Day 125 - 12 May 95 - Page 35


     
     1        little tighter than what was required.  So, this is just an
     2        example, just one of many examples, of what I was pointing
     3        out earlier.
     4
     5   MR. JUSTICE BELL:  How do you spell the second name?
     6        A.  K-A-R-O-S, Karos.  He is still with the McDonald's
     7        system, not as employee but as a franchisee in Cleveland.
     8
     9   MR. MORRIS:  "But merely setting a tough new standard was only
    10        half the task because meat suppliers rarely met
    11        specifications on hamburger even when the restaurant set
    12        them."   Was that something that was found at that time,
    13        that it was difficult to set specifications on suppliers?
    14        A.  Yes, when I first started with the Company, the range
    15        of responsibilities of our field consultants were much
    16        broader than they are now.  It was a requirement that from
    17        time to time the field consultant would make unannounced
    18        visits to a bakery, to the dairy, to the meat plant, and to
    19        observe the preparation of these various products, would go
    20        through the chain of the supply.  If there was anything out
    21        of spec. or out of the ordinary, then, you know, he would
    22        make a report to his superior.  If, in fact, when he was
    23        there, he observed things that he thought would be
    24        deleterious to the health of customers, then he could
    25        actually shut down the line or say that he was going to not
    26        permit the sale of that product.
    27
    28        Now, I cannot say that that happened that often, but I will
    29        tell you that a number of unannounced visits resulted in
    30        the dismissal of suppliers because they were not living up
    31        to our specifications.  We established a new standard in
    32        the industry, in the entire industry in America, as a
    33        result of our policing, our quality assurance programmes.
    34        We made it very clear, extremely clear, that we would not
    35        tolerate any violations of standard.
    36
    37   Q.   Then it says:  "Cheating was the rule, not the exception.
    38        There was reason for meat suppliers to conclude that they
    39        could cheat on McDonald's.  Since all meat was fresh and
    40        not frozen during the chain's first 12 years, all meat
    41        suppliers were local".  Up to that point, that is all
    42        correct, is it?
    43        A.  That is correct.
    44
    45   Q.   "Before McDonald's began converting to frozen hamburger in
    46        1968, its number of meat suppliers hit a peak of 175"; is
    47        that correct?
    48        A.  That is, I would say, correct; whether or not it is 175
    49        or not .....
    50 
    51   Q.   Somewhere around there? 
    52        A.  You know, yes. 
    53
    54   Q.   "As they multiplied some suppliers ignored the high cost
    55        standard, hoping that the fragmented meat supply system was
    56        too difficult for McDonald's to police.  They had not
    57        counted on the intensity of McDonald's commitment to its
    58        meat standard.  Rather than leave the inspection of meat to
    59        visual examination, the method the McDonald's brothers and
    60        most other drive-in operators used", that is previously,

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