato Losses

Jim Prevor’s Perishable Pundit, June 17, 2008

As part of our exhaustive coverage of the Salmonella Saintpaul tomato outbreak, we’ve asked that Retail And Foodservice Buyers Share Their Experiences to learn how the outbreak played out. Now we went to the largest foodservice chain by number of units and asked Mira Slott, Pundit Investigator and Special Projects Editor, to speak to Subway:

Kevin Kane
Public Relations Manager
Subway Group
World Headquarters
Milford, Connecticut

Q: How has Subway handled the tomato outbreak?

A: Late on June 3rd the FDA issued an advisory that said that tomatoes in certain growing areas had potential problems, and advised tomatoes not be consumed in New Mexico and Texas. Based on that advisory, Subway contacted franchisees in those states on June 4 to stop selling tomatoes. On Saturday, June 7, FDA widened its investigation and extended its advisory nationwide.

We advised all our Subway franchises in the U.S., Canada and Puerto Rico to stop sales of tomatoes. Canada and Puerto Rico were receiving tomatoes that we purchased in the U.S. through IPC [Independent Purchasing Cooperative], Subway’s franchisee-run purchasing arm.

Q: That must add up to a lot of tomatoes. [Editors note: There are more than 29,000 Subway restaurants in 86 countries worldwide]. How many franchises were affected? Do you have an estimate on how many pounds of tomatoes that is?

A: When we stopped selling in the U.S., Canada, and Puerto Rico, we’re talking about pulling tomatoes from 25,000 restaurants. How many pounds of tomatoes, I don’t have that number. Subway doesn’t always want to reveal certain information. No tomatoes were sold from Saturday evening until the Wednesday morning June 11 notice came out that we could sell from Florida, and since then it’s been a matter of trying to get those tomatoes in the restaurants as quickly as possible.

Q: Have franchisees experienced any difficulties in getting the Florida tomatoes? Have there been any delays in the certification process FDA is requiring to assure those tomatoes are coming from the approved counties?

A: Right now if someone’s out of product, they’ll be getting tomatoes in the next delivery. Our understanding is we don’t have a supply problem.

Q: How does the purchasing cooperative work?

A: It’s franchisee-operated; they have control. We at Subway have an R&D team that works with them and approves vendors. IPC purchases the products from various sources at different times of year and works out the best deal for its members. IPC executes the deal with the vendor on behalf of the franchisee.

Q: Does IPC have long-term contractual arrangements with its tomato sources, and how flexible is IPC in taking on other vendors to fill in voids in supply?

A: Subway will look at a vendor and insure they are providing the quality and consistency we would need in the restaurant. We have a food safety vendor code of conduct that franchise owners have to follow. We use an awful lot of sources. I can say with a pretty good sense of confidence that the R&D department works too hard with vendors for safe quality product to compromise that on a quick fix.

[Editors note: Diversified Restaurant Systems (DRS) is responsible for supplying Subway restaurants with Gold Standard produce from approved vendors for IPC/Subway and is directly involved in the food safety, GAP’s and social responsibility requirements for this program. See Pundit interview with Michael Spinazzola, President of DRS here].

On Saturday, what we were looking at was contacting franchises not to use the tomatoes. IPC was looking at alternative sources to get tomatoes in the restaurants, not knowing how long this FDA advisory would be. The important thing is abiding by the advisory. If this is going to be prolonged, we need to have alternative sources.

Q: Has FDA’s revised list of approved sources alleviated the problem?

A: FDA started clearing fields. On Sunday (June 8), Hawaii was added to the list of approved sources. Our franchises in Hawaii were getting tomatoes from Hawaii. On Saturday, Hawaii wasn’t on the list, but Sunday morning they were. So Hawaii was under a ban for 10 hours.

On Tuesday (June 10), FDA lifted the ban on tomatoes in Florida, certain counties in Florida, which allowed us to get tomatoes and send them out to our franchisees. So we never had to purchase through the alternative sources. FDA was advising that any regions starting to produce after May 1 were fine.

Q: What impact has this had on the company?

A: It’s too early to know the impact. We focused on the communication Subway franchisees needed. In cases like this, the customers are very understanding. They know why you’re removing tomatoes. We’re all in the same boat — restaurants and retailers.

Q: Did you put any type of signage up in the restaurants?

A: Signage went up when we first pulled tomatoes in the restaurants. The signs just alerted customers, ‘we’re temporarily out of tomatoes.’ The outbreak was all over the news everywhere. I’m not sure we laid out the news of the FDA advisory right up front. For the most part, people knew why we weren’t carrying tomatoes. If a customer had a question, the franchise owner could answer it.

We thank Subway Group for making Mr. Kane available. We thought the little anecdote about the Hawaiian franchises shows the way FDA’s undisciplined approach needlessly caused distress and financial loss.

Hawaiian tomatoes were never implicated in this outbreak, FDA did not “clear” Hawaii through some investigation — FDA simply didn’t do its homework before publishing the original list.

But should an industry suffer because the FDA is not willing to establish a rule and a methodology for its “not implicated” list?

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