Pizza shop owners, grocers decry pending Obamacare-linked FDA labeling rules
Another unhappy surprise for businesses hidden in the 2000-page Patient Protection and Affordable Care Act.
Operators of restaurant and supermarkets are fighting new FDA rules for implementing section 4205 of President Barack Obama’s Patient Protection and Affordable Care Act that will force the labeling of fresh made food as packaged food.
“It’s just ridiculous that they would make us spend so much money for so little useless information to go to the consumer,” said Jonathan D. Sharp, who with Jackie, his wife of 25 years, owns and operates two Domino’s stores in Abilene, Texas.
The former Air Force cryptologic Russian linguist said nothing his code-breaking background helps him understand the rule. “We need to send it through one of the computers at NSA to decrypt it.”
As the rule, which the FDA calls: “Nutrition Labeling of Standard Menu Items at Chain Restaurants” is still being written, people affected do not know what they will be doing right or wrong, said Sharp, who after the Air Force joined Dominos and worked his way up until he was a supervisor of nine retail locations in the Philadelphia-area. As a supervisor, he had the opportunity to buy the two stores he has now.
“We don’t know what the penalties are, what the enforcement rules are going to be—there is very little we know about doing this wrong,” he said. “All we know about doing it right is that it is going to cost a lot of money.”
The rule is a burden, but Sharp would not close his doors, he said.
“It will eat into profitability, of course,” he said. “For different franchisees, it will mean different things, some it would come out of their pockets, for others it would putting off maintenance or not spending as much on marketing—there are all sorts of ways we can absorb the $5,000, but it’s the opportunity cost that keeps us from spending it on another thing.”
Just more upsetting to Sharp is the fact that more than 90 percent of the Domino’s business is delivered, less than 10 percent of the customers will ever see the posters.
Erik R Lieberman, an regulations attorney with the Arlington, Va.-based Food Marketing Institute, said although grocery stores and supermarkets were not part of the PPACA, the FDA expanded its mandate to include those retailers into the rules for section 4205.
Lieberman said 95 percent of food items sold in groceries stores are already covered by existing packaging and labeling regulations.
The five percent of food items not covered come from the bakeries, deli counters and products, such as soups, sandwiches and salad bars, he said.
“The store supplies its own ingredients for the items that are prepared inside the store,” he said. “If we have a lot of carrots, we may improvise and make carrot soup or put more carrots in the chicken soup, so things are always changing.”
“This law was designed for standard items at fast food restaurants, it was modeled after the New York City law, which was aimed at restaurants like McDonalds,” he said.
Lieberman said the White House Office of Management and Budget has already estimated that the paperwork burden on supermarkets and grocery stores require 15 million man-hours to comply with the new FDA labeling rules.
It will cost the supermarkets and grocery stores $1 billion to implement their compliance programs with hundreds of millions of dollars in costs to maintain compliance, he said.
Another example of the rules overreach, the FDA asserted jurisdiction over chains with 20 or more outlets and a chain is any collection of retail operators who share identity, he said. This interpretation means that the thousands of members of the Independent Grocer Association, now known simply as IGA, are part of a chain, even though it is an alliance of independent stores.
Mellissa Cummings, a brand ambassador with the Ann Arbor, Mich.-based Domino’s corporation, which opened its 10,000 store in September, said the FDA is applying the same accuracy within 20 percent standard that it applies to packaged foods.
“We are trying to get food out the door,” she said.
There is a huge effort to train employees and to standardize portions, she said. “You could have that is heavy-handed on one order and go light on the next—that is just the reality of the restaurant world and the fresh, handmade products.”
Sharp said one of the frustrating things to the Dominos franchisee is that for more than 12 years, Dominos customers have been able to go online to not only order and track a pizza, but also design their pizza to order with the company’s “Cal-o-meter” a function that produces a precise accounting of the nutritional make up of the pie as they designed.
Given the possibilities, there are 34 million possible combinations to the pizzas and other items sold at a Dominos, he said.
Cummings said grocers and the members of the pizza industry are confident Congress can set the FDA straight with “The Common Sense Nutrition Disclosure Act of 2012.” The bill in sponsored in the House by Rep. John R. Carter (R.-Texas) and Sen. Roy D. Blunt (R.-Mo.).
The legislation would dial back the 20 percent standard to a “reasonable basis” for determining the ingredients and nutrients with consideration for inadvertent human error, she said.
A restaurant for the purposes of the rule would have to derive at least 50 of its revenues from fresh and handmade food, she said.
When he announced that he had filed the bill July 24 Carter said his bill was meant to end the chaos.
“The Affordable Care Act was a 2,000 page bill and most House members had no idea it created new federal regulations on pizza toppings and sub sandwiches,” he said.
“But the threat of fining a business because a teenage employee put two extra slices of pepperoni on a pizza goes from crazy to scary.”