December 8, 2014
Calorie counts reach retail and grocers aren’t happy
Prepared meals have been a burgeoning opportunity in recent years for supermarkets and c-stores, but new FDA requirements that stores display calorie count information could dilute the payback.
The Affordable Care Act, enacted in 2010, requires a national, uniform nutrition-disclosure standard for foodservice establishments as part of a push to curb obesity in America, where a third of calories are eaten or drunk outside the home.
The final labeling rules, issued last week, apply to restaurants, movie theaters, amusement parks, convenience stores and the prepared foods sold inside many grocery stores with at least 20 locations.
The Food Marketing Institute estimated the cost of complying with the proposed requirements at over $1 billion in the first year.
In 2011, opposing the mandate for grocery stores, the Kroger Company said its chefs often "use different ingredients based on what is seasonal or in stock. It is not unusual for ingredients to change regularly. The restaurant menu labeling rule would render that nearly impossible."
"This is going to take away from anything that’s freshly made in the store because the costs involved will be so high," said Robert Rosado, the FMI’s director of government affairs, told The Wall Street Journal. "You’re going to lose fresh choices."
Kroger Co. said in earlier comments to the FDA that the requirement could mean job losses or higher grocery bills for consumers.
Grocers, c-stores and some other establishments had hoped the nutritional guidelines requirements wouldn’t apply to them since prepared foods is a small portion of their overall business. Several trade groups are encouraging legislators to rework the ruling.
In a statement, FMI president and CEO Leslie Sarasin said a typical grocery store has 95 percent of food items already labeled with Nutrition Facts, disclosing nutritional information well beyond calorie counts. "They should not be pulled into a menu labeling law and regulation designed for a different industry," she said.
Ms. Sarasin added that a restaurant is not considered "similar" to a food retailer for the number of other regulatory requirements imposed on food retailers, including country-of-origin, bioterrorism, and allergen labeling as well as those associated with the Food Safety Modernization Act.
"The one-size-fits-all approach that FDA announced today would treat convenience stores as though they are restaurants, when in fact they operate very differently," said Lyle Beckwith, senior vice president for government relations for NACS. "It is now up to the bipartisan, bicameral opponents of this regulatory overreach to enact legislation introduced in both houses of Congress that reasonably defines a restaurant as a business that derives at least 50 percent of revenue from prepared food."
- FDA Requires Calorie Counts at Restaurants – The Wall Street Journal (sub. required)
- FDA Misses the Point of Menu Labeling: Grocery Stores are Not Chain Restaurants – Food Marketing Institute
- The Affordable Care Act, enacted in 2010, requires a national, uniform nutrition-disclosure standard for foodservice establishments – National Association of Convenience Stores (NACS)
- Restaurant calories and government appetites – Chicago Tribune
- Food Labeling: Nutrition Labeling of Standard Menu Items in Restaurants and Similar Retail Food Establishments; Proposed Rule – The Kroger Co.
Discussion Questions
How will requirements that stores display calorie counts impact the prepared meals opportunity for grocers and c-stores? Do you agree that fresh food choices will be reduced? What adjustments will likely have to be made to the regulations?
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If this holds up, I would expect grocers to either cut out the offering or pass the increased costs to the consumer. That said, the regulation is probably inappropriate and ripe for re-working. And does anybody know if anyone actually pays any attention to these nutrition postings?
We can all see how the regulations will be a burden and unfairly applied. I see Woodman’s with only 15 stores but over a billion in sales being exempt, giving them an even greater advantage, while a smaller convenience store chain with dozens of stores would have to comply with the new regulations. Sure stores would reduce fresh food choices along with cutting jobs, while other stores take advantage of the loophole and add jobs. We might see chains with 21 stores being encouraged to reduce to 19. Or chains with 19 being encouraged to stay at 19. This could also create a new industry of helping retailers comply. Bottom line: Retailers determined to comply and survive will do so.
I could go on a rant about. When is the government going to allow adults to be treated as adults? If we are not smart enough to decide what we are going to put in our mouths, are we even smart enough to be allowed to vote?
If you want to post ingredients in food I suggest we start at the producer level and post the amount of pesticide and hormones used in the production of our food supply.
Better suggestion: Let’s not allow sugar to be sold without a prescription.
Many convenience store companies have been upgrading their foodservice offer. The industry has come a long way from the nitrogen-flushed prepackaged sandwiches. Today the emphasis is on fresh. This has resulted in many changes in the supplier community, supply chain and at the store level.
With more and more food being prepared at the store level and customized to each customer, calorie labeling becomes impossible. One customer wants theirs with mayo and another wants the same thing with olive oil or one wants a lot of mayo and another wants very little. Every time someone wants to substitute an ingredient and/or wants to vary it from the standard amount the retailer might find that they have produced a product outside the norm and find the calorie police ready to pounce.
This would force retailers to standardize their products and either produce them in a commissary or have a third party do so for them. With more and more customers demanding it their way this could result in the growth of foodservice in c-stores slowing down or declining.
So how have all these retailers managed to accommodate the states that enacted this policy years ago? It’s not the end of the world. As someone who should be counting calories, the data is readily available, provided (for custom sandwiches anyways) an average is acceptable. All those “fit” mobile programs seem to be able to figure it out.
Personally, I like it when stores display calorie counts. With a busy life comes eating prepared meals and restaurant food which is a nightmare for watching calorie intake.
I know it’s going to be costly, but I’ll bet it will build brand loyalty for those that embrace the challenge. Running a household includes monitoring the health and wellness of each family member and busy moms are really challenged when it comes to meals on the go.
I used to think it was invasive and sort of a Big Brother thing, but I’ve changed my mind. I don’t always shy away from the high calorie, high sodium choice when the information is available. I just factor it into my daily totals and don’t feel guilty about eating it in the first place.
Fresh food choices will be reduced because of the complexity of the offerings, especially in supermarkets. Ingredients change, new employees need constant training, suppliers are fluid, etc. This is not McDonald’s where a Big Mac is the same in every location because of the rigid purchase process and the strict weight control on products. In-store, packed offerings will vary in weight, percentage of ingredients to the whole and many more variances. The bottom line is, in my opinion, this will cost more, reduce offerings and still not be accurate!
In theory, it’s a great consumer-facing idea. In practice, it will be difficult to impose and even more difficult to enforce. And yes, it will definitely hurt retailers who have been pinning growth (sales and margins) on meals to-go.
The impact will be minimal and it’s simply the right thing to do. Consumers have spoken on this one and it will be mainstream soon enough. I suspect it may actually increase food choices and introduce healthier choices for people, exactly what the law intended. The regulations will get standardized over time.
So, in the mean time, bon apétit.
There is a lot of hand-wringing going on now, but the changes won’t be as onerous as grocers fear. Calculating the calories of the ingredients and dividing by portion size will work for many recipes, especially those which feature “fresh” elements, like salads.
And which shoppers will seek out the calorie counts? More educated, affluent shoppers. These are the customers grocers want to attract anyway. Gotta do this.
Another major intrusion from our government, and I for one can not stand this. The costs to do this right are high, and the fools that pass this law have zero clue about how to run a supermarket or a convenience store. I know I am going to catch some flack from others on this, but it is ridiculous the way we have to run our businesses today, to prevent someone from over eating.
I have been to my NGA convention trying to talk to the USDA reps who have a booth, and they are downright rude and smug.
Trying to explain to any of them the costs of staying in compliance on issues such as labeling, grinding meats and now even more labeling is becoming a nightmare for store owners. We already have plenty of protections built in for safe eating, but this new law will stifle creativity, as the calorie content on new ideas will have to change constantly to keep up. Getting anyone to listen to us is impossible, as the mandates passed down are becoming more cumbersome to manage than ever.
Thanks to DC we have a full time babysitter for our business, and they carry a big stick, so don’t question them or look out.
Some of the best chains with prepared food programs have fewer than 20 stores. So this doesn’t even impact them.
What it does do is hinder large chains from offering special chef prepared items with varying ingredients. This may actually help those small chains of less than 20 stores as they can keep having fun, unique, rotating offers while large chains cannot do so profitably anymore.
Kroger is upset since the in store chef thing is fairly new for them. You don’t see Safeway complaining since all of their programs are standardized.
I think Whole Foods is who this impacts most as far as large chains go. Though, they already say nutrition information is available on all kitchen deli and food bar items upon request….
Why shouldn’t the grocer be the consumer advocate? Give them information they want and need? If you want an eye-opener, read the statement put out by the National Restaurant Association about the calorie counts. They’re for it. Funny how foodservice takes the consumer side, and the grocery industry wants to keep consumers in the dark, or make it more difficult for them. And, some of the posters here should read the actual regulations (many many pages, but only a few directly related to the discussion here) so they don’t get their facts wrong. This is not the end of the world, grocers. Suck it up.
Oh, come on now. The hand-wringing over these new regulations are hysterical at best.
When customers learn that the turkey sandwich has half the calories of the roast beef sandwich with cheese, it’s just not the end of the world. Let’s do something to end the willful ignorance of the American consumer, and change behavior for the better.