One of the new requirements of President Barack Obama’s health care legislation concerns disclosure of nutrition information in restaurants — essentially a tactic designed to shame people into better eating habits.
The mandate will hurt medium-sized businesses. Large restaurant chains, which supported the mandate, have more standardized menus and can spread over a much larger group of restaurants the cost of conducting nutritional testing on a new sandwich. With their greater financial resources, they can make it easy for franchisees to post the new standardized calorie numbers at the drive-thru.
The smallest chains and local restaurants, on the other hand, are exempt from the rule.
Thus it’s the medium-sized chains—those with more than twenty locations but smaller than the giants—that will feel the pinch. They will face new costs of testing and printing each time they alter their menus, and those costs won’t be spread over a large number of restaurants. This creates a disincentive to grow as a chain, even as there’s no proof that publishing calorie counts will alter eating preferences.
The following articles provide useful information about calorie-count mandates.
Making Calorie Counts Omnipresent
The New York Times reports the mandate is “intended to create a national policy modeled on a requirement that has already taken effect in New York City and was to go into effect in 2011 in places like California and Oregon. The new federal law requires restaurant chains with 20 or more outlets to disclose calorie counts on their food items and supply information on how many calories a healthy person should eat in a day.” Critics “contend that there is little evidence to show that menu labeling leads people to eat better.”
Menu Labeling Requirements for Hundreds of Thousands of Restaurants
The Associated Press reports the calorie count mandate is designed to make it impossible for consumers to avoid the information and to nationalize the process: “More than 200,000 fast food and other chain restaurants will have to include calorie counts on menus, menu boards, and even drive-throughs. The new law, which applies to any restaurant with 20 or more locations, directs the Food and Drug Administration to create a new national standard for menu labeling, superseding a growing number of state and city laws.”
Calorie Count Mandate Supported by National Restaurants
The mandate passed primarily because it was supported by larger restaurant chains, which favored a national standard in order to avoid having to pay the costs of tailoring menus to local jurisdictions. As the Detroit News reports, “The National Restaurant Association supported the mandate because it would be easier and cheaper to meet a national standard than a host of local and state rules. The various laws ‘were a challenge for the industry, and it didn’t make sense to consumers,’ said Sue Hensley, National Restaurant Association spokeswoman.” But for smaller chains, “printing and designing new menus will cost time and money.”
Incentives to Stay Under 20 Locations
Columnist Ed Morrissey writes, “Chains under 20 locations will get exempt. But what about those chains with just over 20 locations? Davanni’s, a local pizzeria-sandwich restaurant with 22 locations around the Twin Cities, will now have to comply with this mandate. … It will cost Davanni’s approximately $200,000 to comply with the new mandate—just to start. Every menu change will require Davanni’s to have the new or modified items reanalyzed, which means that Davanni’s will probably resist adding new options for their customers. Meanwhile, larger chains with more economy of scale for such efforts, such as Pizza Hut, can do the tests once for all of their locations, keeping their prices lower for their customers—which they already do, thanks to consumer demand for the information.”
National Application of Philadelphia Law
Philadelphia provides a preview of the new menus, under a law passed in 2008. As of April 1 of this year, menus in chain restaurants located in Philadelphia must detail the total number of calories, grams of saturated fat, grams of trans fat, grams of carbohydrates, and milligrams of sodium in each item.
No Proof Labeling Deters Obesity
As The Wall Street Journal notes, “Deborah Dowdell, president of the New Jersey Restaurant Association, which represents 23,000 food and beverage shops, said labeling increases menu costs for restaurants, is inaccurate and doesn’t solve the nation’s obesity trend. ‘If our goal is to curtail the trend of obesity, there are much more effective ways that can be implemented to accomplish that goal,’ Ms. Dowdell said, suggesting exercise education as one example.”
For further information on the subject, visit the Health Care News Web site at www.healthpolicy-news.org or The Heartland Institute’s Web site at www.heartland.org.
Nothing in this message is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. If you have any questions about this issue or the Health Care News Web site, contact Managing Editor Ben Domenech at 312/377-4000 or [email protected].