The Chipotle Effect: Understanding the Importance of Supplier Contracts

While the legal and financial impacts of the Chipotle foodborne illness situation are still being tabulated, restaurant owners across the country are considering what would happen to them should a similar situation occur inside their operation. Many independent restaurant owners will find they have much less protection than originally thought.

A restaurant operator’s first line of defense from legal action stemming from foodborne illness claims is in its contracts with suppliers. Those contracts generally lay out how much responsibility distributors have if there is an issue, and what things the distributors and growers promise they’ll do to make sure that the food they provide is safe. The problem is that many times, the terms in those contracts are often vague and skewed heavily in the favor of the distributor.

For example, sometimes suppliers say they will use “commercially reasonable efforts to obtain representations and warranties from our suppliers.” As an operator, ask…