Case 2: Beefman Steakhouse

The Beefman Steakhouse Restaurant (BSR) was established shortly after the Oklahoma Land
Rush of 1889. Its founders insisted on serving only the best steaks by raising and slaughtering
their own cattle; however, the founders had no systematic way of grading their beef to ensure
the best quality on a consistent basis. In 1923, the United States Department of Agriculture
(USDA) began grading beef. Although there are eight levels of USDA graded beef, there are
generally only three USDA grades of beef that a person would buy in a supermarket, a butcher
shop, or a restaurant: Prime, Choice, or Select. Of all the beef produced in the U.S., less than
2% is certified as USDA Prime. Anyone that has savored a USDA Prime Graded Steak knows
that it is delightfully tender and juicy with a buttery flavor that makes it distinctively superior to
any other steak. Unfortunately for the BSR, most of its homegrown beef did not grade out as
Prime. Consequently, the BSR began purchasing USDA Prime beef on the open market in 1924
from various local vendors, a practice that continues today.
In addition to grading the quality of beef, the federal government also inspects beef. The
Federal Meat Inspection Act’s (FMIA) two main purposes are to prevent adulterated or
misbranded meat and meat products from being sold as food and to ensure that meat and meat
products are slaughtered and processed under sanitary conditions. These requirements also
apply to imported meat products, which must be inspected under equivalent foreign standards.
USDA inspection of poultry was added by the Poultry Products Inspection Act (PPIA). The
Food, Drug, and Cosmetic Act (FDCA) authorizes the Food and Drug Administration (FDA) to
provide inspection services for all livestock and poultry species not listed in the FMIA or PPIA,
including venison and buffalo.
Recent events, however, have called into question the effectiveness of government inspections
of meat. Three months ago, Michael Jones and his family ate dinner at a Burgers Galore
restaurant in Tacoma, Washington, where Michael enjoyed his “Kid’s Meal.” (Instructor’s Note:
Assume Burgers Galore is a large, multinational restaurant similar to McDonald’s.) The next
day, Michael was admitted to Children’s Hospital and Medical Center in Seattle with severe
stomach cramps and bloody diarrhea. Several days later, Michael died of kidney and heart
failure. At the same time, 300 other people in Idaho, Nevada, and Washington who had eaten at
Burgers Galore restaurants were poisoned with E. Coli bacteria, the cause of Michael’s death.
By the end of the outbreak, more than 600 people nationwide were affected. After a month
investigation, it was determined that the E. Coli tainted meat came from one packing plant in
Washington where the meat had not been inspected before shipment.
Examples of illness rooted in unsafe meat are not isolated incidents. Bad or undercooked meat
causes an estimated 4,000 deaths and 5 million illnesses annually, according to the federal
government’s Centers for Disease Control (CDC). Advocacy groups place part of the blame on
insufficient federal government inspectors and part of the blame on consumers themselves. For
example, the USDA recommends the minimum temperature of steak to be 145°F to kill off any
bacteria such as E. Coli. Cooking steak to this temperature is classified by chefs as “medium”
and by many gourmets as overcooked. “Medium rare,” 130° – 135°F, is the temperature range
at which steaks are at their most tender, juicy, and flavorful, but this temperature is insufficient
to kill most meat-borne bacteria.
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The BSR is still recognized today as one of the best restaurants in the United States for quality
steaks, serving only USDA Prime graded beef. It has various cuts of steaks and cooks them to
each customer’s preference: rare – 120°F, medium-rare – 130°F, medium – 140°F, mediumwell – 150°F, and well done – 160°F. It estimates that over 70% of its customers prefer their
steaks cooked no more than medium-rare. However, the national news also reported yesterday
that Burgers Galore agreed to settle a class-action lawsuit brought by plaintiffs with minor E.
Coli effects for $12 million. Two other suits, brought on behalf of children who went into comas,
were settled for $3 million and $15.6 million, respectively. As the owner of the BSR, what will
you do? Analyze and format your analysis according to the case instructions.