The National Association of Convenience Stores (NACS) has released our analysis of the cost of FDA’s menu labeling rule. From Convenience Store News

“The way the FDA rule is written makes it virtually impossible for businesses to comply with the regulations even though they will spend billions over the next several years trying to do so,” said economist David Zorn of Mangum Economics, who developed the analysis for NACS. While the FDA rules for calorie disclosures on packaged foods recognize that actual calorie counts vary unavoidably from one package to another, the menu labeling rule makes "no allowance for normal variation from one serving of food to the next in the number of calories and nutrition content." Because of this, enforcement costs of the final rule, which include fines, legal fees and negative publicity, are likely to vastly exceed the $84.5 million total cost that the FDA estimated for all covered industries, NACS said.

FDA allows only a 5-calorie deviation (for foods with over 50 calories) for unit-to-unit variability of the same product. That means that a slice of cheese pizza declared at 270 calories is violative if it has less than 265 calories or more than 274 calories. So, a difference of just 0.07 ounces of cheese on a typical slice of pizza makes it illegal.

Our analysis was part of NACS’ public comment in response to FDA’s interest in reducing the regulatory burden of the rule or increasing compliance flexibility.

Our key findings were:

  • Actual costs of compliance and enforcement of the FDA Final Rule for all covered industries are estimated to be more than 3.6 times FDA’s estimates and for the convenience store industry 7 times FDA’s estimates;
  • Annual costs of compliance and enforcement of the FDA Final Rule are estimated to exceed $306 million;
  • Actual costs of compliance and enforcement of the FDA Final Rule to the convenience store industry alone are almost equal to the total cost that FDA estimated for all covered industries;
  • Because the Final Rule makes no allowances for normal calorie and nutrition variations in foods, more than 93% of foods subject to the rule are likely to be in violation of the Final Rule no matter how much businesses spend attempting to comply; and
  • Enforcement costs (including fines, legal fees, and negative publicity) alone of the Final Rule are likely to vastly exceed FDA’s total estimate of the compliance costs of the Final Rule.