This week, the House Energy and Commerce committee will hold a mark-up hearing on the Common Sense Nutrition Disclosure Act (H.R. 2017), a bipartisan bill intended to deal with a little-known provision of the Affordable Care Act that could increase the burden on small businesses and unintentionally increase the price families pay when they eat at restaurants.
Provision 4205 of the ACA requires that retail food establishments with 20 or more locations to list calories for regular menu items it serves on all signs and printed menus. The rule, which was named “third-most-onerous regulation of 2013” by Obama’s own Office of Management and Budget, is set to go into effect December 1, 2016, and covers restaurants, grocery stores, pizza shops, convenience stores, and vending machines. While the one-size-fits-all rule is intended to downsize America’s obesity problem, research shows that it’s unlikely to work. Brian Elbel, a population-health expert at the New York University School of Medicine looked at the effects of New York City and Philadelphia’s calorie menu labeling requirement and found no significant change in the customers’ orders after the calorie-rules went into effect.
What the rule will do is supersize restaurants’ expenses, requiring an estimated 14.5 million hours to comply with the rule—costs which restaurants will almost certainly pass along to their customers. Franchises will be hit particularly hard. As Jason Stverak at Forbes noted, “Although the law is designed to target corporate fast-food giants, in practice it will largely affect individual franchises that effectively operate as independent small businesses…Each of these franchisees will now be tasked with complying with the mandate–paying for new signage, removing profit-generating advertisements to make room for the calorie data, updating menus every time recipies (sic) change, and accommodating inspectors.”
And then there’s the establishments that have “customizable” menus, like pizza shops, for example. According to Domino's CEO J. Patrick Doyle, there are 34 million ways to order a Domino’s pizza. The FDA attempted to address this complexity by allowing “variable menu items,” like pizzas to have a calorie range. But the range could be as wide as 2,000 calories. Not very helpful for those trying to track their caloric intake. Doyle estimates that the cost of complying with the new menu labeling rule would cost each Domino’s restaurant between $1,600 and $4,700 each year.
And it’s not just about the cost; the rule may also change what items are available to consumers at these restaurants. Take beer, for example. Alcoholic beverages are covered by the new rules, but calorie testing could cost as much as $1,000 per beer. While larger breweries, like Anheuser-Busch, will have little trouble absorbing the cost, smaller breweries may not want to test each and every beer they make, which means they won’t be picked up by chain restaurants and customers will be left with only large breweries’ products on the menu.
However, The Common Sense Nutrition Disclosure Act (H.R. 2017), introduced in April by Reps. Cathy McMorris Rogers (R-Wash.) and Loretta Sanchez (D-Calif.), seeks to add flexibility to the menu rules. For example, establishments where the majority of customers order off-site, like pizza shops, can provide nutritional information through remote-access menus, such as putting the menu online. It allows them to also list ranges, averages, and label individual components of a possible meal. Also, it would eliminate the possibility of criminal penalties for establishments that give customers larger-than-expected portions.
While bill titles are usually comically inappropriate for what the laws would actually accomplish, in this case it seems H.R. 2017 truly is a common sense solution to the ACA’s possible quagmire of red tape that could sink restaurants, reduce choice, and strain family budgets. It still won’t be a perfect situation, but it’s a step in the right direction.