Are you someone who would you like to know the calorie count of that scrumptious three-layer cake at your favorite restaurant? Even if you're not, menu labeling is now a fact for U.S. restaurant-goers and many restaurant operators alike under the new national health care law, the Patient Protection and Affordable Care Act. Section 4205 of the Act, signed into law March 23, 2010, sets new federal requirements for nutritional labeling of foods sold at "chain retail food establishments."
For many restaurant operators, particularly franchised systems and others with locations spread throughout the country, this new law is the preferred alternative to a patchwork of state and local laws. In the absence of a national standard, state and local authorities have pursued their own menu and nutrition labeling laws--often with inconsistent results. Facing these challenges, many restaurant operators and industry groups (such as IFA and the National Restaurant Association) pressed for a federal law to provide a clear nationwide standard, preempting state and local requirements. With the law's passage, the next step is implementation. The Food and Drug Administration (FDA) has proposed new guidelines, but also made clear that it will not enforce those guidelines until it issues final regulations.
1) Who is covered? The requirements will apply to all restaurants and retail food establishments with 20 or more locations in the U.S., doing business under the same name (regardless of ownership), and offering substantially the same menu items. A definition this broad encompasses not only traditional restaurants but also coffee shops, movie theaters, bakeries, and ice cream shops. Operators with fewer than 20 locations can elect to participate as well.
2) What is required? The FDA must issue proposed regulations to carry out the new law by March 23, 2011. Although the FDA issued partial draft guidelines (akin to a regulation) last August, that draft was withdrawn in late January, when the FDA announced it would instead issue the entire set of draft guidelines at once, rather than on an interim basis.
Under the draft guidelines (and quite possibly under the final version as well), a chain retail food establishment must disclose the following for its "standard menu items":
Notably, the definition of "standard menu items" does not include daily specials, customized orders (such as when a customer asks to "hold the mayo"), pre-packaged foods with labels already displaying nutritional information, temporary menu items offered for fewer than 60 days a year, and test items offered for fewer than 90 days a year.
3) Does it affect state or local laws? In short, yes. To industry, this was of critical importance. To alleviate the burden of conflicting requirements, the law restricts state and local nutritional labeling requirements that are not identical to the federal requirements, with some exceptions. Additionally, the federal law will include procedures by which non-chain food businesses with fewer than 20 locations can voluntarily participate in the federal program--so that they can also take advantage of the pre-emption from conflicting state and local laws.
Taking heed, several jurisdictions, including Maine, Massachusetts, New Jersey, Oregon, and New York's Nassau County, have stated they will not implement or enforce their own new or pending menu labeling regulations. The new federal law relates only to nutritional labeling, so other state and local labeling requirements, such as allergen labeling or safety advisories, are not affected.
The requirements of the new law reflect a real departure from the way many restaurants and similar retail food businesses handle nutritional labeling. Complying with the new law will require real work and communication within restaurant systems. Franchisors and franchisees should be alert for further guidance from the FDA and assess their operations and plans to properly implement the changes across their restaurant systems.
Regina Amolsch is a partner with Plave Koch PLC and has represented franchisors in private practice since 1999, after working as an in-house counsel for a franchisor. Contact her at email@example.com or 703-774-1211.