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THATCHER: Common sense for restaurant-menu labeling
Customers will pay cost of regulations on nutritional-content signs
One major problem with Obamacare that the president failed to mention in his State of the Union address is pending regulations that could make food more costly. The law's Section 4205 requires restaurants with 20 or more locations to list calorie-content information for each menu item on a board at every establishment.
The costs of this intrusive regulation would be passed on to consumers in the form of higher prices — the last thing we need in a struggling economy. Some relief may be on the way, though, in the form of bipartisan legislation.
The Common Sense Nutrition Disclosure Act of 2013 (S. 1756), introduced by Sens. Roy Blunt, Missouri Republican, and Angus S. King Jr., Maine independent, last November, would allow food-service businesses that receive the majority of their orders off-premise to list nutritional content online rather than on a physical national menu board.
It also gives them a range of options for how restaurants may present the information, including "ranges, averages, individual labeling of flavors or components, or labeling of one preset standard build." Reps. Cathy McMorris Rodgers, Washington Republican, and Loretta Sanchez, California Democrat, introduced a companion House bill (H.R. 1249) in March.
On top of the burdensome costs they impose, the existing Obamacare menu regulations do not take into account whether customers will even see the menu boards. Pizza-chain Domino's already has a Cal-o-meter on its website, since a majority of its customers call or order online. Yet, it would still have to comply with Section 4205 and create physical signs in all of its stores, which the vast majority of its customers never enter.
Moreover, for many businesses covered by Section 4205, creating a nutritional menu for the hundreds of possible food combinations or daily menu changes, such as for daily specials, is no easy task.
According to the Food Marketing Institute, which represents retail grocery chains, the current proposed menu-labeling regulation would cost the industry $1 billion in the first year of implementation with "no additional, quantifiable benefit to supermarket customers, according to [the Food and Drug Administration's] analysis." This represents a significant burden for an industry that operates on a profit margin that averages 1 percent.
According to the bill's House sponsors, "The Obama administration's Office of Management and Budget estimates the menu-labeling regulation to be the third-most onerous regulation proposed in 2010." Their bill will provide relief, not only for grocery stores and pizza parlors, but also for those establishments that derive less than 50 percent of their total revenue from prepared food sales, such as gas stations.
Affected industries have lined up support behind the bill. The American Pizza Community stated in a Nov. 21 press release that the Senate bill "makes much-needed changes to the menu-labeling requirements on restaurants for which the Food and Drug Administration (FDA) is currently finalizing regulations," and it gives pizza shops the freedom to provide accurate consumer information "in a common-sense manner."
The Food Marketing Institute says the bipartisan bill provides "a more practical approach to menu labeling."
The bill has received some opposition, though, mainly from the National Restaurant Association, which lobbied both the FDA and Congress for Section 4205 for two reasons. First, it wanted to avoid the emerging patchwork of state menu laws by creating a national standard. Second, it wanted to add a hurdle for its increasing number of competitors, including gas stations, supermarkets and convenience stores.
Rather than throwing their competitors under the regulatory bus, restaurants wanting fairer treatment should seek greater relief from burdensome regulations on their industry.
Moreover, the bill benefits restaurants, giving them the flexibility to choose how they display offerings' calorie counts. Those that already display the information online wouldn't have to post physical signs.
The Common Sense Nutrition Disclosure Act is a step in the right direction, but it addresses only one part of a very large bill that doesn't work. Congress should follow up passage of the Common Sense bill with a vote to repeal Obamacare before it does more any more damage.
Liz Thatcher is an adjunct scholar with the Competitive Enterprise Institute.
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