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,
