Small Businesses Urge Trump Administration to Delay 'Onerous' Obamacare Regulation

Calorie labeling rule will cost $1 billion, violations carry jail time

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March 23, 2017

Small businesses are pleading the Trump administration to delay an onerous Obama-era regulation requiring calorie labeling on menus, violations of which can carry jail time for mislabeling food.

Trade organizations representing pizza chains, supermarkets, and convenience stores are asking for common sense to prevail before the rule goes into effect May 5.

The regulation, buried in Obamacare and written by the Food and Drug Administration, requires restaurants with 20 or more locations to list calorie counts on every food item, including items on coupons and advertisements. The final guidance for the rule, which has been delayed twice already, included a 171-word definition of the word "menu."

Associations representing grocery stores and gas stations say the FDA does not even know what the regulation requires, including whether a store could face criminal penalties for serving different sizes of fried chicken. The unwieldy government mandate could lead to $1 billion in costs for supermarkets and stores being sued for mislabeling calorie counts on potato salad.

"We want to eliminate some of the more onerous, and frankly ridiculous, pieces of the legislation, which is that there is a criminal element to the menu labeling act right now," said Tim McIntyre, an executive vice president of Domino's Pizza.

The regulation carries criminal penalties for "misbranding" food, including a maximum $1,000 fine, one year in prison, or both. McIntyre said this could mean jail time for putting too much pepperoni on a pizza.

"If people are heavy handed with cheese or pepperoni, and a pizza doesn't meet standards and is outside of the range of the nutritional labeling, then that could be a store manager liable for a criminal penalty," he said. "And that's absolutely ridiculous."

"To face one year in prison for putting too many pepperonis on a pizza? Everybody laughs and smiles, but that's the reality of the way it's written now," said Chris Reisch, who worked his way up from delivering pizza to owning 10 Domino's franchises in Lexington, Ky.

Reisch said the regulation is hurting franchise owners, who are too scared to hire under the rule's requirements.

"Here's the government stepping in again and throwing another hurdle your way," he said. "Already small business owners are scrambling, they're spending dollars, they're buying new menus, they're trying to figure out what's the plan. Everybody's pulling their hair out trying to make this May 5 deadline."

"It's difficult to hire right now," Reisch said. "I'm friends with franchisees and in every part of the country, we're having problems hiring people."

Doug Kantor, a partner at Steptoe and Johnson and counsel to the National Association of Convenience Stores, a trade group that represents 2,100 retailers, said the rule is just as difficult for small convenience stores.

Kantor said the FDA is unable to tell the association what a menu is.

"We might have something hanging from the ceiling that says, 'Get a hot dog and a Coke for $2.50.' FDA says, 'Well, that might be a menu because the food you want and the price, if someone can order from it, that's a menu," he said.

Kantor said the FDA could not answer whether the sign was a menu if it was on a gas pump or being held by an employee on the corner.

"We now have a month to comply, and FDA won't tell us what's a menu, and what we have to put calories on and what we don't," he said. "And that's just one of dozens and dozens of problems like this."

"Some of our members will do crazy stuff like fried chicken," Kantor added, sarcastically. "And we called [the FDA] and we said, 'Look. We have this problem, chickens are not all the same number of calories. What do we do about that?' And FDA's answer was, 'Well, can you tell people just to buy chickens of all the same size?'"

The FDA later admitted, "Maybe that's hard to do."

Robert Rosado, a senior director at the Food Marketing Institute, which represents 40,000 retail grocery stores including Giant, Safeway, Harris Teeter, Whole Foods, Wegmans, and Weis Markets, said stores could stop carrying local foods. Local food growers would have to provide stores with a nutrition analysis, records, recipes, and sign an affidavit to comply with the regulation.

"The way FDA has written this, it's the local person in the store, the store employee, that's liable, has to sign something for it," Rosado said. "What's happening in reality, a lot of these local items are going away."

Pizza chains like Domino's say they have no problem listing calorie information, a practice that has been commonplace on websites for over a decade. The vast majority of pizza orders are placed online or over the phone, where customers never glance at a menu.

In fact, McIntyre said only 3 out of every 100 people who place an order in store look up at the menu, and one out of those three said they did so because they "didn't want to look at the person" behind the counter.

The groups said they are reaching out to the Trump administration to delay the rule, but staffing delays at the Department of Health and Human Services, which houses the FDA, are impeding their efforts.

"We have reached out to the administration, and we've had good conversations with them, we're hoping that they will make some changes to deal with this and take the time to do this rule correctly," Kantor said. "But we don't have an answer, we don't know if they will or not."

The associations would like to see the passage of the Common Sense Nutrition Labeling Act, a bipartisan bill that would provide greater flexibility to businesses, including the option of posting calorie counts online.

"We're hoping somebody, Congress, the administration, or both working together, will fix this in the near term before we hit this deadline," Kantor said.

Published under: FDA , Obamacare , Regulation