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California Menu Labeling Law

In: Business and Management

Submitted By keelankilpatrick
Words 951
Pages 4
California menu labeling law (calories to be posted next to menu items) 1. Why was it adopted? * People are eating out more than try and combat obesity by making consumers more aware about what they are eating.

2. Company costs vs. benefits: Depends on position in market * Costs: * Fast food chains lose customers * Company image of fast food chains * New menus containing calorie count * Benefits: * If the actual calorie count is less than consumers expect * Encourage innovation to develop healthier options * Healthy restaurants get more business

3. Competitor costs vs. benefits: * Depends on position in the market * Competitors will have same costs and benefits as above. * Healthier restaurants will have less costs and more benefits than fast food chains

4. Consumer costs vs. benefits: * Cost: * Tax to pay for law * Benefits: * More options due to innovation * Awareness of what they’re eating * Improved health * Less tax for healthcare

5. Enforcing the law: * Enforcement of inspectors * Fines from noncompliance

6. Evaluation: * Benefits considerably outweigh the costs * Grade: A-

Kilpatrick, Keelan
2301001, Section 104
On January 1, 2011 the state of California issued a menu labeling law (California Health and Safety Code Section 114094) requiring all chain restaurants with at least 20 outlets throughout the state to disclose the calories for each menu item directly beside the item on a menu board or within a menu. This law is designed to combat the obesity epidemic that threatens the health of many Californians, as nearly 16 million California residents are obese or overweight. Other closely related health consequences include type II diabetes, heart disease and high blood pressure. These can be attributed to the fact that people tend to eat more and eat unhealthily when they dine out—most often because they don’t know the content of the food they are indulging in. If an effective law is applied, this offers the potential for a considerable benefit on healthcare of the state through altering eating habits and creating calorie awareness.
The impact on companies through the new menu labeling law depends on the firm’s position in the market. Most of the burden from the costs of the new law is placed on fast food restaurants, whereas healthier restaurants will see fewer costs and will reap the majority of the benefits. Fast food chains have been forced to position the high calorie count of their menu items directly beside the item on the menu board. This intimidates customers and also affects the restaurant’s brand image. Consumers are made more aware of the unhealthy content within fast food menus and may decrease the restaurant’s sales. All restaurants have endured the cost of creating new menus and menu boards, but this expense is minimal compared to the damage of brand image incurred due to the change in perception that comes through consumer’s calorie awareness. In certain cases, there can be times when the calorie count is actually less than what a consumer expects, making the product more desirable to the consumer, but these are far and few between. From a long-term perspective, the menu labeling law will continue to encourage fast food chains to innovate and produce new, healthier items on their menu. These beneficial calorie changes to menu items are made visible to the public eye, and this kind of improvement can actually enhance the brand image.
Just as the costs and benefits imposed on restaurants depend on position in the market, so do the effects on competitors. With customers more aware of the calories they are consuming, they are more likely to turn away from high calorie food available at fast food chains and choose healthier options instead. The benefits accumulated by healthy restaurants are greater so consequently they will be assisted by the law due to the costs imposed on their competitors in the fast food industry. The benefits of the consumers from the introduction of the menu labeling law in California are significantly higher than the costs involved. Although there was a large expense to tax payers in creating this law, the benefits to the consumers can be seen widely throughout everyday life. The implementation of this law will result in a healthier society and decrease the cost of healthcare and the considerable amount of tax payer dollars poured into healthcare every year. Also the increased innovation from the fast food industry provides customers with a variety of healthier options when they decide to eat out. Customers also become more aware of the calories in their meals, which enables them to record calories consumed more easily to manage their health. These benefits may not be immediately visible, but in the long term they will become very noticeable.
There will also be a cost to enforcing the law. The government will have to supply investigators to assure compliance from qualified restaurants. It is possible that fining restaurants that are noncompliant with the regulations can cover some of these costs; however an infringement is “punishable by a fine of not less than $50 and no more than $500”. The fine is relatively minute to the context of these businesses, and due to the simplistic nature of the law, most restaurants would comply without any hesitation.
The California menu labeling law is an effective law that outweighs its costs with the benefits to diners and restaurants alike. The fast food industry will endure some short-term costs due to the high calorie nature of their food, however, there is a long list of benefits including increased sales for healthy restaurants, public awareness of calorie intake, and a healthier state of California with decreased healthcare costs. This law addresses the very reasons it was enacted upon and in a proficient manner, deserving a grade of A-.

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