Whenever any legislative body—be it city, county, state, or federal—passes a bill affecting an industry, it can take the regulators months or even as long as three years to write the rules which govern the law. That’s exactly how long our industry has been waiting for the FDA to finalize the rules covering the posting calories requirements for foodservice operators with 20 or more locations. The law is scheduled to take effect this May.
One of the reasons for the delay is that this version requires supermarkets and convenience store chains to start posting calories for their foods. These groups opposed inclusion on the basis that they did not offer the same environments as restaurants. The counterargument raised by the National Restaurant Association was that the law covered the selling of food already prepared to eat—not where you eat it—and it obviously prevailed.
I will now digress to explain why their inclusion was so important. I have been saying that supermarkets and convenience stores have been and will be a growing and ongoing competitive threat. A recent article in FastCasual.com confirms that fact and I quote: “Also this week, one-third of U.S. adults responding to a Reuters/Ipsos poll said they are eating out less than they did just three months ago because of the cost.
“The poll surveyed 4,200 U.S. adults in late January and found that 62 percent of those eating out less frequently said cost was keeping them away. In fact, two-thirds of the poll’s respondents said they found eating at home now to be very or somewhat cheap.
“The Reuters/Ipsos poll also found that 55 percent of those surveyed—all strictly in the U.S.—said when and if they do eat out, they most often do so for the convenience it offers. But with increasing competition from lower-priced groceries and the increased competition in that arena from online services and meal kit businesses, it appears groceries are winning back some customers who are willing to sacrifice some convenience for some spare change.
“Following the release of the poll and NPD analysis, the Chicago Tribune reported that McDonald’s would soon begin an LTO [limited-time offer] to cut the price of some of its beverages. The gap between restaurant menu prices and the costs consumers pay for groceries eaten at home is at an all-time high, according to the consumer price index showing food purchased away from home is now nearly 2.5 percent more than it was just last year at this time, while the price of food purchased to be eaten at home dropped nearly 2 percent over the same period.”
In addition to all of the above, grocers and convenience stores have another advantage. They can and do change their prices every day, to adjust to any commodity changes they receive overnight. I have never heard of a restaurant that could do that and stay in business. Their purchasing power dwarfs most foodservice establishments and that, my friends, is why I was so pleased to know that both supermarkets and convenience stores are included under this law. It creates a level playing field. If you will recall, I suggested you remember the word “grocerant”; that’s them, and they are growing rapidly.
I’m sure that many of you reading this take solace in the fact that this law involves only operators with 20 or more units. While the general public has no way of knowing that, you can be sure the press will announce it on its effective date and, as a result, you should be prepared to respond when asked why you are not complying.
To give you some idea of the burden you would be facing, here is one of the questions most affected operators want to know: “How should the calories be determined?” Answer: The FDA says food sellers need to use a “reasonable basis for determining the calorie information.” Lab analysis is one option, but businesses should also get the information from databases, cookbooks, recipes, manufacturers, nutrition labels, or a combination of those options. Developing this information won’t come cheap, and its application covers all foods and portion sizes. I will leave the pizza servings for another time!
There still are many unanswered questions, such as: Who will enforce these regulations on posting calories? Will there be a series of warnings prior to being cited? Will violators’ names be published?
We have become one of the country’s leading economic engines, one of the few to have provided more employment than any other. We operate with very close profit margins. We also face this reality: When the price of a restaurant meal is no longer acceptable, the consumer can and will eat at home. We can’t compete with that.
It would be helpful if regulators at all levels of government would keep that in mind when advocating legislation for our industry.