FDA's Menu Nutrition Labeling Rule May Have the Unintended Consequence of Preserving the Status Quo

On September 11, 2015, the U.S. Food and Drug Administration (FDA) issued Draft Guidance to help companies comply with the Affordable Care Act's requirement that restaurants and similar food establishments disclose calorie and nutritional information for the food they sell. The FDA implemented those labeling requirements in a December 2014 rule (21 C.F.R. § 101.11; Menu Nutrition Labeling Rule or Rule). The Draft Guidance, in Q&A format, reflects the FDA's "current thinking" about interpreting and applying the statutory and regulatory labeling requirements. The FDA will be accepting public comments on the Draft Guidance until November 2, 2015.

The Rule applies to restaurants and "similar food establishments" that are a part of a chain with 20 or more locations that conduct business under the same name and that offer for sale substantially similar menu items. Recognizing the significant time and effort needed to prepare for the new labeling requirements, the FDA delayed the Rule's implementation for a year: food establishments have until December 1, 2016 to comply.

Overview of the Requirements

The Menu Nutrition Labeling Rule requires food establishments to (i) provide on a menu or menu board, the number of calories contained in each listed standard menu item; (ii) provide on a sign adjacent to the food, the number of calories contained in each standard menu item that is self-service food or food on display; and (iii) provide additional written information upon request. However, packaged within these three requirements are numerous exemptions, language requirements, and reporting obligations that covered establishments must follow.  

• "Covered Establishment": The Rule applies to restaurants and similar food establishments that are a part of a chain of 20 or more locations "doing businesses under the same name" and selling substantially similar menu items. The FDA explains that "name" refers to the name of the establishment that is presented to the public or, if no name or only a generic name (e.g., "concession stand") is presented, the name of the parent entity. In addition, the names need not be identical. Names of establishments in a chain that vary slightly due to differences in geography, location, or size (e.g., "New York Ave. Burgers" and "Pennsylvania Ave. Burgers") would be considered the same.

The Draft Guidance notes that the following establishments are exempt from the Rule:

• • In-patient only food service facilities located in hospitals;
  • Food trucks, mobile lunch wagons, and sidewalk carts;
  • Schools serving meals under the National School Lunch or Breakfast programs;
  • Transportation carriers (e.g., trains and airplanes); and
  • Prisons.

• Exempt Food Items: The Menu Labeling Rule applies to standard menu items, but not to foods such as condiments for general use, daily specials, temporary menu items (foods that appear on a menu for less than 60 days per year), items that are customized by a customer, menu items included to test customer's acceptance of the product, self-service and displayed food that appear on a menu for less than 90 consecutive days, and some alcoholic beverages.

The Draft Guidance explains that the FDA's intent is to "cover the food most like the food offered for sale in restaurants." Thus, if "the food requires additional preparation, such as reheating, before consuming and is typically eaten over several eating occasions or stored for later use," it would be beyond the scope of the menu labeling requirements. However, if the covered establishment makes nutrient content or health claims, the nutritional basis for the claims must be provided.

• Substantially Similar Menu Items: Although, to be covered under the Rule, chain restaurants must sell substantially similar menu items, the labeling requirements apply to all standard menu items offered at a covered establishment. Thus, if a covered establishment offers a standard menu item that is unique to its location, the Rule applies, and the establishment must also provide the required nutritional information for that unique item.
• Advertisements: Menus and menu boards are defined as "the primary writing of the covered establishment from which a customer makes an order selection." Opponents of the Rule have expressed concern that advertisements may fall within the definition of "menu" and, as a result, that ads for covered establishments will have to include the number of calories for each menu item that appears. The Draft Guidance explains that whether a writing constitutes an advertisement or a menu depends on (i) whether the writing lists the name or image of a standard menu item; (ii) whether the writing lists the price of the standard menu item; and (iii) whether the writing can be used by a customer, at the time of viewing the writing, to make an order selection.

Generally, the FDA would not consider advertisements such as coupons to be menus, but the Draft Guidance identifies one example to the contrary. If a coupon includes the phone number to place an order, and states "1 large pepperoni and sausage pizza $9.99," —or, alternatively, includes an image and price of the menu item, as well as a phone number to place the order—the coupon would be considered a menu.

• Recipe Modifications: To comply with the Menu Nutrition Labeling Rule, covered establishments must maintain current and accurate calorie declarations. As a result, if the establishment modifies the recipe, preparation, or method of serving the standard menu item, it must recalculate the number of calories and update all menus, menu boards, and written materials before offering the modified item for sale.  

The Draft Guidance suggests that rare exceptions may be granted, if the food establishment is unable to make the appropriate updates before launching the new product. According to the FDA, "there may be rare circumstances when the availability of the updated menu does not coordinate with the introduction of the new standard menu item," and the covered establishment can contact the FDA agency for consideration "on a case-by-case basis."

• Reporting Obligation: Within 4-6 weeks after receiving a request from the FDA, a covered establishment must provide the FDA with information that substantiates the calorie and nutrient information that is provided on menus, menu boards, and displays and in written nutrition information, as well as the method used to calculate the values. The FDA may also ask establishments to provide the recipes on which the calories and nutrient information are based.

The food industry has identified a number of problems with the Menu Nutrition Labeling Rule. For example, representatives of the supermarket industry assert that requiring grocery and convenience stores to comply with the same Rule requirements as restaurants is unfairly burdensome. Others contend that chain food establishments are no better suited to comply with the rules than non-chain food establishments. Despite the fact that these companies prepare and serve substantially similar products, the calorie counts may vary because different establishments in the chain might use different suppliers. Thus, the Rule could force each covered food establishment within the same chain to independently ensure that the chain's calorie counts and labels accurately reflect their as-made menu items. Relatedly, the food industry has expressed additional concern regarding the inherent imbalance in obligations between food establishments, which would be required to comply with the Rule, and food suppliers, which would not.

While intended to provide consumers with the information necessary to make healthier food selections, the Rule will likely restrict the range of choices available to consumers. The Draft Guidance makes clear that "if the calorie and other nutritional information [are] not accurate, the food will be considered misbranded and subject to the same penalties as misbranded packaged foods." In light of this risk, companies in the food industry are devoting copious amounts of time, resources, and energy to ensure compliance with the Menu Nutrition Labeling Rule. Consequently, because of the compliance requirements associated with modifying existing menu items, companies may think long and hard before introducing new products or transitioning to healthier menus.

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Other Articles in This Month's Edition:

• California Changes Its 'Made in the USA' Labeling Standard
• Back to the Future: Manufacturers' Warranties May Go Digital with Updates to the Magnuson-Moss Warranty Act
• FDA's Menu Nutrition Labeling Rule May Have the Unintended Consequence of Preserving the Status Quo
• R-E-V-E-R-S-A-L Spells Reversal! The Sixth Circuit Holds Varsity Brands' Cheerleading Uniform Designs to be Copyrightable
• Landmark EU Court Judgment on the Notification Requirements for Substances of Very High Concern
• Identifying Endocrine Disruptors in the European Union
• Advertisers in the Ring – A Roundup of This Month's Competitor Advertising Challenges: the Importance of Syncing Test Results to Claims

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