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The cost of quality
By Kevin Freeborn

 

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Examining the components of a food safety program and what it means to foodservice operation executives
 
There’s a need to control costs during difficult economic times such as these. All aspects of the foodservice operation are under scrutiny, including quality control costs, so foodservice operators need quantitative reassurance that their investment in food safety is worthwhile.

Cost-benefit analysis of food safety is often difficult because there are many intangibles such as the amount your customers are willing to pay for safer food. While it is impossible to determine the exact cost of foodborne illness, the Canadian Restaurant and Foodservices Association’s Food Safety Code of Practice estimates the cost to our healthcare system at $2 billion annually (not including the loss of productivity for the 11- to 13-million people who are sickened each year).
 
 
Aside from the societal costs, businesses that cause an outbreak can expect litigation expenses, possible fines and increased insurance expenses. The damage to a business image can result in a slow recovery of revenues at best and, according to a study published in the Journal of Consumer Affairs in 2002, legal costs can range from tens of thousands to millions of dollars (averaging out at about $25,000).

The Price of Protection

There are very specific tasks involved in implementing a food safety plan, such as HACCP (Hazard Analysis Critical Control Points), and there are three phases: planning, implementation and maintenance. A study published in the May 2006 issue of Food Control, examining the costs of a food safety plan at an airline commissary, revealed some interesting results that those in the industry would do well to note.
 
Planning. Most operations don’t have the resources in-house to take on HACCP plan development alone. The cost of consulting fees can range from a few thousand dollars to $20 thousand. Another expense to consider is the time your managers in charge of food safety will dedicate to developing the plan. Typically, the food safety plan will take several months to complete, taking personnel away from their other duties. For the airline commissary in question, the cost of the planning phase was approximately $32,000.

Implementation. Several costs are incurred to implement the plan, including employee training, the purchasing of new equipment, and operational changes.

Employee training costs include several components: personnel cost for time missed from work, registration in an approved certification course, and travel expenses. Training registration costs in Canada are typically $100 to $150, employee wages usually fall between $10 and $14 per hour, and the average course takes one full day, making the cost of food safety training approximately $200 to $300 per person, assuming no travel expense.

Equipment costs in the case study included replacement of equipment such as cutting boards and knives; installation of additional hand-wash stations; and infrastructure improvements to ceilings, walls and floors.
Some of this expense can be amortized over several years, and operational improvements to sanitation procedures and pest control were made to improve performance of the commissary’s “Good Operating Practices.” However, the cost of implementation was approximately 0.06 per cent of the annual sales.

Maintenance. Maintaining a food safety plan entails dedicated human resources to monitor the critical control points and recordkeeping. As new recipes are added, they must be analyzed and incorporated into the food safety plan. The company in question spent 1,040 hours per year maintaining its food safety plan, and an additional expense of $6,300 per year was spent on external audits to provide third-party verification that the plan was working as intended. Smaller operations likely need fewer hours and would therefore spend less on maintenance.

The Bottom Line


In this case study, the foodservice operation added an additional 14 cents (or 1.9 per cent) to the cost of each meal it produced. Executives of foodservice operations are left to decide if their customers are willing to pay an additional 2 per cent for safer food, and if the cost outweighs the risk.


About the author:

Kevin Freeborn is an award-winning consultant, author and speaker with 30 years’ foodservice experience. Founder of Freeborn & Associates, a management consulting firm that helps companies achieve their goals, he has been retained by leading North American organizations to develop food safety programs and training. For more information, call 1.888.829.3177.

 

 

 
 
 
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