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Commentary By Savannah Saunders

Pizza Parlor Owners Face Prison Time

Economics Regulatory Policy

Pizza makers could face fines and prison time under a new Food and Drug Administration rule for failing to provide calorie counts for their billions of combinations of pizza orders.

Under FDA regulations, chain restaurants, retail stores with 20 or more locations, movie theaters, and vending machines are required to provide calorie information for every menu item. Pizza parlors will be hit hardest because of the unfathomable combinations of pizza that customers can order.

FDA’s menu labeling rule will go into effect on December 1st, 2016, much to the chagrin of pizza lovers across the nation. If a company does not perfectly comply with the mandate, food may be rendered “misbranded” under the Federal Food, Drug, and Cosmetic Act, a violation that carries criminal penalties. Failure to comply with the regulation could lead to government seizure of food, a maximum $1,000 fine, and a one-year prison sentence. A second violation carries a penalty of $10,000 and up to three years in prison. 

One of the first problems with the regulation is FDA’s definition of “menu.” A menu is defined as any piece of primary writing that is “used by a customer to make an order selection at the time the customer is viewing the writing.” Under the regulation, a menu could be anything from a physical display board, a web page, or even an advertisement for a $5 dollar meal special. The American Pizza Community, a coalition of the nation's largest pizza companies, says FDA’s definition of a menu is especially difficult for pizza parlors because a considerable amount of orders are made over the phone, so customers may gain their information from a variety of places. Ninety percent of pizza customers never see in-store menus, so APC says spending money to update menu boards is a waste of money. 

Moreover, the pizza industry faces challenges with the regulation because pizza orders are highly customizable. Considering the different combinations of crusts, cheeses, meats, toppings, and sauces, there are literally billions of possible pizza orders. In an interview with the Washington Free Beacon on January 2015, Executive Vice President of Domino’s, Lynn Liddle said perfect compliance with the regulation is ludicrous because the company offers around 34 million possible pizzas. Last year, Pizza Hut unveiled their new menu and declared their company offers over 2 billion possible combinations. Those within the pizza industry believe that providing such a wide range of caloric possibilities is unfeasible, pointless, and far too expensive. 

Companies already have incentives to give calorie information and have been doing so for years. Patrick Doyle, CEO of Domino's Pizza said in an interview with the Wall Street Journal that his company has voluntarily been providing calorie information to consumers through a “calo-meter” tool on the company website. Domino’s also urged FDA to allow the company to give caloric information by the slice, which is the way most customers think about consuming pizza. Additionally, Domino’s argued for permission to provide the now-required information online, because that is how most customers order their pizzas. But FDA refused these suggestions, insisting that all companies must fall under equal and perfect compliance with the regulation. 

Menu labeling may not inspire customers to make healthy choices. Several studies on the effectiveness of calorie displays suggest the mandate will have little to no effect on the public’s choices. In one study on menu-labeling in New York City, Brian Elbel, a professor at New York University, found that only 28 percent of people who saw calorie labels said that the information influenced their choices. There was no statistically significant change in calories purchased. In another study, Lisa Harnack of the University of Minnesota examined whether knowledge about calorie counts of menu items would influence how much a person ate, even if the information did not change ordering habits. A lab study revealed that, overall, consumers did not change how much they ate after receiving information about their food’s caloric content. 

Revising systems under strict compliance with the regulation’s guidelines is expected to cost Domino’s $1,600 to $4,700 per restaurant annually. In general, the rule is expected to cost businesses $537 million, losses that necessarily must be passed on to consumers in the form of higher prices. With the rise in consumer demand for healthy food options, companies already have numerous incentives to provide nutrition and ingredient source information for their products. Additionally, the benefits of calorie labeling are inconclusive and cannot be used as a reliable means of “nudging” Americans to eat healthily. America is in need of a health transformation, but millions of dollars in compliance costs and potential prison time for pizza offenders, all for the sake of an ineffective policy, is too high a price to pay.


Savannah Saunders is a contributor for Economics21

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