Dominos, takeout restaurants fight potentially onerous FDA Obamacare calorie counting rule

By John Breslin | Apr 25, 2017

Takeout restaurants, where the majority of the orders are placed online or over the phone, are making a last push to stop a new regulation that requires all calorie counts to be listed on store menus.

CHICAGO — Takeout restaurants, where the majority of the orders are placed online or over the phone, are making a last push to stop a new regulation that requires all calorie counts to be listed on store menus.

Under the Food and Drug Administration (FDA) regulation, restaurants with more than 20 locations are required to list the calories for its items on menus. All franchisees of chain outlets are required to do so at an estimated cost of up to $5,000 for each store, while also facing the risk of civil lawsuits and criminal penalties if they fail to do so.

Franchisees of pizza restaurant chains, including Domino's Pizza, are at the forefront of a fight to stop the regulation, which is scheduled to be in place May 5.

Domino's and a franchisee claim there are "millions" of different pizza combinations, that the overwhelming majority of orders are made online or over the phone and that the company already lays out the calorie counts online.

The regulation stems from the Affordable Care Act (ACA), more commonly known as Obamacare, which mandated calorie counts must be listed on menus. The FDA introduced a rule that mirrors one already in place in New York.

Reece Arroyave, who runs more than 30 Domino's Pizza stores in the Chicago area, said the cost of changing the menus could run to close to $150,000. He estimates the cost to be between $3,000 and $5,000 each.

"We are just looking for a 21st Century (solution) to a 21st Century issue," Arroyave said. 

Arroyave, 41, has worked for Domino's since he was a teenager, and opened his first franchise restaurant at age 23. He employs 600 people.

The regulation was due to be introduced in 2015, but the FDA delayed implementation until December 2016. It was further delayed until May.

The regulation says that calorie numbers must be displayed in "restaurants and similar retail food establishments if they are part of a chain of 20 or more locations, doing business under the same name, offering for sale substantially the same menu items and offering for sale restaurant-type foods."

HR 772, the Common Sense Nutrition Disclosure Act introduced by U.S. Rep. Cathy McMorris Rodgers (R-WA), states that "nutritional information may be provided solely by a remote-access menu (e.g., an Internet menu) for food establishments where the majority of orders are placed by customers who are off-premises."

Tim McIntyre, Domino's executive vice president for communications, said the company, which has close to 6,000 stores in the U.S., has been trying to persuade the FDA to change its thinking for years.

The company estimates any one store can work with 34 million combinations when taking into account the type of crust, toppings and size of the pie. Ninety-seven percent of the stores are run by franchisees, half of which are single outlets. Nine out of 10 orders are placed online or over the phone, the company said.

"It is difficult to label Domino's a traditional fast food menu board, where you walk up and there is a board and you make choices based on that," McIntyre said. "That does not happen with pizza restaurants."

"For small business owners to pay $3,000 to $5,000 for something that no one is going to see, it is ridiculous," McIntyre said.

He said that his company has voluntarily provided the information online for the last 13 years.

That is appropriate given the nature of the pizza business, where there are multiple combinations and where most of the orders come from outside the store, he said.

"When we said this to the FDA, they said then just put it in a range, but that would mean 300 calories to 5,000 calories," McIntyre said. "How is that helpful?"

On, when a customer builds an order, there is a system which lists the calories for each product. Online, "all the information is right there in front of them," McIntyre said.

In New York, the franchisees did a number of things to comply. Some created spread sheets they kept on the counter, while others put a range of calories on the boards, and some took down their menu boards altogether.

"We are not trying to get out of anything," McIntyre said. "But this (is) a one-size solution that does not fit."

Pizza companies, grocery stores and delis are asking Congress to pass the Common Sense Nutrition Act, in which they are requesting a provision removing criminal penalties. 

But a key problem for those opposed to the rule is the potential for class action lawsuits. McIntyre foresees a situation in which plaintiff lawyers will take advantage of the law, having pizzas tested and then launching court actions claiming a store owner is lying about the calorie range.

Domino's has told franchisees it will pay for the menu boards and testing initially, but that will not happen in the future. And changes are made to the menu regularly.

"There is a legal position, and then there is what is right for your customers," McIntyre said of the company advising franchisees to not remove the menu boards, a legally sound move. "We are not spiteful. What we have chosen to do instead is work really hard about sharing the information."

Presently, Dominos and others want legislation passed, but they are also appealing to U.S. Secretary of Health and Human Services Tom Price to step in and delay the rule's implementation. 

McIntyre said the Common Sense bill last year passed in the House of Represenatives following a bipartisan vote, but ran out of time in the Senate.

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