Archive for January, 2011

Taco Bell Defends Itself With New Ads

Monday, January 31st, 2011

Battling a hit to its public image from a lawsuit over its taco meat, Taco Bell is going direct to consumers with full-page advertisements in leading U.S. newspapers offering “the truth” about its seasoned beef.

The campaign comes in response to a lawsuit filed earlier this week in California alleging that Taco Bell falsely advertised as “beef” a taco filling that includes “extenders” and other non-meat substances. Taco Bell has said it is considering legal action against the plaintiff for false statements.

The confusion resulting from media coverage of the lawsuit has damaged Taco Bell’s public image, according to data from customer perception research firm BrandIndex.

Prior to the lawsuit, Taco Bell had been registering BrandIndex scores well above the quick-service segment average of 12.2, from survey respondents who had eaten at a quick-service restaurant during the previous 30 days.

On Jan. 19, the day plaintiff Amanda Obney filed her claim, Taco Bell’s index score reached a peak of 31 among frequent QSR diners, but its scores have fallen sharply since news of the suit came to light. The brand finished Jan. 28 with an index score of negative 2, which was still falling as of press time.

BrandIndex calculates its scores of overall brand perception by surveying 5,000 consumers each weekday; averaging ratings of companies’ reputations and their customers’ satisfaction; and subtracting negative responses from positive ones, yielding an overall index score between negative 100 and positive 100.

In Taco Bell’s newspaper ads Friday as well as those on its website, the chain fought back with full disclosure of its taco meat ingredients. Taco Bell president and chief concept officer Greg Creed described the campaign as giving away its “secret” recipe.

Irvine, Calif.-based Taco Bell, a system of about 5,600 restaurants, is operated and franchised by Louisville, Ky.-based Yum! Brands Inc.

In the print ads, a letter from Creed says, “Thank you for suing us” in large letters, and goes on to say that the claims made against the quick-service chain’s seasoned beef are “absolutely false.”

Both the ads and a detailed response on the company’s website outline specifically the ingredients used in its taco meat.

Obney’s lawsuit alleges that Taco Bell is misrepresenting “taco meat filling” as beef in its products, referring to a U.S. Department of Agriculture definition.

The lawsuit seeks an unspecified amount in relief and asks that Taco Bell launch a corrective advertising campaign to “educate the public about the true content of its food products.”

The USDA’s Food Safety and Inspection Service would regulate any meat-processing facility that might produce such products for restaurants.

The agency defines ground beef as having no more than 30 percent fat, and, not including added water, phosphates, extenders or binders, though seasoning may be an ingredient.

“Taco filling” must contain 40 percent meat and the label used by the processing facility must show the product name as “taco filling with meat,” “beef taco filling” or “taco meat filling.”

In the ads and online, Creed affirms that Taco Bell’s meat does not include “extenders” to add volume, and that the ingredients added to the USDA-inspected ground beef used are typical of any cooking process.

Taco Bell states that its seasoned beef is made up of 88 percent beef.

The other 12 percent includes: water, representing about 3 percent; and spices, representing another 3 percent to 5 percent, including salt, chili pepper, onion powder, tomato powder, sugar, garlic powder, cocoa powder and a proprietary blend of Mexican spices and natural flavors.

Another 3 percent to 5 percent is represented by oats, starch, sugar, yeast, citric acid and other ingredients, which the company said contribute to the flavor, moisture, consistency and quality of the product.

“We’re cooking with a proprietary recipe to give our seasoned beef flavor and texture, just like you would with any recipe you cook at home,” the company said on its website. “For example, when you make chili, meatloaf or meatballs, you add your own recipe of seasoning and spices to give the beef flavor and texture, otherwise, it would taste just like unseasoned ground beef. We do the same thing with our recipe for seasoned beef.”

Ted Marzilli, senior vice president for BrandIndex, said Taco Bell’s slip to less favorable perceptions was statistically significant, reminiscent of the hit Domino’s Pizza took to its public image in 2009 when employees posted a YouTube video of themselves contaminating food.

However, Domino’s BrandIndex score dropped 20 points in the first week and took five weeks to recover back then. Taco Bell’s scores have dropped more than 30 points and are still falling, “so there’s potential for this to go longer before recovery,” Marzilli said.

A drawn-out court battle could keep the story fresh in consumers’ minds, he added, necessitating Taco Bell’s need to act decisively soon.

“The scores are still going down, and until we see a bottom, it’s hard to predict the kind of recovery period Taco Bell will need,” Marzilli said. “The bigger question is how do you bring effective communications to consumers that are more than she-said-we-said.”

He suggested hiring an independent company to collect beef samples from several Taco Bells and analyze their contents. That, in addition to the newspaper ads, “could stop this story dead in its tracks,” said Marzilli.

Taco Bell isn’t the first chain to be the target of a lawsuit questioning ingredient claims.

A class action lawsuit filed in 2007 raised questions about Pinkberry’s swirled dessert product, arguing that it didn’t meet California’s specific definitions for what could be called “frozen yogurt” and questioning whether it could be called “all natural.”

In 2005, Rubio’s Restaurants was the target of a lawsuit saying that chain falsely presented as “lobster” what was actually similar-tasting crustacean known as langostino.

Both cases were reportedly settled, with no admission of wrongdoing.

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Foodservice Industry Forecast Revised Upward

Monday, January 31st, 2011

Market research firm Technomic Inc. revised upward its 2011 forecast for the foodservice industry, citing improved macroeconomic data and increased sales momentum among many restaurants in the fourth quarter.

The Chicago-based firm released new numbers this week showing a 0.7 percentage point increase in expected sales for food and beverage, including alcohol, across the U.S. foodservice industry. Expectations for sales at U.S. restaurants and bars also were increased by 0.7 percentage points.

“It is not a monumental change, it’s a tweak, but it’s a tweak toward the positive,” Joe Pawlak, vice president at Technomic said.

This year, the restaurant industry is expected to post nominal sales growth of 2.3 percent. Excluding menu price inflation, real growth for restaurants is expected to decrease 0.2 percent. Technomic’s original forecast from last fall called for restaurant sector growth of 1.6 percent on a nominal basis, or a drop of 0.4 percent on a real basis.

“The major point that led to this change was an improvement overall in the economic situation,” Pawlak said. “GDP growth is pretty strong … the employment picture is getting better.

He also noted the sales momentum that many restaurant chains reported in the fourth quarter. This week both Starbucks and Wendy’s cited strong sales through the end of last year that the companies expect to continue in 2011.

Technomic also raised its projected menu price inflation for 2011 from 2 percent in the September forecast to 2.5 percent in the January forecast. Pawlak said the move reflected increasing commodity prices that will most likely lead restaurants to raise menu prices. Already some large players like McDonald’s and Einstein Noah have said they will take selective price increases as commodity costs rise.

EARLIER: Restaurant sales growth could hit 4-year high

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A look at Souplantation’s New Express Concept

Monday, January 31st, 2011

Garden Fresh Restaurant Corp. said customers are reacting favorably to the à la carte pricing at Souplantation Express, a quick-service alternative to the company’s buffet restaurants.

The express restaurant opened Jan. 17 in Carlsbad, Calif., in a 1,500-square-foot space with 40 interior and 30 outdoor seats. That contrasts with the San Diego-based company’s 118 conventional all-you-can-eat restaurants — known as Souplantation in Southern California and Sweet Tomatoes elsewhere — that take up 4,500 to 8,000 square feet and seat from 140 to 230 people. Garden Fresh officials have said the company plans to open four additional Express units within the next 12 months.

Business has been “great and consistent” at the first Express restaurant, where employees behind a food bar assemble salads to order, said Dan Anderson, vice president of business development and supply chain for Garden Fresh, a holding of Sun Capital Partners.

“Guest reactions are positive with the biggest complaint being the salads are too big,” he said. “Some of our most loyal buffet guests have even been pleasantly surprised with the à la carte format because of the increased choices and value.”

Anderson said an average meal at the company’s all-you-can-eat restaurants costs under $10. Customers eating at the one-time-through Express concept can spend from $6 to $15, depending on whether they order a $5.99 salad, which includes focaccia and a side of Joan’s Broccoli Madness, or a $7.99 soup-and-salad combination. Add-ons include beverages for $1.79 to $1.99 or a protein for salads.

The option to augment salads with proteins, including grilled chicken for $2 or shrimp or marinated steak for $3, is not available at the company’s buffet restaurants, Anderson said. Half a fresh avocado also can be added to Souplantation Express orders for $1; à la carte soups are $3.89 for a 12-ounce portion and $4.89 for 16 ounces; and warm cookies are available for 50 cents each or three for a dollar.

For the new Express unit, Garden Fresh worked to create a look that was “familiar and recognizable with our brand,” said Joan Scharff, Garden Fresh vice president of brand and menu strategy. She said the Express design is an attempt to bridge the look and feel of the company’s buffet prototype, which plays off the concept of a contemporary farmer’s market.

“Both used elemental colors and textures reminiscent of nature, the most beautiful fruits and vegetables and the subtle tones of earth, grass and nature,” Scharff said. “Express has a brighter palette, more citrus colors, slightly more contemporary and more whimsical.”

Garden Fresh chief executive Michael Mack has said that the company is looking to the Express concept to give it more expansion options, while leveraging its salad expertise, buying power and central kitchen systems. Outside of Southern California, the quick-service variation will be known as Sweet Tomatoes Express, the company said, with the first such store tentatively scheduled to open in a Las Vegas suburb in May.

The Carlsbad Express unit is located in the Bressi Ranch area, which Garden Fresh said features a mix of businesses and residences, with high traffic at lunch and dinner.

Anderson and Scharff said the Carlsbad Express restaurant is being promoted using local-store marketing outreach tactics, print advertising in local newspapers and through digital means, including e-mail alerts to regional members of the company’s Club Veg loyalty program. The marketing and promotion mix also includes the use of unique Facebook and Twitter channels, they added, with the intent being to ultimately drive sales through social media.

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FDA withdraws guidance on menu labeling

Monday, January 24th, 2011

The International Franchise Association voiced support Friday for a decision by the U.S. Food and Drug Administration to withdraw its draft guidance on federal menu labeling regulations as it works on final rules.

The FDA also told state and local authorities not to enforce the regulations until the final rule is published later this year.

In a statement, the agency said it recognized that the restaurant industry might require more guidance from the FDA and time to comply with the provisions that went into effect when the bill was signed last year. It said it plans to complete the full rulemaking process before it takes any enforcement action. Click here to view the FDA’s announcement.

The FDA said it would issue proposed regulations by March 23.

The IFA applauded the move by the FDA, saying it would give franchise owners more time to comply.

“The decision to postpone guidance and conduct a full rulemaking process will allow stakeholders to provide input that will result in a workable regulation for small restaurant owners,” said IFA president and chief executive Stephen J. Caldeira.

The IFA said it had earlier urged the FDA to complete the full rulemaking process for all provisions included in the law, rather than implement a piecemeal approach that could confuse operators.

The draft guidelines were published by the FDA on Aug. 25 and requested public comments before the agency issued its final regulations

Among the details included in the guidelines were:
• Making slight variations to a chain’s name would not exempt the concept from the regulations.
• Menu items available for less than 60 days would not have to include nutrition data.
• Takeout menus and online menus should include calorie information.
• Any food on display, whether self-service or accessed by the restaurant staff, must include calorie data postings.

In announcing the withdrawal of the draft guidance, FDA officials said “this approach to implementing [the regulations] will minimize uncertainty and confusion among all interested persons.”

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Sizzler sees higher checks from kiosks

Wednesday, January 19th, 2011

Sizzler is expanding a test of guest self-service kiosks, which the grill-and-salad bar chain said have resulted in faster service times and higher average checks.

Michael Branigan, vice president of marketing for parent company Sizzler USA, said two kiosks for ordering have been in test since mid-December at an El Segundo, Calif., restaurant operated by the chain, which traditionally funnels incoming guests to an order counter. The test kiosks are located near the area where customers line up to place their orders with cashiers during rushes, he said.

“[The use of kiosks] is absolutely quicker because the cashiers don’t have to prompt the guests with all the merchandising questions,” Branigan said. “It has cut the order time in half, and that is critical during the lunch daypart.”

He added that for guests using the kiosks, “we are seeing anywhere from a 15-percent to 20-percent average check lift” from the restaurant’s typical per-person check of $11.97.

After the initial success of the test in El Segundo, Sizzler plans to deploy a pair of kiosks in five additional Sizzler locations throughout California within the next month, Branigan said.

He said the chain set out on the trial involving EMN8 Inc. kiosks and Aloha point-of-sale system software with the goal of bumping tickets by 10 percent to 12 percent “through proper merchandising and prompts.”

Some operators have deployed self-order kiosks and other computerized input systems, such as online ordering systems, because of the potential for digital upselling, which use images or video and suggestive text prompts, such as those asking consumers if they want a premium topping on their sandwich or steak, a beverage or a dessert.

It is too early to say if the use of kiosks in Sizzler restaurants will meet the return on investment and service perception targets established for the technology, Branigan said, as kiosk development and deployment is not an inconsequential investment.

The kiosk trial was 13 months in the making, Branigan said, because the ordering steps involved in an operation with steaks and other cooked-to-order foods are more numerous or complicated than those needed at a quick-service restaurant, which is the segment that has spurred a good deal of kiosk development in recent years. Among other things, Sizzler guests need to be prompted about cooking instructions, seasoning preferences, steak-size upgrades or the addition of premium toppings, he said.

“It is amazing that it is literally men and women 18 to 70 that are using the equipment,” Branigan said. Though it might seem as if 18-to-24-year-old urban professionals would be the greatest users of the kiosks, he noted, “It really is a broad spectrum of people coming in and using them.”

Branigan stressed, however, that consideration of such things as income, education and store volumes are important when plotting markets or locations in which to use kiosks.

Such advance work seems to have paid off in El Segundo. Branigan said that unit was chosen as the initial pilot test site for those demographic considerations, the performance of the crew and the restaurant’s relative close proximity to Sizzler headquarters.

El Segundo Sizzler general manager Michael Tebo said customer reaction has been positive.

“My guests have been thrilled with the addition of the kiosks,” he said. “They feel like they are 100 percent in control of their purchase.”

Culver City, Calif.-based Sizzler operates or franchises 178 domestic and 85 international restaurants.

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Breakfast pizza heats up mornings

Wednesday, January 19th, 2011

Pizza for breakfast is a long-standing tradition — cold pizza, often eaten as a hangover cure by people who vaguely remember having ordered it the night before.

But now piping hot pizza, often topped with eggs but no tomato sauce, is getting significant traction in the breakfast daypart.

A year ago, Technomic’s MenuMonitor didn’t track any pizza on breakfast menus. At the end of 2010, it found 12 of them. (EARLIER: The 10 fastest-growing breakfast items)

Among them is Happy Joe’s Pizza & Ice Cream Parlor, a 60-unit chain based in Bettendorf, Iowa, that now offers breakfast pizza in 24 of its restaurants.

“We deliver it to a lot of businesses in the morning,” said Kristel Whitty-Ersan, the chain’s marketing director.

Happy Joe’s calls it an omelet pizza. It has eggs, cheese and customers’ choice of vegetables, but no tomato sauce.

The chain also has some pre-built pizzas, such as a Western, a Denver, an all-meat and a vegetarian. It sells them for around $21 per pie, which is in the same range as their specialty pizzas.

“It’s a little bit of a challenge getting your guests to think of you for breakfast,” Whitty-Ersan said. “It definitely takes time and money. But it’s a lot of fun to add a daypart.”

Although Technomic just noticed Happy Joe’s breakfast pizza, the chain has been rolling it out one store at a time for several years.

The nation’s only 24-hour Domino’s Pizza, in Dayton, Ohio, launched a line of breakfast pizzas last year, in time for the fall semester at the nearby University of Dayton. The sauce-free pizzas with cheese and scrambled eggs can be ordered for $7.99 with ham and bacon; sausage, onions and jalapeños; onion, green peppers and mushrooms; or the customers’ choice of three toppings, including anything available on regular pizzas.

“It’s doing very well,” assistant manager Steve Martin said of the pizza. “The word’s getting out there and we’re getting a lot of customers coming back and ordering more.”

He said the ham and bacon is the most popular pizza, followed by the build-your-own option.

Leona’s Neighborhood Restaurants, a 14-unit chain based in Chicago, with restaurants in Indiana and Illinois, has a dozen individual-sized breakfast pizzas available for $9.95 each.

They include the Wise Guy, with Italian sausage, pepperoni, eggs, roasted red peppers, provolone, potatoes and marinara sauce; the Popeye, with mushrooms, sautéed spinach, eggs, smoked bacon, Alfredo sauce, potatoes and blue cheese; and the Queen Mary, which has fresh mozzarella, eggs, sliced tomatoes and chopped basil all on an olive oil base.

Independent restaurants also are seeing success with breakfast pizzas. Donatella in New York City offers a Hangover Pizza at brunch that’s topped with sausage, lardo, smoked mozzarella, pecorino cheese, basil and a sunny-side-up egg.

Pulino’s Bar & Pizzeria, also in New York, has an entire section of the breakfast menu devoted to pizza, with options ranging from sausage, bacon and eggs to Nutella to roasted fruit with cinnamon and pecorino cheese. Prices range from $7 to $16.

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Side Dishes to Take Center Stage

Monday, January 10th, 2011

Menu developers are likely to shift their focus away from the center-of-the-plate and concentrate their energies on side dishes in 2011, according to food trend expert Nancy Kruse.

“I think we’re on the brink of revitalization of the side-dish category,” said Kruse, who is president of The Kruse Company in Atlanta and a columnist for Nation’s Restaurant News. “It’s been the least developed and most commoditized.”

She said the “wild popularity” of sweet potatoes has refocused research and development chefs’ attention on this normally sleepy category, and predicted the industry would see more yams — beyond fries — as well as more interesting uses of regular potatoes.

Green vegetables are “absolutely going to burst wide open,” she added, noting that they have been largely absent from menus for so long. She also reasoned that health concerns would direct more attention to such better-for-you foods.

Some casual-dining chains will be charging a premium for seasonal fresh asparagus this spring, Kruse said, adding that customers “will absolutely go for” upcharges on such health-centric items that they tend not to cook at home.

“Customers are looking for a reason to do the right thing,” she said, and if green vegetables are finished with a nice sauce or nuts or another upscale flourish, “I think they’re irresistible.”

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Wingstop to Expand in Mexico

Monday, January 10th, 2011

Wingstop Restaurants, a 475-unit chicken-wing chain, will be expanding its franchise units in Mexico.

Richardson, Texas-based Wingstop said this week it had extended its development agreement with WIS de Mexico S.A. de C.V. to add another 20 stores in Mexico over the next three years.

Franchise owners Jose Luis Serrato Villegas, Luis Antonio Ortiz Dominguez and Jose Francisco Cantu Quintero opened six Wingstop locations in Mexico City in 2010 as part of an original 10-store franchise agreement. The group will be adding stores in the Mexico Federal District, the state of Mexico, Puebla, Morelos, San Luis Potosi, Queretaro, Guerrero, Quintana Roo and Jalisco.

Mexico increasingly has become a destination for U.S. restaurant franchisors. Over the past several years, chains as varied as Wendy’s and Chili’s Bar & Grill to P.F. Chang’s China Bistro and Dave & Buster’s have signed deals to expand their presence in the nation.

“We have achieved so much since opening our first Wingstop in Satélite,” Serrato said. “We’ve developed a delivery system, have six stores in operation, celebrated our grand opening with [former Dallas Cowboy quarterback and Wingstop spokesman] Troy Aikman and created wing fans across the city.”

David Vernon, Wingstop’s vice president of franchise sales, added that “this is just the beginning of what we hope to accomplish together.”

Wingstop was acquired in 2010 by Roark Capital Group, an Atlanta-based private-equity investment company.

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Outlook 2011: Operators Predict More Hiring, Social Media

Monday, January 10th, 2011

Respondents to the NRN a.m. 2011 Restaurant Operator Survey were split on reinvestment plans for this year, but clearly said additional hiring and more social media efforts will be in the works.

More than 130 subscribers to NRN a.m. — the daily e-newsletter from Nation’s Restaurant News — took an online survey last month, helping to shed light on what the industry is expecting in the year ahead.

The majority of respondents said they expect improved sales and profit, while unit growth will remain questionable for many. The industry’s top challenges, including commodity costs, as well as possible benefits, like increased consumer spending, were also covered in the survey.

NRN is exploring the survey results in a series of articles this week.
• See Part I, covering industry expectations for the year’s biggest challenges and possible benefits.
• See Part II covering sales, profit and unit growth expectations.
• See Part III covering outlooks for menu prices and trends.

Below is a deeper look at reinvestment spending, hiring outlooks and marketing plans. Monday, NRN will run a recap of all the survey results.

Respondents said they plan to put more dollars in 2011 behind various initiatives, without a clear winner. About 28 percent said they would spend more on marketing; nearly 24 percent will look to add dollars behind restaurant redesigns; about 18 percent on technology and about 17 percent on equipment upgrades. About 13 percent of respondents chose none of those areas for reinvestment or spending plans.

With marketing spending looking to be up in 2011, respondents also delved into what specific marketing strategies they would pursue. About 43 percent deemed social media efforts as their largest marketing priority. Thirty-one percent said in-store promotions are key, and about 12 percent deemed local television advertising as their main strategy. About 9 percent will focus on national cable advertising and about 4 percent will rely on radio advertising.

Workforce outlooks suggest that operators will be maintaining staff levels or adding employees. About 56 percent of respondents said they will keep staff levels the same at their restaurant operations, while about 39 percent will look to hire additional employees in 2011. Just 5 percent said they would cut their workforce this year.

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California Inspectors Propose Grace Period for Menu Labeling

Monday, January 3rd, 2011

An organization representing restaurant inspectors across California proposed guidelines Friday recommending the penalty-free enforcement of state menu-labeling requirements that go into effect Jan. 1.

California restaurant chains face uncertainty as the second phase of state menu-labeling rules goes into effect with the new year — despite the expectation that they will be pre-empted by federal rules coming later in 2011.

Though both the state and federal laws require the posting of calorie counts on menu boards and menus, the specifics of how restaurants should disclose the information — from the size of the font, to the menu items impacted and other details — may differ. The U.S. Food and Drug Administration is not expected to nail down specifics on the federal rules until March 2011.

Concerned that chains will be forced to go through the expense of complying with the state rules, only to have to retool when the federal directive is issued, the California Conference of Directors of Environmental Health, or CCDEH, recommended Friday that inspectors allow restaurant chains a few months without formal sanctions — though the state law will still be technically enforced.

Justin Malan, CCDEH executive director in Sacramento, Calif., said the group proposed that inspectors use the transition period to educate restaurant operators about their obligations for nutrition disclosure.

“We will write them up as not in compliance” if restaurants are not following the state rules, Malan said. “But there will be no formal sanctions: no fines, penalties or restaurant close downs.”

CCDEH represents environmental health directors from the state’s 62 local jurisdictions. The guidelines issued Friday are not binding, however, and each local jurisdiction has the authority to decide for itself how to approach the issue, Malan said.

“We’ve got this gray area or hiatus period” with a state law in effect and federal rules coming, he said. “Our view is that it just doesn’t make sense for a large chain to spend thousands, maybe even tens of thousands [to bring menus and menu boards into compliance], and to have to tear it down in a few months.”

In September, the California Restaurant Association and the California Retailers Association asked for a written opinion from the state Department of Public Health clarifying the timing of the expected pre-emption of the federal menu-labeling law over the state law.

The industry groups argued that the federal menu-labeling mandate — which was part of the sweeping health care reform bill signed into law in March — is not identical to the state law, and therefore the federal rules should pre-empt California’s requirements, making them unenforceable.

In November, however, the California Department of Public Health responded by saying the issue of pre-emption was a matter for the courts or the FDA, not a state agency.

Meanwhile, restaurant operators have been forced to make a decision whether to comply with the state rules or wait for what’s to come.

“It’s like watching two ships come into port and trying to figure out which lands first,” said Harald Herrmann, president and chief executive of Yard House restaurants, based in Irvine, Calif.

Because Yard House has fewer than 20 units in California, the state mandate would not apply to the chain. But the restaurants are complying with state rules anyway, Herrmann said, because consumers will expect the information to be available.

Anna Graves, an attorney and co-leader of the restaurant, food and beverage industry group of Pillsbury Winthrop Shaw Pittman LLP in Los Angeles, said she is recommending that her chain restaurant clients check with each jurisdiction where they operate to see where health inspectors stand on the issue.

Some may want to weigh the cost of reprinting menus against the possibility of penalties.

“It’s a risk-versus-cost analysis you have to do,” Graves said.

Angelo Bellomo, director of environmental health for the Los Angeles County Department of Public Health, for example, said his agency would likely follow the CCDEH guidelines.

“We think their approach is reasonable,” he said. “We would hate to see restaurants get into compliance with the state directive only to have to redo it.”

Bellomo said inspectors in Los Angeles County would continue to enforce and apply penalties for the first phase of the California law, which requires that restaurant chains with 20 or more units in the state make nutrition information available.

After Jan. 1, however, inspectors will not deduct points for being out of compliance with the second phase, which requires the posting of calories on menus and menu boards. As a result, letter grades that restaurants must post to reflect their inspection score in the county likely will not be impacted.

Bellomo said the conversation on enforcement remains fluid and will likely continue as the federal rules develop in early 2011. By mid-year, he said, inspectors will likely shift into strict enforcement mode as more is known about the federal rules.

“We want the direction we’re giving the industry to be clear so there’s no loss of energy and no loss of resources,” he said.

Even with reassurance that penalties will not be applied, Graves said chains in California face the risk of class-action lawsuits for non-compliance.

Operators say the lack of clear guidance on the issue has been frustrating.

“We would have liked for the state and federal legislation to be more coordinated,” said Thien Ho, a spokeswoman for Rosemead, Calif.-based Panda Restaurant Group, the parent to the Panda Express chain. “Other states where we have restaurants have deferred to the federal deadline, which makes more sense to us.”

Still, the chain intends to comply with the state requirements on Jan. 1, she said, “but doing so is not without a mass effort by our operators.”

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