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Is Your Restaurant at Risk for a Chipotle-Scale Outbreak?

Is Your Restaurant at Risk for a Chipotle-Scale Outbreak?

Foodborne illness has been a big item in the news lately for the restaurant industry, with chains such as Chipotle suffering big drops in sales and loss of consumer confidence due to outbreaks of e. coli, norovirus, salmonella and other foodborne illnesses. While contaminated ingredients and poor food safety practices are often blamed for being major causes of foodborne illnesses, industry research suggests that an even bigger culprit is something surprisingly simple: restaurant workers coming to work while sick.

According to a survey by the Restaurant Opportunities Center (ROC) cited in BuzzFeed News, two out of three restaurant workers reported that they had cooked, prepared or served food while sick. The BuzzFeed article also cited a CDC study which found that 70 percent of norovirus outbreaks are caused by sick foodservice workers – and each year, norovirus results in $2 billion of costs to the U.S. economy in terms of health care expenses and lost productivity.

If sick restaurant workers are such a leading cause of foodborne illness, why is it so rare for restaurants to offer paid sick leave? There is a widely accepted cultural attitude within the restaurant industry that people are expected to work hard and show up for every shift – even if they’re not feeling well. But as Chipotle’s massive sales declines have shown, if your restaurant is making customers sick, the cost of not offering sick leave can become more damaging than simply paying your sick employees to stay home.

We talked with a few restaurant industry experts about the state of paid sick leave in the restaurant world, and how small independent restaurant owners can navigate the challenges of avoiding foodborne illness without sabotaging their bottom line profitability.

Why Sick Leave is Rare in the Restaurant Industry

Many restaurants do not offer any paid sick leave – workers are expected to show up for their scheduled shifts, or lose income. This often creates a tough situation for restaurant employees, who feel like they have to choose between their health and being able to pay their bills. But it’s a bit more understandable when you look at the larger context of how restaurants operate.

Rick Davis is a former restaurant owner and an attorney in Leawood, Kansas who regularly represents restaurant owners. He said that sick leave is so rare in the restaurant world in large part because of the nature of the work. “In an office environment, if Jane is out sick on Tuesday, she can just finish the report she was working on the next day – but in a restaurant setting, if Jane doesn’t show up to work, the kitchen is short one cook during the rush,” Rick said. “It can be very difficult for a restaurant owner to find other employees to cover for a sick employee and restaurants’ thin profit margins usually prevent restaurants from “overstaffing” to prepare for potential missing employees.”

Restaurants are a less profitable business than many people might expect. As of 2013, average U.S. restaurant profit margins were only 5.1 percent – and that was up significantly from 0.4 percent in 2008. With many restaurants struggling to pay their own bills and maintain positive cash flow, it can be hard for restaurant owners to budget for paid sick leave.

“Despite the sometimes significant revenue that is coming in, restaurants have much smaller margins than people realize,” Rick said. “Also, many restaurants’ business may be seasonal. Committing to expenses such as sick leave makes it even that much more difficult to make a profit.”

What Restaurant Owners Should Do

Nick Mazing, a former operator with Aramark who now works as a portfolio manager at consumer-focused investment firm Ampera Capital, said that part of the challenge for restaurant owners is that many employees choose to come to work sick out of their own sense of financial self-interest.

“It is important to note that the dynamic of workers coming to work while sick is also driven by the employee: they often need the hours and will come in sick, or they have used up their sick leave for the period,” Nick said. “Paid sick leave can be legislated. Some cities, like New York City, do mandate sick leave for all but the smallest employers, but even that is not perfect because of the high proportion of illegal, off-the-books and family labor in many restaurants.”

In the absence of an industry-wide standard for sick leave, Nick suggests that restaurant owners look to adapt their operations to be able to better handle employee absenteeism.

“Sick leave can be dealt with the way any other absenteeism is dealt with,” Nick said. “Managers can do several things: ask people to come in early, stay late, come on their day off or use a floater or a temp labor person from a local agency. Building some slack in the labor schedule goes a long way.”

Rick Davis suggests that more education about foodborne illness is key – especially by showing restaurant owners the link between sick employees and slower sales.

“The best way to make a change in this area would be to further educate restaurant owners on the risks of spreading foodborne illnesses and more importantly what effect that has on their bottom line,” Rick said. “Whether an employee is sick or healthy, the business owner should place an emphasis on proper hygiene and sanitation practices. Employees should regularly wash their hands and wear gloves when touching ready-to-eat foods. These simple practices can have a profound effect on the spread of food-borne or other illnesses.”

However, Rick also believes that the overall restaurant industry has some significant cultural barriers to overcome if paid sick leave is going to be a widely adopted practice.

“It would take a massive overhaul of the restaurant industry for employers to start providing sick leave to employees, especially since it would be counter to the culture that exists in restaurants,” said Rick. “The fastest way to see a change would be if some of the larger chains started making this a part of their benefits package. Over time, more employers may start to see the upside of offering these benefits.”

Rick also says that fear of a Chipotle-style publicity nightmare could also drive restaurant owners to make big changes.

“The other potential game changer is if there continue to be these highly-publicized cases, such as Chipotle,” Rick said. “Chipotle is big enough to weather the storm of lost sales resulting from this bad publicity, but a smaller restaurant or chain may not have the resources necessary to survive such a situation. As restaurant owners begin to realize the possibly of something like this happening to their business, they will be more driven to implement changes in their restaurants.”

Limit Your Restaurant’s Liability to Lawsuits

In addition to seeking to prevent foodborne illness by implementing smart training and scheduling practices, restaurant owners should also consider how to protect their business in the worst-case scenario of a customer lawsuit. According to Ted Devine, CEO of small business insurer Insureon, many restaurant owners could benefit from double-checking their business liability insurance coverage.

“In recent years, laws in the U.S. have evolved to favor the doctrine of “strict liability,” which means that if you buy something and use it correctly and it results in an injury, anyone involved in selling it to you (vendor, distributor, manufacturer) can be legally and financially responsible for the damages to you,” said Ted.

This strict liability standard means that restaurants who serve food to customers – and whose customers then get sick from eating the meals – could potentially be vulnerable to a lawsuit (depending on state laws). And in the eyes of the law, it often doesn’t matter what the cause of the food contamination was.

“According to strict liability principles, even if a restaurant handled its ingredients properly and maintained adequate cleanliness within its restaurant, it could be found legally liable and financially responsible for its customers’ illnesses,” Ted said.

Ted recommends that small business owners, especially restaurant owners, take time to investigate their business’ level of product liability insurance. “The good news for small businesses is that a special type of insurance policy called “product liability insurance” may cover the cost of a food poisoning or other product injury lawsuit,” Ted said. “This type of insurance is typically included in a general liability insurance policy. General liability is often considered a foundational coverage for small businesses – it’s best known for covering slip-and-fall accidents. So in most cases, if you have a general liability policy, you have product liability coverage. Of course, it’s always a good idea to double check by reading through your policy or calling your agent.”

As people become more health-conscious and interested in knowing about the sources of the food they eat, consumer concerns about food safety are likely to intensify. This is going to put some added pressure on restaurant owners – but with a few best practices and protections, you can keep your customers safe and happy and keep your restaurant’s reputation clean!

Are you a restaurant owner? What’s your take on the Chipotle foodborne illness outbreak? What should restaurant operators do to minimize risks and maximize profitability? Leave a comment and let us know!

Kabbage Team

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