The Cost Benefit of the FDA’s Menu Labeling Rule

Consumers are currently taking in approximately one-third of their calories away from their own home. 

As health awareness continues to increase, the FDA’s final rule for nutrition labeling will enable consumers to have transparent information regarding nutritional facts.  This will enable consumers to make informed dietary choices for themselves and their families.

History

Originally expected to take effect in December 2015, the U.S. Food and Drug Administration’s (FDA’s) menu labeling requirements are now slated to begin December 1, 2016. The requirements, which date back to the 2010 Affordable Care Act, are the first significant federal regulations on nutrition labeling since the 1990 Labeling and Education Act.

What’s Covered

These regulations apply to restaurants and retailers with 20-plus locations that sell prepared food (such as convenience stores, movie theaters and supermarkets) requiring them to display nutrition and calorie information on menus. The law also applies to vending machines companies that have 20 or more machines. There are some exceptions to the regulation; for instance, the law also does not apply to food served by establishments without a fixed location, such as airplanes, food trucks, or trains.

Costs

The FDA estimates that approximately 300,000 establishments, includ¬ing non-restaurants such as grocery stores, will be impacted. The FDA further estimates it will cost chain restaurants, grocery stores, and vending machine companies from $111 million to $118 million to comply. The supermarket industry determined a much higher compliance amount, upwards of billion dollars. Conversely, the Center for Science in the Public Interest figures a grocery store chain’s average cost would only amount to $22,500. Costs will come from lab testing, printing, employee training and record keeping. The FDA believes that the costs involved will be offset by $3.7 billion to $10.4 billion in benefits over the next 20 years.

In February 2016, the House passed the “Common Sense Nutrition Disclosure Act,” designed to give more flexibility to those impacted by the FDA’s menu labeling requirements. The bill still needs to pass in the Senate.