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Analysis - January 29, 2007

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January 2007

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Print Accommodation, Issues,

Restaurant industry in change: be proactive!

New regulations are being introduced in the restaurant industry. Now that consumers want to eat better and know more about the origins and composition of their food, some lawmakers are taking action. Not to be outdone, Canada will likely follow suit and pass its own new regulations in the near future. The hotel and food service industries can wait and then react to such legislation, or businesses can, as some chains have done, be proactive and take advantage of this trend to distinguish themselves from the competition.

New York City gets things started

The New York City Department of Health and Mental Hygiene has unanimously voted to phase out the use of artificial trans fats* in the city’s 24,000 restaurants by July 2008. In another first, the same department has also adopted a measure requiring restaurants with standardized menus (in other words, approximately 10% of all restaurants) to post calorie information on menus or menu boards. Although New York is the first city to adopt such regulations, if the large number of states and municipalities currently considering such measures is any indication, this is indeed a growing restaurant industry trend.

Reactions to these measures have been varied, but the NYC health department maintains that 95% of the comments received during the public consultation process supported the proposal. Complying with these new regulations may be onerous and costly for many establishments. For major restaurant chains, changing a recipe is a major logistic challenge. In addition, posting the number of calories on menus not only involves research and printing costs, it can create a crowded display.

Three days after NYC’s announcement, the Loews hotel chain was the very first such chain to announce its intention to eliminate artificial trans fats from all restaurants, shops and mini-bars in its 18 US and Canadian properties by June 2007. Restaurant chains like Taco Bell and KFC are preparing similar strategies, while Wendy’s International has already phased out trans fats from its 6,300 restaurants. Marriott International will be the second hotel chain to follow suit by eliminating all trans fats from its 2,300 establishments in the US and Canada.

The sale and production of foie gras

In addition to trans fat bans and calorie labelling, there are other regulatory measures affecting food. For example, the production of foie gras is now prohibited in many countries (e.g., Germany, Denmark, Finland, Ireland, Israel, Italy, Norway, the Netherlands, Poland (the world’s 5th largest producer before the 1999 ban), the UK, Sweden and Switzerland) and Chicago has outlawed its sale. In this case, the goal is to discourage cruelty to animals. California will also outlaw the sale of foie gras as of 2012 and the city of York in Great Britain is considering adopting a similar measure. The restaurant industry is therefore being subjected to new standards that may, in some cases, be very restrictive.

Where does Canada stand on the issues?

When it comes to foie gras, Canada remains a country open to both its production and sale. However, the elimination of trans fat is another matter. Since November 2004, Health Canada has been working with the Heart and Stroke Foundation of Canada to develop recommendations and strategies for reducing trans fats in foods to the lowest level possible. Canada was also the first country in the world to make trans fat labelling mandatory (December 2005). A proposal to phase out trans fats was tabled, but in the fall of 2005, agro-food industry representatives successfully petitioned the federal government to postpone the measure to give them time to develop alternate solutions.

Nonetheless, Canadian lawmakers are very aware of the issue and will most likely move to outlaw or severely restrict the use of trans fats in the near future. Some establishments have already adapted their menus accordingly. As of December 2006, the Pacini restaurant chain was still the only Canadian chain to have completely eliminated all artificial trans fats from its menu. This change was made with the help of clinical nutrition and cardiology specialists from the Centre hospitalier de l’Université de Montréal (CHUM) and is a concrete example of the feasibility of such adaptations. The A&W chain has significantly reduced the use of trans fats, while Starbucks has committed to eliminating them from its menu by the end of 2007, in both Canada and the US.

At the present time, there are no proposals in Canada to require calorie labelling for restaurants offering standardized menus. However, it will be interesting to follow the evolution of this awareness-building trend in other cities and states; we may be pulling out our calculators in restaurants sooner than we think!

A plus for tourism?

Although the regulations discussed here have been implemented for other reasons, their impact on tourism is also worthy of consideration. A key element in the tourist experience, food can even be the primary travel motivator. At the same time, consumers are increasingly health conscious, especially with the advent of more information about the dangers of trans fats, GMOs (genetically modified organisms), mad cow disease and the avian flu, in addition to being motivated by ethical or environmental considerations. As such, the number of regulations and incentives to reflect these consumer concerns are likely to increase.

The elimination of trans fats is part of this trend. Whether it is the subject of a municipal ordinance or simply a hotel or restaurant policy, it could be a differentiation strategy worth studying. Like the smoking ban enacted in bars and restaurants, it is attractive to many types of tourists. Although such changes can be costly, they will have to be made sooner or later. Be proactive and help your business take full advantage of its foresight!

Sources:
– The New York City Department of Health and Mental Hygiene. Press releases of September 26 and December 5, 2006, [www.nyc.gov].
– Association des restaurateurs du Québec. Press releases of October 4, 2006, and September 8, 2005, [www.restaurateurs.ca].
– Boyd, Christopher. “Loews Hotels Set To Ban Trans Fat,” Orlando Sentinel, December 9, 2006.
– Rosolen, Deanna. “Marketing to Quebecers,” Food in Canada, June 2004, Vol. 64, No. 5.
– Quan, Shuai and Ning Wang. “Towards a Structural Model of the Tourist Experience: An Illustration from Food Experiences in Tourism,” Tourism Management, June 2004.
– Health Canada. [www.hc-sc.gc.ca].

 

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