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When the Food and Drug Administration (FDA) released the draft guidance documents resulting from Section 4205 of the Affordable Care Act (ACA), it caught the convenience store industry by surprise, to say the least. Having been seen as a truly separate industry by having the lion’s share of sales come from “non-restaurant type food,” c-store operators were not expecting to be covered in the FDA’s final menu labeling regulations.
But then, along came H.R. 2017, introduced on April 23 of last year by Rep. Cathy McMorris Rodgers (R.-Wash.). Looking at the current ACA ruling and the now-pending H.R. 2017 from the c-store industry perspective, some interesting things have taken place.
The simplest and clearest way to dissect it all is to use a timeline using all the information available at this moment:
March 23, 2010: The Affordable Care Act passes. The passed law includes Section 4205: Menu Labeling, to be determined by the FDA.
Nov. 25, 2014: The final menu labeling rule released by FDA (395 pages) names convenience and grocery stores by vertical of foodservice included in the menu labeling regulation, among others.
Dec. 1, 2014: FDA releases a condensed version of the FDA guidance regulations (105 pages) and the retail sector of stores is still included and named.
April 23, 2015: H.R. 2017, called the “Common Sense Nutrition Disclosure Act of 2015,” is introduced in the House of Representatives. Section 6 (III) of this bill states: "The term 'restaurant or similar retail food establishment' means a retail food establishment that derives more than 50 percent of its total revenue from the sale of food of the type described in sub clause (i) or (ii) of clause (A).”
We started to refer to this section as the “50% Rule.” This meant that c-stores and grocery stores would not get roped into menu labeling due to the fact that their sales of restaurant-type food was under that 50-percent threshold.
The pans started flying in the restaurant sector when this was uncovered, with the National Restaurant Association voicing its deep concerns.
April 28, 2015 and June 4, 2015: The National Restaurant Association sends a letter to Congress saying the only part of the bill it objects to is the “50% revenue exemption in H.R. 2017.”
Sept. 11, 2015: FDA releases “Draft Guidance for Industry: A Labeling Guide for Restaurants and Retail Establishments Selling Away-From-Home Foods – Part II,” which still names convenience stores as covered establishments under the menu labeling regulations.
Feb. 10, 2016: H.R. 2017 comes in front of the House for discussion, is voted on and passed by the week’s end.
Also on this date, the White House releases an official statement from the Executive Office of the President saying that “The Administration opposes H.R. 2017,” sending a clear message that if President Obama gets this bill across his desk, the likelihood of it becoming law is slim. It does still need to pass the Senate first, but this is a food fight at its best.
THE C-STORE PROS & CONS OF H.R. 2017
There are a few key points in H.R. 2017 that would in fact make it easier for the convenience store operator, but there are also some very-stretched opinions.
On the pro side:
- There would be more flexibility on the sizing of the slices you serve. Those that serve other than a traditional pizza triangle would benefit from the loosening of the requirement.
- There would be a more forgiving area for variance on the final nutritional numbers. The current FDA guidance documents allow for limited variance in the numbers, and do not have defined allowable differences like packaged goods. This new bill would give a little leeway closer to what we currently have in, say, a jar of salsa.
- Finally, the biggest win in this new bill that the FDA did not put into its draft documents pertains to the actual menu boards for places that have most of their ordering done online. Those types of establishments can forgo all the menu-board labeling in exchange for providing the information online or electronically at point-of-purchase for those diners. This is similar to a c-store using a kiosk to provide the information.
On the con side:
- Confusion for the consumer could result, with some locations having calories on a menu board, while others will only have it online.
- The method to obtain the nutritionals is looser in H.R. 2017 and that could lead to more inaccurate information.
- The implementation delay is hurting the entire industry as companies begin this process and then get told to wait because the date is going to extend out.
As it stands right now, federal menu labeling will be effective within the next year. If H.R. 2017 goes through, it will push that date out further.
However, here is the main food for thought as I see it: Based on our clients, there are 15 different rules and laws in place today for menu labeling across the country.
Consumers are looking for this information and in many cases, they are choosing with their dollar whom they wish to purchase restaurant-type food from. Many believe it’s their right to know how many grams of sugar are in a frozen coffee beverage. If the corner convenience store wants that market, they need to be fully in it.
We at MenuTrinfo have worked with a number of convenience store brands, as well as manufacturers to this industry. Caught off guard and confused by the rules have been the first topics of our discussions with clients, but then we get down to the facts and figures. It is less daunting and much easier to digest with the right team in place. And it is time to get’er done.
Editor’s note: The opinions expressed in this column are the author’s and do not necessarily reflect the views of Convenience Store News.