Calorie labelling in the out of home sector: consultation analysis

7. Costs to businesses

Question 13 - Please list any costs to businesses in addition to those listed that you think need to be considered in our economic evaluation

Overview

In total, 288 individuals and 59 organisations provided a response to question 13.

Many respondents used this question to reiterate their lack of support for the proposal at all. Several also stressed that the costs to businesses (especially small and micro businesses) was one of the main reasons why the policy should be avoided.

Costs to business

Among those who did directly answer the question that was asked, the main perceived costs to businesses that were directly associated with the policy were:

• Materials (paper, ink, printing, etc.) associated with updating labelling/signage/menus;
• Accessing nutritional analysis systems/appropriate software/license fees and associated infrastructure (IT resources, etc.);
• Staff time costs associated with generating accurate calorie information;
• Staff training costs (to familiarise themselves and understand the new requirements, training in how to accurately generate calorie values and training in how to explain calorie content to consumers, etc.);
• Paying specialists/nutritionists to carry out nutritional analysis where existing employees are unable to do so (and/or specialists for installing and maintaining analysis programmes); and
• Staff time for uploading calorie content information any digital platform (e.g. menus for online ordering, etc.).

Among these, costs of staff time in calculating calorie contents was the most frequently mentioned concern (again, especially for and among small businesses) and was seen as unduly burdensome (especially for organisations that operate with volunteers).

There was no clear difference in views between those representing different types of organisations and, within sectors, a wide range of different costs were presented by individual respondents. For out of home providers and the one manufacturer who answered this question, concerns were arguably more linked to resources required to complete recipe analyses and calculation of nutritional values of the food and drink items supplied. Among industry representative bodies and public bodies, there was a slight emphasis on staff training and education costs, as well as staff costs associated with time to calculate calories and issues around staff recruitment and retention in the industry.

Overall, however, most respondents viewed that increased costs would arise as a result from a combination of all of the above:

"Every aspect of this policy leads to additional costs: product testing, extra staffing, labelling, maintenance, staff training, printing. This is an additional financial burden that businesses should not be expected to absorb at a time when many are still recovering from the impacts of the pandemic." [Organisation, Industry Representative Body]

More nuanced concerns included that considerable time/cost would be required to calculate calories of each menu item where ingredients needed to be changed/substituted on particular days or changes made to standard menus at short notice. The lack of flexibility in the proposal was mentioned again in this regard.

A niche concern,especially among small businesses, was also that some businesses may be forced to adjust food quality and limit food choices as a result of the change. Some currently bulk buy products to keep prices low, with bulk buy products often having higher calorie contents. If businesses felt obliged to substitute such items for lower calorie alternatives (to keep their restaurants attractive and viable in a competing market), this may increase prices of menu items and costs to customers. Conversely, others who use high quality products may substitute them for low quality lower calories items which would also have negative consumer consequences.

The policy may also deter some businesses from using locally produced or seasonal produce, as to adjust menus to accommodate changing ingredients would be too costly and time consuming.

If costs of regular monitoring and labelling were too high, some smaller business may simply also choose to limit their menus to reduce burdens which in turn would limit consumer choice.

A more generic concern was that mandatory calorie labelling may be off-putting and deter customers, which would simply reduce their 'eating out' activity as a result, and thus have a knock-on impact on business revenues/profits.

Temporary business closures (especially for small businesses) to allow them to make the various required changes would also result in lost revenue, it was stressed. Longer term, some smaller and micro businesses may find it too difficult, with permanent closure as a result:

"This will close down many small guest houses, cafes, etc. as it will make cooking a total nightmare. The cost in additional time will be enormous. Most will just give up." [Organisation, Out of Home Provider]

Similarly issues around recruitment and retention were raised by a few, such as concerns around staff leaving the industry because they find it too challenging.

Environmental costs were also highlighted by a small minority, including environmental impacts associated with more printing, paper, internet use, electricity consumption. Similarly, if businesses stopped using local produce due to concerns around costs and time with updating menus, this may have negative impacts on the environment (in terms of produce being brought in from further afield and needing to be transported, with associated emissions). Environmental concerns were also raised in relation to food waste, i.e. food waste for those items on the menu that people are put off ordering.

Health costs, in terms of potential for increases in disordered eating and associated mental and physical health outcomes were also raised.

Similarly, moral costs associated with removing consumer choice as to whether they are/are not exposed to calorie information was raised by a few:

"The costs of consumers deciding they do not wish for that level of control. The higher costs and restricted choices are one of the factors that drove consumers to turn their back on pubs, the same thing could happen here and change or even destroy the already beleaguered food industry for good." [Individual]

Several respondents again stressed that they felt the focus should not be on the cost to businesses but should be on the negative impacts on people (i.e. personal health costs). Offering education rather than legislation around healthy eating was again encouraged, as the costs of raising nutritional awareness in the round may represent better investment and provide better returns to society as a whole.

Other comments made by just one or two respondents each included that funding would need to be provided by the government to support businesses, that there would be increased costs to the public purse in enforcing/monitoring the policy and that costings should have already been considered before the policy was proposed and that businesses (rather than the wider public) would be more able to comment on this question and so should be separately consulted.

Only a small number of respondents who supported the policy and gave a substantive response to this question put forward any new or different views from those above. The main additional comments were that:

• the costs outlined in the consultation document appeared to be comprehensive;
• costs could be mitigated if sufficient time was afforded to businesses of different sizes/capacity to respond to the change;
• it may be prudent to 'get past' the current cost of living crisis before businesses were asked to implement any new strategy that would cost them money;
• most businesses already had digital platforms which could be easily updated and so would require little in terms of time for updating; and
• any costs would be justified if they improved public health.