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New Meaning Of A Value Meal: Cultural Change Needed To Factor In Food Safety

Jim Prevor’s Perishable Pundit, December 12, 2006

We’ve been looking at old Taco Bell commercials. You know, the ones with the little Chihuahua, Yo Quiero Taco Bell and all that.

Simultaneously we’ve been thinking about the food safety crises we’ve experienced both with spinach and with scallions.

The commercials and the food safety issues lead us to think about the organic community.

It seems like a reach, but the organic community has been struggling with the entry of companies such as Wal-Mart into the organic business in a big way. We’ve dealt with the issue in the Pundit’s sister publication, PRODUCE BUSINESS, both in this column and in our response to a letter received about the column.

The activist wing of the organic community has not been thrilled about Wal-Mart’s foray into organics. At first this seems counterintuitive. After all, Wal-Mart will tremendously expand the market for organics.

The quizzical nature of the objection fades only when you understand that for many organic activists, the elimination of synthetic pesticides is only one goal and a modest one at that. Instead they want to use the organic industry as a way of establishing a supply chain that is aligned with a value structure.

When British supermarkets buy from African producers in places such as Kenya, it is not sufficient for them to have an audit showing the food is safe. They need an audit showing that there is a values alignment in terms of how workers are treated, how the environment is treated, etc.

The complaint organic activists have with Wal-Mart and organics is that they want much more than the legal organic standards require: They want locally grown, they want biodiverse agriculture, they want employees paid what they call a “living wage” and much more.

They know that the Wal-Mart imperative to offer low prices and to drive costs from the system will not encourage the expenditure of money on anything not required by the law.

So, although Wal-Mart may sell a lot of organics, it won’t build the kind of world these activists yearn for.

So, in watching the Taco Bell commercials, one thing strikes you: Every commercial ends with a product being sold for less than a dollar. The original Yo Quiero Taco Bell commercial had a tag at the end for two tacos for 99 cents. Others promote “20 items on the value meal for less than a buck.” Others have an anthem with a 99 cent taco against a red revolutionary flag.

The Pundit is not one to trivialize the importance of good prices. Taco Bell built its fame on a three-tier pricing plan in which, in the 1990s, the value menu was priced at 49, 59 and 69 cents. For many people, 99 cent tacos add joy and happiness to lives that don’t have a lot of material things. It means a night out with the family or lunch with co-workers. It is a date in high school. Inexpensive food means a lot.

It is sensitivity to these types of issues that has led some to accuse the Pundit of being “pro-Wal-Mart,” but it is very easy to fall in love with Central Markets, Whole Foods and Wegmans. After all, someone has to stand up for the family to whom price is the main deal.

Now, however, in the face of so many food safety problems, we have to wonder if the culture that pushes to reduce costs is the culture that can most effectively enhance food safety.

Some of this is compensation-based, particularly what a company pays buyers to do. We’ve dealt with that issue in one of our most e-mailed pieces: a Tale of Two Buyers.

Yet it also strikes us as more fundamental. When a buying organization walks into a selling organization, what is the priority? If you study those Taco Bell commercials, one comes away with the feeling the overwhelmingly important thing is that they bring ingredients in at a cost that will enable them to sell products to consumers for the value meal.

This doesn’t mean they don’t want it safe. They certainly do. There is not the slightest reason to think that anyone at Yum!Brands, the parent company of Taco Bell, has ever urged a supplier to stint on food safety.

But that may not be the point.

I’m reminded of the situation Dominos Pizza found itself in a few years back. Its key marketing initiative was a 30-minute delivery guarantee. There is no evidence that the corporation ever urged anyone to speed. The company’s manual specifically forbids it. But the culture rewarded drivers who made their deliveries; some stores even paid a 1% bonus for delivering on time.

Nobody got paid bonuses for going the whole year without a speeding ticket.

It wasn’t until as Gary D. Zeune, CPA explained:

After a number of lawsuits for auto accidents involving delivery drivers, Domino’s Pizza Inc. learned its lesson about its compensation strategy. About 10 years ago, Domino’s had 30-minute delivery guarantee. To encourage drivers to get there with the pie, some stores paid drivers a bonus of 1 percent for delivering a minimum number of pies on time, according to testimony from one employee.

The system cost Domino’s BIG bucks. In 1993, the company reached a $2.8 million settlement with the family of an Indiana woman killed by a delivery vehicle allegedly speeding to meet the 30-minute guarantee.

Later that same year, a jury awarded a St. Louis woman $750,000 in actual damages plus $78 million in punitive damages. She was injured by a Domino’s driver who ran a red light. Rather than appealing, Domino’s and the woman later settled for an undisclosed amount. The company ended its 30-minute guarantee a few days later.

Taco Bell is the example at hand, but this culture of official corporate policy being to favor food safety — but everything else in the organization is focused on other values — permeates a lot of companies in the industry.

And this is where the Buyer-led Food Safety Initiative falls short. The goal is to raise minimum standards, but food safety is always variable and those new mandated standards will just be a floor.

Most of these big buyers are forced, by virtue of their size, to buy from big vendors who, typically, were already significantly exceeding the minimum standards. So it is not clear that these new minimums will do anything at all for most of these buying organizations.

What has to happen is that compensation practices and core cultural convictions have to be changed so that the buyer looking for someone to co-pack his spinach is not focused on just getting the best deal and the fast food buyer is not focused on getting the item to retail for 49 cents.

This is not going to be an easy transition to make. In the end, it may require that the proposition made to the consumer has to change.

Or to put it another way, a culture that is driven to provide the cheapest food possible is going to always look for the legal minimums on everything.

A truly aligned supply chain is, first and foremost, aligned by values. Those values can be the imperative of a set price value meal or the imperative of food safety — but not both.

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