Sourcing from small group of suppliers leaves restaurant chains at greater risk

A small number of suppliers in the food industry means many restaurant chains are exposed to more risk of contamination, notes a new article from Lloyd’s of London.

Restaurant chains and franchisees are increasingly getting their ingredients from a small number of suppliers, meaning “their exposure to foodborne illnesses and food contamination can be magnified,” Lloyd’s says.

Lloyd’s points to an E. coli outbreak in 2006 among 90 restaurants across several states from lettuce sourced from a single supplier.

“You used to have someone in the kitchen chopping up the lettuce and vegetables and someone else handling the meat,” David Burke, senior class underwriter of product contamination at Catlin notes in the Lloyd’s article.

“That doesn’t happen anymore. The business model for franchise restaurants has changed and everything comes pre-packaged and pre-made and the people in the kitchen put the product together.”

“While that results in a lot of efficiency in the food service industry it does mean if that bag of lettuce has got e-coli in it, it’s potentially going to hundreds of outlets. In the past, the contamination would be quite localised, and now it can spread dramatically through a brand’s network of restaurants.”

Franchise systems also tend to encourage restaurants to use the same suppliers, Ian Harrison, a product recall expert at Lockton, also notes in the piece.

“If you walk down a UK high street now you’ll see far more global brands – franchised restaurants – whereas 20 years ago it would have been local restaurants,” he says.

“So you get this franchised system of quality control which means you should have global homogenous food, but if the system goes wrong you could get quite significant economic exposures.”