Businesses take a hit from hepatitis

Genki Sushi and the distributor of possibly tainted scallops were blindsided by the negative publicity following the state’s embargo on the seafood suspected to be the source of Hawaii’s hepatitis A outbreak.

The restaurant and distributor, Koha Oriental Foods, have a major challenge on their hands to restore their public image even as they anticipate losing substantial revenue for an unknown period.

“I’m sure it’s going to be substantial for a while,” said David Moon, operations manager for Genki Sushi USA Inc. The business was “thrown for a loop.”

Genki abruptly closed its 10 Oahu restaurants and one on Kauai on Monday evening after authorities determined the likely cause of the outbreak, which has sickened 168 people.

“Anytime you get shut down in the middle of service, you take a big hit,” said chef Henry Holthaus, a lecturer in the Culinary Arts Department at Kapiolani Community College. “It’s a huge challenge that may involve not only assuring the public that they’ve fixed that problem, but going even further and doing more food-safety training with their employees. It seems to me they have to oversteer and really prove that they’re paying attention to food safety.”

Holthaus added that other restaurants should take measures “so that this doesn’t happen to them.”

Gregg Fraser, executive director of the Hawaii Restaurant Association, said the setback is significant, but “we hope that the businesses survive.”

“It can be devastating. It’s not like something a restaurant does blatantly; it’s something that happens completely by surprise, and all you can do is address it as it comes up and solve the problem,” he said. “It’s going to be difficult for them just because of the way the public reacts to issues like this.”

Other businesses that have been in the news in recent weeks because of employees infected with the virus have lost between 75 and 90 percent of revenue, Fraser said.

“It comes down to the public’s perception,” he added. “It’s not the restaurant that’s infected. It’s not the restaurant that’s tainted. There’s going to be individuals that will have a problem getting over it, but I think everybody should understand that businesses do what they can to address issues like this.”

Koha Oriental Foods, which supplied the scallops in question to Genki restaurants on Oahu and Kauai, has close to 1,000 customers, some of whom are worried about the brand.

“Now we’re going to have this stigma that we bring in hepatitis A products. We do have a lot of concern from our customers about our name being thrown out there,” said Dane Nakamura, Koha’s chief operating officer and chief financial officer, adding that there is still no confirmation from the Food and Drug Administration that the product is contaminated.

“When Costco has a recall on a product, a lot of people still go to Costco but might not purchase that product anymore. For someone like us, we’re wholesale distributors, so we don’t sell directly to consumers,” he said. “It’s something like this that we don’t know how to handle. We’re going to start contacting some PR firms to see how do we get out of this and how do we move forward when the state implicates a product that hasn’t come out positive and also ties it directly to us.”

The state has also blocked distribution of the same product by True World Foods, which would have supplied the scallops to Genki Sushi restaurants on Maui and Hawaii island. No hepatitis A cases have been linked to those scallops.

True World Foods said it has already seen a dramatic decrease in business because of the negative publicity.

“Within minutes of the release, we’ve been getting orders canceled just because people are unaware of what’s going on,” said Keliikipi Manewa, operations manager at True World Foods, which has between 300 and 400 customers. “Today alone it was a desert in our warehouse. Usually it’s hustle and bustle going on. Of course, consumers are going to be more worried where they eat. Our market is sushi restaurants — basically, people who eat raw sushi. It’s going to have a heavy impact on us. We just got to sit down as a company and re-strategize our efforts. We can’t do anything until we see what the market is responding to. We just want to make sure we stay alive as a business.”

Other businesses that have faced similar public relations crises have rebounded, said Holthaus.

For instance, Jack in the Box was able to bounce back after a 1993 E. coli outbreak from undercooked hamburger patties that sickened hundreds of people and led to the deaths of several children.

“When that happened with Jack in the Box, they went a whole year without advertising any hamburgers,” Holthaus said. “When they did start advertising a year or so later, that’s when they blew up Jack in the Box (in a television commercial). They re-branded themselves.”

Holthaus predicts the same will happen in this case for Genki and the scallop suppliers.

“It’ll last a little while, but generally my experience is that the public has a short memory,” he said. “The public is really easy to distract. So they just have to lay low and do a good job and make sure they don’t get anybody else sick. I bet the whole scallop industry is taking a hit out here. People are going to be suspicious for a while, and then everybody’s going to forget about it.”

In addition to harm to their reputation, the businesses are facing lawsuits from some of the customers who were sickened by the virus.

Pearl City resident Brant Mauk, 31, who was hospitalized in July after contracting hepatitis A, filed a lawsuit Tuesday in First Circuit Court against Genki and Koha Foods, and there might be more to come, said William Marler, a food-safety lawyer based in Seattle, who is representing Mauk.

“In my experience, companies that admit responsibility and work with their insurance companies to see that clients are fairly compensated for what happened and really reach out to get help to make sure these kinds of things don’t happen to them again, those are the companies that survive,” Marler said.