Day 125 - 12 May 95 - Page 36
1 "Turner and Karos advised franchisees to have the meat
2 routinely analysed in labs." You already mentioned
3 something like that?
4 A. Yes, that is absolutely correct. We did take samples
5 of the product at the supplier from time to time, and also
6 when it came in the back door of the restaurant. As to the
7 175, it could have been 175, it could have been more, it
8 could have been less. But one of the things that we did as
9 we saw the need to have more stringent controls was to set
10 up a competitive situation where those meat suppliers that
11 were on the up-and-up, that is to say, that those that did
12 a good job day in and day out, that really adhered to
13 proper operating practices, those were the suppliers that
14 got additional business, were authorised as we went into
15 the frozen programme.
16
17 Q. So there was a process over some years of beginning to what
18 they call their "police" of many suppliers that you had to
19 kind of get them to conform to standards?
20 A. Well, the policing began at day one. Our founder, Ray
21 Kroc, felt it imperative that we do that and, as
22 I indicated earlier, where we saw violations, we would just
23 dismiss the supplier. We saw that this was a system that
24 was fraught with problems and that we had to go to a better
25 method and you know what the -----
26
27 Q. If you go on to page 326, the first paragraph: "By then
28 the battle between", "by then", I think we are talking
29 about, effectively, the 70s, I believe -- it comes up?
30 A. The paragraph starting with "By then"?
31
32 Q. Yes, "The battle between the titans of fast- food".
33
34 MR. JUSTICE BELL: If you turn back a page it might tell you
35 what "by then" was.
36
37 MR. MORRIS: "Even by the late 1960s it was becoming apparent
38 that the fast-food business, especially the hamburger
39 segment, would develop in another decade into a market
40 dominated by a few powerful leaders, all of whom could
41 produce an acceptable hamburger, market it aggressively and
42 deliver it through a nationwide network of modern stores.
43 By then", which, presumably, means then the end of the 70s,
44 "the battle between the titans of fast-food would
45 increasingly be one of efficiency of supply and the winner
46 would be the competitor whose suppliers had the lowest cost
47 production, the highest level of technical expertise and
48 the greatest desire to innovate". Is that all OK, as far
49 as you can -----
50 A. Yes, it is; it is very true.
51
52 Q. "There was no guarantee that McDonald's could achieve that
53 type of dominance by casting its lot with smaller
54 entrepreneurial suppliers and then attempting to make them
55 into giants on its own. When compared to the potential
56 supplier networks of other fast-food chains, which were
57 either supplied by the major names in the food processing
58 business or owned by them, McDonald's supply system did not
59 seem to hold much promise for becoming the industry's power
60 house". This is all comment. "In fact, that is exactly
