Forward March on Menu Labeling

The calorie-count countdown is on for convenience store menus, among others. How retailers prepare now can make all the difference moving forward.

In November, the Food and Drug Administration (FDA) released its finalized rule on menu labeling, requiring caloric information to be clearly and conspicuously listed on menus and menu boards in chain restaurants, similar retail food establishments (including c-stores) and vending machines with 20 or more locations by Dec. 1, 2015.

More specifically, businesses that must comply are those that are: part of a chain with 20 or more locations, do business under the same name regardless of ownership, and offer substantially the same menu items. So for c-stores, this would include 7-Eleven franchisees, for example, that even operate just one store.

It is important to note menus do not have to be identical to fall under the rules, only “substantially” the same. The FDA stated it is not going to set a specific percentage of menu items that must be the same to qualify. Borderline retailers are advised to play it safe and follow the rules.

As for the food that falls under the ruling, retailers must determine if they serve “restaurant-style food,” broadly defined by the FDA as food that is served for immediate consumption or processed/prepared primarily in a retail establishment and usually eaten on the premises, while walking away or soon after arriving at another location.

Only standard menu items apply; exempt foods include custom orders, temporary menu items available for less than 60 days in a calendar year, food that is part of a customary market test for less than 90 days, and condiments offered for daily use.

Once a retailer determines it is part of the menu-labeling mandate, it must then consider the signage that falls under the FDA regulation. Menu boards, signs behind the counter, table tents and website menus generally qualify. On the other hand, storefront posters, billboards, mailings, coupons and circular advertisements generally do not qualify.

CONSUMERS WANT TRANSPARENCY

While the convenience store industry has strongly opposed the menu-labeling issue for years, a recent Associated Press-Gfk poll found a majority of consumers are in favor of the mandated move. More than 50 percent of Americans favor requiring prepared-food counters at stores to post calorie amounts on menus (the percentage in favor was slightly higher for both fast-food restaurants and sit-down restaurants).

This and other positive consumer response to transparent nutritional information begs the question: Is the menu-labeling mandate moving forward just as it should? Some experts believe it is par for the course for an industry that is vastly improving its foodservice.

“Five years ago, c-stores were not providing prepared foods the way they are now,” Fred Brown, a partner managing the food and beverage practice at Beachwood, Ohio-based innovation consulting firm Kalypso LP, told Convenience Store News. “Today, c-stores are becoming more like quick-serve restaurants, so part of this whole declaration is catching up with them.”

Along with this is a new kind of customer. “Millennials buy in small quantities; they like quick-serve, and smaller but multiple meals throughout the day, and this fits in the c-[store] space,” Brown added. “So more customers than ever before are buying prepared foods in c-stores.”

And more of them read labels and want transparency.

THE COMMON SENSE ACT

Quick-service restaurant (QSR) chains recognized this trend and reportedly got the ball rolling on FDA menu labeling in order to avoid having different regulations governing different cities.

Once the FDA did get involved with the menu mandates for QSRs, it expanded them to include other entities including grocery and convenience stores. This is where retail industry trade groups such as NACS, the Association for Convenience & Fuel Retailing, and the Food Marketing Institute (FMI) say the rules fall short and don’t fit as well.

Both NACS and FMI support the recently introduced Common Sense Nutrition Disclosure Act of 2015 (there was a previous version in 2013), which would clarify certain aspects of the menu-labeling regulations and also extend their effective date to two years after the final rules implementing the bill were issued. Also known as H.R. 2017, the legislation would “provide the reasonable accommodations that will make it possible for members of our industry to comply, without creating an undue business burden,” according to NACS.

As of press time, the chairman of the Energy Congressional Committee, one of the co-sponsors of the original bill, had just signed on, which “bodes well for getting this bill moving,” said NACS Senior Vice President of Government Relations Lyle Beckwith. “We’re pushing for Congress to get this resolved by Labor Day — people have to prepare.”

In the meantime, Beckwith and other industry experts are encouraging c-stores to prepare now. “We encourage retailers to check with their franchisor or suppliers to see what level of [menu labeling] data is going to be supplied to them,” Beckwith stated. “However you get prepared foods or products, these same suppliers should be supplying the information.”

Brown of Kalypso encourages c-stores to take a proactive, positive approach. “If you look at quick-serve restaurants today, they use this transparency as a weapon. They openly state it and brag about reducing calories and making some items healthier choices. So they embrace the issue, rather than try to get around it,” he said.

He acknowledges there will be a cost issue for c-stores, but doesn’t believe it will be one tied to understanding the nutritional content on the backend. “Organizations know what’s in their products today, they just haven’t made it public,” Brown said.

The real expense will be getting the information out to the market. “There’s going to be a big training effort and cost to ramp up stores initially to comply,” he said. And then they need to have processes in place that manage change — how they will redistribute that information when entirely new products come along.

Kalypso is one firm that stands behind technology to facilitate these processes for retailers — technologies that can create “labels on the fly,” as Brown put it, or electronic labeling distribution for changes in nutritional values and for consumer-requested labels.

The other aspect of embracing the menu-label change for c-stores, as Brown sees it, is product choice. “If c-stores want to be successful moving forward with this, they have to offer a broader choice in prepared foods to include healthier options,” he said. “They have to monitor their consumers to see how they’re impacted by the transparency of the information, and then see how they can offer new choices for them.”