Point, Counterpoint: Domino's menu labeling stance

 
Oct. 13, 2011

Editor's note: On Aug. 17, PizzaMarketplace.com reprinted an open letter written by Domino's CEO J. Patrick Doyle. The letter urged policymakers to be flexible with the menu labeling law, citing cost and logistics concerns specifically from the variable and delivery-heavy pizza industry. Nancy Huehnergarth, executive director of the New York State Healthy Eating and Physical Activity Alliance (NYSHEPA) has responded on the contrary. Her column originally appeared on the International Association of Franchisees and Dealers website and has been republished here with her permission:

Why Domino's is wrong on menu labeling

One would think that providing more information to the consumer at point of purchase is always a good thing. But in a recent op-ed in The Hill, Domino's CEO, J. Patrick Doyle, expresses a very different point of view with regard to the new menu labeling law that is part of the Patient Protection and Affordable Care Act.

The law, which was supported by the National Restaurant Association and received bipartisan support in Congress, requires that food establishments with 20 or more locations provide calorie information on menus and menu boards.

Similar laws have been passed and implemented around the nation and our organization, the New York State Healthy Eating and Physical Activity Alliance (NYSHEPA), spearheaded successful campaigns to get these laws enacted in a number of New York State counties.

Since the concerns raised by Mr. Doyle are similar to concerns we heard in New York State (all of which turned out to be exaggerated), I appreciate this opportunity to address them.

Mr. Doyle's overarching concern appears to be ensuring that the federal menu labeling law leaves Domino's on a competitive field. For example, he expresses dismay that Domino's franchisees must go to the expense of posting a new in-store menu board with calorie information when, according to Doyle, 90 percent of their orders are placed by phone or online.

However, menu and menu board changes are hardly rare occurrences for chain restaurants. It's safe to say that both are changed on a fairly regular basis at most chains for a variety of reasons including but not limited to marketing purposes, to add or remove items, or to change prices.

We've learned that while sometimes the entire menu board must be replaced, many chains can remove and update "slats" that are slid in and out.

We've also learned that the majority of restaurants receive new menus and menu boards from their parent company as part of their yearly pre-paid advertising and promotion budget. In those cases, changes required by the federal menu labeling law will be covered at no additional cost.

If none of the above scenarios apply to Domino's franchisees then I can give them one assurance. Purchasing a new menu board will be a one-time expense - not an annual expense costing "thousands of dollars a year" as Mr. Doyle mistakenly states.

I'd like to note that in the New York State locales that have adopted menu labeling, we have heard no report of any franchisee being placed at a competitive disadvantage, seeing a drop in business growth, or suffering financial distress -- not even a Domino's franchisee.

Mr. Doyle also expresses concern with how the new law proposes to deal with customized or variable items like pizza. Just like the federal law, each New York State county or city menu labeling measure requires that the entire calorie count or calorie range of a pizza be posted on the menu and menu board.

The reasoning behind this is simple. If consumers purchase a whole pizza, they should be given the calorie count or calorie range for the entire pizza. When a pizza is cut into 4, 6 or 8 slices, consumers are smart enough to do the math.

Why are public health advocates insistent that per slice calorie counts for pizza not be used for a whole pie? Last year, I saw for myself what happens when a restaurant goes the per slice route. Dining with friends at a well-known chain restaurant in New York City, I noticed that the restaurant illegally posted the per slice calorie count of its personal pizzas. And sure enough, my dining companions marveled out loud, at the low calorie count for an entire personal pizza - until I broke the bad news.

This is exactly the kind of confusion or misrepresentation the law is trying to avoid. Mr. Doyle touts Domino's online tool the Cal O Meter as a superior and more accessible way for Domino's customers to learn calories than what the menu labeling law proposes.

While the Cal O Meter works nicely (except that it gives confusing per slice nutrition information for whole pizzas), it is time consuming to use and it would only appeal to a very determined and motivated consumer.

Research has shown that calorie labeling works only when the customer sees the information precisely at point of purchase. That's why the law is written as such.

Mr. Doyle asserts that in locales where Domino's has been required to post calorie labeling, they have seen no change in customer ordering behavior. I have not seen any formal data or study posted by Domino's on this topic so I can't comment on Mr. Doyle's claim.

I can however, point to a number of studies that show that calorie labeling works. The most recent NYC study found that one out of every six fast food customers surveyed said they used posted calorie information to make food buying decisions and these customers purchased 106 fewer calories than those who did not see or use the calorie information.

That's big news because eating an extra 100 calories a day can cause you to gain 10 pounds a year, whereas eating 100 calories less than usual may result in a loss of 10 pounds.

Many health advocates believe that the true value of menu labeling may actually lie in product reformulation, which will impact all diners. Chains have already been reformulating high-fat and calorie-laden items and introducing lighter, healthier options in response to menu labeling requirements and consumer demand.

Some recently revealed calorie counts have been downright embarrassing and significant product reformulation to lower calories and fat has been noted at Starbucks, Denny's, Uno Chicago Grill, Le Pain Quotidien, Dunkin' Donuts, KFC, McDonalds (even the Happy Meal), Cosi and Romano's Macaroni Grill, which managed to squeeze a whopping 880 calories out of just one salad.

In a 2010 Washington Post article, it was reported that Austin Grill, California Pizza Kitchen, the Cheesecake Factory, Fuddruckers, Silver Diner and Sizzler, among others, are working with a consulting company to make their recipes healthier. The consulting company referenced has seen its business jump 80 percent in 2008 and 100 percent in 2009.

If restaurant chains hope to be part of the solution to our nation's deadly obesity epidemic then reformulation of unhealthy, high calorie fare is an important step forward.

The federal menu labeling law is just one of many critical interventions public health professionals and legislators are supporting to begin to put the brakes on America's deadly obesity epidemic, which is shortening our life spans and costing the nation $147 billion annually.

While I understand Mr. Doyle's focus on the financial well-being of his Domino's franchisees, I believe his concerns are overstated. As we've seen in New York, where menu labeling has been successfully implemented in numerous locales, the law has not put Domino's or any other chain at a competitive disadvantage.

Having calories listed clearly at point of purchase is a simple, cost-effective way to provide consumers with the information they need to make informed choices. Isn't that what America is all about?

Domino's responds to Huehnergarth's post

Domino's vice president of communications Tim McIntyre responded as such to Huehnergarth's post in the comments section:

"While we can appreciate that you disagree with us, because that's what you get paid to do, we do feel compelled to point out that you exaggerate your messages of 'exaggeration.' We are not against menu labeling or sharing nutritional information with our customers, which is why we've done it – voluntarily – for more than a dozen years. The spirit of menu labeling is to provide information to consumers before or at the point of purchase.

As is well-documented, 90 percent of our customers order over the phone or online. The expenses our franchisees would incur (and they are real, despite your protestations) are expensive and not well-invested, especially when they will reach only 10 percent of the target audience. Our web site can be reached by virtually 100 percent of the target audience, most of whom are not interested anyway.

By the way, our menu boards don't have 'slats,' so the entire board would need to be replaced and updated, at a cost of several thousands of dollars per year. Our franchisees pay for their menus; they are not included in their royalties, as you wrongly argue.

Roughly 2/3 of people in the U.S. say that they are actively trying to lose weight. If what people say they were going to do was equivalent to what they actually do...the obesity problem would be solved. The fact is that the menu boards have not changed purchasing habits in NYC. Period. Many independent studies have shown that. If your "fact" about 1-in-6 people changing their behavior were true, we would expect to see the obesity problem in NYC to be solved by now.

Lastly, we fervently believe in communicating information by the slice, as that is how people eat pizza. We also believe our customers are smart enough to do the math...but our customer service orientation compels us to do the math for them.

We also feel compelled to fight on behalf of our franchisees: small business owners who provide thousands of jobs across America, and whose businesses continue to be threatened by well-meaning, but illogical "help" from government and activist groups.

- Tim McIntyre, Domino's Pizza"

Middle ground?

Michael Webster, a commenter who read Huehnergarth's letter and McIntyre's comments, left a comment of his own about the lack of middle ground by both parties.

"... I also think that Tim is right about the cost here of the menu board. It is just too much of an expense for an operator to incur without a clear and corresponding benefit to the public.

Phone ordering has to be addressed. Even if Nancy's numbers are right, people phoning in to purchase a pizza are not seeing a menu board.

On the other hand, I am less persuaded by Tim's argument that caloric counts should be by the slice - the caloric counts should be by whatever item was ordered, slice or pie.

It is also clear that both parties do not accept each other's experts and the evidence about the effectiveness of disclosure. This is something that should be the subject of joint fact finding.

Finally, while Tim is probably correct in asserting that most people are not really committed to their weight loss goals, it doesn't feel right to simply dismiss well meaning advocates and Nancy's message as 'illogical help.'"

Read more stories about health and nutrition initiatives.


Topics: Commentary , Customer Service / Experience , Domino's Pizza , Franchising & Growth , Health & Nutrition , Menu Boards , Operations Management , Trends / Statistics


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