Analysis Uncovers Heavy Cost of Menu Labeling Rule Delay

Losses for consumers outweigh industry gains by a factor of 15-to-1.

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A new independent economic analysis has found that the Food and Drug Administration’s (FDA) decision to delay the national menu labeling law for one year (from May 5, 2017 to May 7, 2018) could end up costing consumers an astounding $15 for every $1 saved by industry. Delaying implementation of the law increases costs through increased health care costs and loss of productivity.

The study was funded by the Center for Science in the Public Interest and the Consumer Federation of America, and prepared by Dr. Mark Cooper, who holds a Ph.D. from Yale University. The finding is in stark contrast with the FDA’s benefit-cost analysis, which already conceded the cost to consumers was greater than any savings to industry by 2-to-1 ($2 cost to consumers for every $1 saved by food establishments that have not yet added nutrition data to their menus). Calorie labeling, already in place by many restaurant chains, allows consumers to make informed decisions when eating out, which can lead to lower-calorie choices and options.

“This economic analysis once again proves the importance of menu labeling, which the public has been waiting for over seven years since the law passed in 2010,” said Colin Schwartz, Senior Nutrition Policy Associate of CSPI. “The FDA’s delay of the law comes with a steep price tag for consumers.”

The study finds that changing the requirements could cost food service establishments additional hundreds of millions of dollars. Further, the vast majority of food service establishments have already incurred the initial costs of compliance. As a result, delaying the law is unlikely to result in any cost savings for them.

“Because of the last-minute delay of the rule and the uncertainty introduced by the Trump Administration, many food service establishments, including the nation’s top 50 restaurant chains, have already made large investments to abide by the law and give their customers what they want,” said Schwartz. “Now they are faced with uncertainty at the prospect of changes that would cost them additional hundreds of millions of dollars to redo their menus, retrain staff and conduct legal reviews.”

“While this delay was misguided, we are heartened that FDA Commissioner Scott Gottlieb, M.D. agrees that consumers have access to calorie information when eating out, and decided not to further delay the law past May 2018. We will remain vigilant that the FDA’s final guidance on menu labeling later this year ensures that the consumer-choice spirit of the law remains intact.”

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