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Hotel Lawyer: Nutrition disclosure laws. The latest in California.

19 April 2009

Hotel Lawyer: “I am from the government and I am here to help you . . .”

As the old joke goes, this was one of the three biggest lies (along with “the check is in the mail” and “that’s my Porsche and I own it.”). But however you view it, the government is certainly taking a bigger role in all our lives. Part of the latest regulation requires nutritional information to be provided to customers of hotels and restaurants. Here is the latest from our Jim Abrams.


California requires many restaurants
and hotels to provide nutritional information

By James O. Abrams, Hotel Lawyer

Concerns about obesity and all of the serious health problems associated with it have made people aware of the need to “watch what they eat,” both in terms of quantity and quality. This has led to a growing movement to insist that restaurants and other food service establishments provide nutritional information, much as one finds on most food products in grocery stores, because it is felt that this information would allow customers to make more informed decisions about the food they purchase.

Some local jurisdictions (e.g., New York City and Kings County, WA) have already adopted nutritional information laws. When Governor Schwarzenegger signed Senate Bill 1420 (Padilla) on September 30, 2008, California became the first state to mandate that restaurants and other food service establishments provide nutritional information. While many in the hospitality industry feel that there is no need for government to enact mandates in this area, it became clear during the current legislative session that a bill dealing with this issue was likely to pass. Consequently, the industry negotiated with the bill’s author to craft legislation that achieves important public health goals while limiting the scope of the bill and providing affected food facilities with flexibility and compliance options. Importantly, SB 1420 prohibits local governmental entities from enacting their own nutritional labeling ordinances.

SB 1420 does not cover only “chain” or “franchise” restaurants; it can also apply to many hotels, depending on how they conduct their food service operations — read more below!

1. Who Is Covered by SB 1420?

SB 1420 applies to “food facilities,” which are defined as follows:

“Food facility” means a food facility in the state that operates under common ownership or control with at least 19 other food facilities with the same name in the state that offer for sale substantially the same menu items, or operates as a franchised outlet of a parent company with at least 19 other franchised outlets with the same name in the state that offer for sale substantially the same menu items…. (Emphasis added.)

As far as the lodging industry is concerned, SB 1420 expressly exempts from the definition of food facilities bed and breakfast inns with 20 rooms or less, agricultural homestay facilities that have no more than six guest rooms and do not accommodate more than 15 guests, and vending machines. It is unlikely that any bed and breakfast inns or agricultural homestay properties will meet the 20-or-more threshold, regardless of how many rooms or guests they have.

Most full-service hotels probably will not meet the definition of food facility for purposes of SB 1420, because even if there are 20 or more of them with the same name in California, it is unlikely that they would all “offer for sale substantially the same menu items.” However, full-service hotels that meet the 20-or-more threshold need to analyze their food service operations to determine whether or not 20 or more of them offer substantially similar menu items. If that is the case, they will need to comply with this new law, as described below.

It is quite possible, however, that many limited-service properties will fall within the definition of food facility for purposes of SB 1420. Obviously, many limited-service lodging establishments (either franchised or under common ownership and control) will meet the 20-or-more threshold and also “offer for sale substantially the same menu items.” Note: It could be argued that the breakfasts (and perhaps evening hors d’oeuvres) provided by many hotels are “complimentary, and that they are therefore not “offered for sale.” But the fact of the matter is that the food is included in the price of the room, and this means that it is quite probable that it will be deemed that a “sale” has taken place. For example, it is clear that sales tax applies to complimentary F&B provided by hotels when it is included in the price of the room (unless the fair retail value of the F&B is not more than 10% of the property’s ADR), and lodging establishments that serve alcoholic beverages that are included in the price of the room are deemed to be “selling” the beverages and therefore must have a liquor license.

If you conclude from the foregoing that your establishment is not required to comply with the disclosure requirements of SB 1420, and you can stop reading at this point! But even if your property is not covered by this new law, you might want to consider providing nutritional information on a voluntary basis; in that case, the information below will be helpful.

2. What If My Property Is a Food Facility As Defined in SB 1420?

Even though your lodging establishment meets qualifies as a food facility under SB 1420, this does not necessarily mean that you will have to do anything. The requirement to provide nutritional information applies only to “standard menu items” which the facility offers for sale. SB 1420 defines this important term as follows:

“Standard menu item” means a food or beverage item offered for sale by a food facility through a menu, menu board, or display tag at least 180 days per calendar year, except that “standard menu item does not include any of the following:

  1. A food item that is customized on a case-by-case basis in response to an unsolicited customer request.
  2. An alcoholic beverage, the labeling of which is not regulated by the federal Food and Drug Administration.
  3. A packaged food otherwise subject to the nutrition labeling requirements of the federal Nutrition Labeling and Education Act of 1990.
  4. A food item when served at a consumer self-service salad bar.
  5. A food or beverage item when served at a consumer self-service buffet. (Emphasis added.)

    Although there are some ambiguities in SB 1420 on this point, it appears that only those food facilities that offer standard menu items for sale will be obligated to provide nutritional information, and even then, only if certain other conditions are met.

    3. What Must I Do If I Am Required to Comply with SB 1420?

    IF your hotel is a food facility that offers standard menu items for sale, as described above, you need to disclose specified information as discussed below. For these purposes, SB 1420 defines “nutritional information” and “calorie content information” as follows:

    “Nutritional information” includes, but is not limited to, all of the following, per standard menu item, as that item is usually prepared and offered for sale:
    (A) Total number of calories.
    (B) Total number of grams of carbohydrates.
    (C) Total number of grams of saturated fat.
    (D) Total number of milligrams of sodium.

    “Calorie content information” means the total number of calories per standard menu item, as that item is usually prepared and offered for sale.

    A. Commencing July 1, 2009, to December 31, 2010, inclusive, you must disclose nutritional information (which includes the total number of calories) either as set forth in this paragraph 3.A or as set forth in paragraph 3.B, below.

    1) If you do not provide sit-down service, you must “disclose the information in a clear and conspicuous manner on a brochure that is made available at the point of sale prior to or during the placement of an order. (“Point of sale” means the location where a customer makes an order.) Note that each brochure must include the statement: “Recommended limits for a 2,000 calorie daily diet are 20 grams of saturated fat and 2,300 milligrams of sodium.”

    2) If you provide sit-down service, you must “provide the nutritional information in a clear and conspicuous size and typeface on at least one of the following:

    a) A brochure available on the table.

    b) A menu next to each standard menu item.

    c) A menu, under an index section that is separate from the listing of standard menu items.

    d) A menu insert.

    e) A table tent on the table.

    3) There are specific rules for food facilities which have a drive-through area. (“Drive-through” means an area where a customer may provide an order for and receive standard menu items while occupying a motor vehicle.)

    B. On and after January 1, 2011, the following requirements apply:

    1) If you provide a menu, you must disclose the calorie content information for a standard menu item next to the item on the menu in a size and typeface that is clear and conspicuous.

    2) If you use an indoor menu board, you must disclose calorie content information for a standard menu item next to the item on the menu board in a size and typeface that is clear and conspicuous.

    3) If you use a display tag as an alternative to a menu or menu board to describe a standard menu item that is displayed for sale in a display case within your facility, you must disclose calorie content information for that standard menu item on the display tag for that item in a size and typeface that is clear and conspicuous.

    4) There are specific requirements for food facilities that have a drive-through area.

    Notes: (1) As described above, in some cases SB 1420 specifies that a food facility must display “nutritional information,” while in other cases it specifies that “calorie content information” must be displayed. SB 1420 requires that covered food facilities disclose the specified nutritional information from July 1, 2009, through December 31, 2010, and that starting January 1, 2011, they only have to provide calorie content information–but not the other nutritional information. However, if you want to continue displaying all of the nutritional information after 12/31/10, that is acceptable if you don’t want to change the information you provide. (2) Apparently, covered food facilities can use brochures, menu inserts, and table tents only through December 31, 2010, and after thereafter they have to use the appropriate mechanism listed in paragraph 3.B, above.

    4. How Do I Determine My Nutritional and Calorie Content Information?

    A. As noted above, on and after January 1, 2011, covered food facilities must disclose calorie content information. SB 1420 provides the following guidance on how to comply with this requirement:

    1) The disclosure of calorie content information on a menu or menu board next to a standard menu item that is a combination of at least two standard menu items on the menu or menu board, shall, based upon all possible combinations for that standard menu item, include both the minimum amount of calories for the calorie count information and the maximum amount of calories for the calorie count information. If there is only one possible total amount of calories, then this total shall be disclosed.

    2) The disclosure of calorie content information on a menu or menu board next to a standard menu item that is not an appetizer or dessert, but is intended to serve more than one individual, shall include both of the following:

    a) The number of individuals intended to be served by the standard menu item.

    b) The calorie content information per individual serving. If the standard menu item is a combination of at least two standard menu items, this disclosure shall, based upon all possible combinations for that standard menu item, include both the minimum amount of calories for the calorie count information and the maximum amount of calories. If there is only one possible total amount of calories, then this total shall be disclosed.

    B. The nutritional information and calorie content information required by this section shall be determined on a reasonable basis. (“Reasonable basis” means any reasonable means recognized by the federal Food and Drug Administration of determining nutritional information, as well as calorie content information, for a standard menu item, as usually prepared and offered for sale, including, but not limited to, nutrient databases and laboratory analyses.) A reasonable basis determination of nutritional information and calorie content information shall be required only once per standard menu item, provided that portion size is reasonably consistent and the food facility follows a standardized recipe and trains to a consistent method of preparation.

    C. Note that SB 1420 states that it “shall not be construed to preclude any food facility from voluntarily providing nutritional information in addition to the requirements of this section.”

    5. What Liability Might I Have Under SB 1420?

    SB 1420 provides the following:

    • Menus and menu boards may include a disclaimer that indicates that there may be variations in nutritional content across servings, based on variations in overall size and quantities of ingredients, and based on special ordering.

    • [SB 1420] shall not be construed to create or enhance any claim, right of action, or civil liability that did not previously exist under state law or limit any claim, right of action, or civil liability that otherwise exists under state law. The only enforcement mechanism of [this bill] is the local enforcement agency.

    • Commencing July 1, 2009, a food facility that violates this section is guilty of an infraction, punishable by a fine of not less than fifty dollars ($50) or more than five hundred dollars ($500), which may be assessed by a local enforcement agency. However, a food facility may not be found to violate this section more than once during an inspection visit. Notwithstanding [Health and Safety Code] Section 114395, a violation of this section is not a misdemeanor.

    6. Can Local Government Enact Nutritional Information Ordinances?

    No. SB 1420 provides:

    To the extent consistent with federal law, [SB 1420], as well as any other state law that regulates the disclosure of nutritional information, is a matter of statewide concern and occupies the whole field of regulation regarding the disclosure of nutritional information by a food facility. No ordinance or regulation of a local government shall regulate the dissemination of nutritional information by a food facility. Any ordinance or regulation that violates this prohibition is void and shall have no force or effect.

    7. How Will SB 1420 Be Enforced?

    Given the language of SB 1420, it is quite likely that at least some limited service hotels will have to comply with it.

    This legislation will be enforced by local environmental health officials. At this very moment, the local health officials (through the California Conference of Directors of Environmental Health) are working with the California Department of Public Health and industry associations (California Hotel & Lodging Association, California Restaurant Association, California Retailers Association, and California Grocers Association, among others) to develop the specific policies and procedures that will be used to guide industry and local health officials.

    And Don’t Forget: The California Retail Food Code (CalCode) has undergone very significant changes in the past two years, and many retail food establishments are not aware of all of new requirements and restrictions. For example, CalCode imposes on food service managers an obligation to be aware of symptoms food handlers exhibit and determine if they might have one of a number of specified diseases; if so, the managers have to force the employees in question to change positions or leave work altogether.

    If you have questions about this HotelLawBlog or anything else related to retail food operations, feel free to contact Jim Abrams (415-984-9679 or jabrams@jmbm.com).

    This is Jim Butler, author of www.HotelLawBlog.com and hotel lawyer, signing off. We’ve done more than $60 billion of hotel transactions and have developed innovative solutions to unlock value from troubled hotel transactions. Who’s your hotel lawyer?

    ________________________
    Our Perspective. We represent hotel lenders, owners and investors. We have helped our clients find business and legal solutions for more than $60 billion of hotel transactions, involving more than 1,000 properties all over the world. For more information, please contact Jim Butler at jbutler@jmbm.com or 310.201.3526.

    Jim Butler is a founding partner of JMBM and Chairman of its Global Hospitality Group®. Jim is one of the top hospitality attorneys in the world. GOOGLE “hotel lawyer” and you will see why.

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