Study: Menu Labeling to Cost C-store Industry $84.2M Annually

WASHINGTON, D.C. — The Food and Drug Administration's currently delayed menu labeling rule is effectively impossible to be in compliance with, according to an economic study released by NACS, the Association for Convenience & Fuel Retailing.

Mangum Economics, an independent firm specializing in the economic analysis of public policy, found that based on past research, calorie count variations in prepared foods would result in 93 percent being more than 10 calories away from the posted amounts and therefore in violation, no matter how much businesses spend to comply with the rule.

"The way the FDA rule is written makes it virtually impossible for businesses to comply with the regulations even though they will spend billions over the next several years trying to do so," said economist David Zorn of Mangum Economics, who developed the analysis for NACS.

While the FDA rules for calorie disclosures on packaged foods recognize that actual calorie counts vary unavoidably from one package to another, the menu labeling rule makes "no allowance for normal variation from one serving of food to the next in the number of calories and nutrition content."

Because of this, enforcement costs of the final rule, which include fines, legal fees and negative publicity, are likely to vastly exceed the $84.5 million total cost that the FDA estimated for all covered industries, NACS said.

The study also found that the rule will hit the c-store industry particularly hard. Due to the high level of expected non-compliance, additional costs associated with c-stores' decentralized format, and out-of-date cost estimates, total annual enforcement and compliance costs for the c-store industry are predicted to be $84.2 million on an annualized basis. This is seven times the $12.1 million estimated by the FDA, and nearly equal to the FDA's estimated cost for all covered industries.

"This comprehensive study confirms what NACS and our members have asserted all along: the final FDA menu labeling rule will hit the industry, including small businesses, with huge costs, and in the end they will still have to pay fines because they just won't be able to comply," said Lyle Beckwith, NACS senior vice president for government relations.

"We appreciate the action taken by the FDA to delay and re-evaluate the rule. We hope that these new findings will prove useful to the FDA in guiding the agency re-write the rule to recognize the practical problems that businesses face," he concluded.

The full study is available here.