By: Sentry Marketing Group

December 24, 2014

The FDA has recently announced new regulations requiring larger restaurant chains to provide nutritional information on all regular menu items. Businesses with fewer than 20 units are exempt from the new rules, but some may find it advantageous to opt in voluntarily.

The New Rules

On November 25, the Food and Drug Administration (FDA) announced the long-awaited menu-labeling regulations anticipated by the passage of the Affordable Care Act in 2010.  The new regulations, which require retail food establishments with at least 20 locations to provide nutritional information on all regular menu items, will go into effect on December 15, 2015.

The rule, of course, raises a number of questions regarding its implementation: What qualifies as a menu?  What is a retail food establishment?  Who is going to make sure the rules are enforced?  The FDA anticipated most of these questions, and you can find a lot of the answers in the text of the 29-part Rule by the Food and Drug Administration at the government’s federal register.  However, if you don’t relish the prospect of spending the whole of your holidays reading through “Comments and FDA Response on the Proposed Definitions of Terms Related to the Scope of Establishments Covered by the Rule”, may we recommend the more easily digested summary from Hogan Lovells US LLP made available by the National Restaurant Association.

Though the FDA’s regulations apply only to establishments that are “part of a chain of 20 or more locations, doing business under the same name and offering for sale substantially the same menu items”, the new rules have owners and operators of smaller chains wondering—should they go ahead and get on board now or wait to see what direction the health push takes?

Why you might want to get on board

1. Customers are increasingly demanding menu transparency.

A recent update of Technomic’s “Healthy Eating Consumer Trend Report” indicates that “most consumers want restaurants to be more transparent about menu-item ingredients. Further, two in five consumers cite a rising concern over food additives.”  They reported that some 65% percent of restaurant patrons are in favor of nutritional labeling in restaurants, particularly calories and sodium content.   Meanwhile, Nation’s Restaurant News stated in a recent article that 42 percent of working-age adults and 57 percent of older adults claim to use “Nutrition Facts” panels most of the time, and 76 percent of working-age adults say they would use the information if it were available.

While the prospect of displaying the inner workings of your menu items may at first make you feel vulnerable and exposed, consider this:  Though consumers are increasingly health conscious, many of them operate on perceived healthfulness rather than quantified data.  Providing them with this data can often lead them to order things that they would otherwise have assumed to be extremely high in calories.  Likewise, it often happens that, when a customer sees on a menu that a larger size is only a couple dozen calories more than the smaller size, they go ahead and order the larger size.  While this may not be the best thing for their health, it can help to balance things out for your business.

Even if your menu is inescapably calorie heavy, though, this may not be a bad thing for your restaurant.  In places like New York , where calorie labeling on menus has been the norm for several years, establishments are finding that reducing calories per item by reducing portion sizes has encouraged sales, even when the price of those items did not change.  Ultimately, people have been willing to pay more for what they perceive to be healthier choices, based on things like calorie count, which could serve to lower your costs.

2. The more restaurants are seen to cooperate with efforts to curb those rates, the better it is for the industry and, consequently, for individual restaurants.

The food industry, especially quick service, have gotten a bad rap for being responsible for the nation’s unprecedented rise in obesity.  Gallup’s 2013 Consumption Habits poll had more than ¾ of American respondents considering fast food “not too good” or “not good at all” for you their health.  As a result, many chains are making moves toward healthier menu items and practices, and they are getting a good a good response.

3. If you plan on growing beyond the 20-location limit at any time in the near future, you might as well take the necessary steps to comply now.

It is also probably not unreasonable to assume that, depending on how this first step goes, the same or similar requirements will extend to more and more establishments.  It could be wise to move towards compliance now, while you can take you time with it, rather than wait until the pressure is on.

4. In areas where similar regulations already exist, voluntary compliance with the Federal regulation exempts you from having to comply with those at the lower level.

If you have restaurants in places like California and New York, where the 1990 Nutrition Labeling and Education Act spurred local and state requirements for menu labeling and disclosure of nutritional information in restaurants, it is possible that Federal compliance would take only a little extra effort on your part and, in some cases, may actually prove less stringent than the rules you are following now.  It would be worth it to take a look and consider whether the new rules might work in your favor.  At the very least, compliance with the FDA’s requirements would enable you implement uniform practices across locations in different states or localities, streamlining your compliance efforts.

What’s involved if I decide to comply?

This will probably be the clincher for the operators of smaller chains.  Though on the surface, compliance with the new regulations may seem like a simple matter of posting calorie counts next to all your menu items, there is a lot more involved in providing the kind of accurate nutritional information that the FDA—and your customers—require.

In addition to providing caloric information on every item on its menu and menu boards, a complying business would need to:

1. Provide upon consumer request written information about total calories, total fat, calories from fat, saturated fat, trans fat, cholesterol, sodium, total carbohydrates, fiber, sugars, and protein, and note on its menus and menu boards that this information is available.  Staff, then, would, of course, need to be trained to provide this information to customers as needed.  This is yet another area where a well-designed mystery shopping program can help make sure standards are being met.
2. Print somewhere on each menu a statement something like the following: 2,000 calories a day is used for general nutrition advice, but calorie needs vary.  This is to help consumers understand the significance of calorie information in the context of a total daily diet.
3. Establish through a reliable means the nutritional values of each menu item and record those values in a way that would allow for orderly dissemination to various arms of the operation and systematic updating as menu items change.  Remember, this information needs to be accurate and factual.  Nutritional information that is unreliable will ultimately just compromise consumer trust and threaten brand loyalty. The FDA has estimated a mere 15 minutes per menu item to perform the analysis needed to establish the relevant values, but that estimate would not seem to include the time required to create and implement a system for conducting these analyses and managing the data.

   Healthy Dining, an organization that has been helping restaurants address the question of nutrition for about 25 years, notes in an article published in Nation’s Restaurant News that, to obtain and maintain accurate nutritional data, a restaurant needs to establish precise restaurant protocols and train both cooking and wait staff to meticulously adhere to those protocols.  They also recommend involving an experienced dietitian to assist, as you will need the help of someone who understands well the effects of evaporation, absorption, cooking methods and other processes and can apply formulas to compensate.   This can be quite an expense.

   Add to that the cost of a specially-designed database to keep all of this information (Genesis by ESHA is generally considered the standard of nutrition analysis software systems and will run you about $6,000 to start), and, of course the creation of all new menus and signage, and you’re looking at a considerable outlay for compliance.  But all this must be weighed, of course, against the cost of being left behind as the health train pulls away from the station.

4. Designate individuals at both restaurant sites and corporate headquarters to be responsible for ensuring compliance and accurate record keeping.

The pros and cons of complying with the new regulations are, of course, going to vary from business to business.  The rise of the health wave, though, is a reality for everyone, and finding a way to get on board is likely to be essential for restaurants to survive in the coming years.

If compliance with the FDA regulations seems a little beyond your current capacity, consider some of these ideas for a reduced-fare ticket for the health train.