Fast-food franchises face major menu changes that may lead to decreased profits when the Board of Health’s recently-passed ban on large sugary drinks goes into effect March 13, 2013.
The so-called “big soda ban,” part of the city’s controversial plan to combat obesity in the city, states that food service establishments cannot serve sugary drinks over 16 ounces. The ban will be a big change for many New Yorkers, as a 2010 survey conducted by the New York City Department of Health and Mental Hygiene found that 30 percent of adults in New York consume one or more sugary drinks each day.
Despite pushback by the beverage industry, small businesses, and individuals, the Board of Health passed the ban with eight votes in favor and one abstention by Dr. Sixto R. Caro. “The reality is that we are in a health crisis, and we need to act on this… This is a small step, but a bold and exciting step towards a better and healthier New York,” said board member Dr. Deepthiman K. Gowda, a professor of medicine at Columbia University.
While those opposing are in the minority, that minority is vocal, and packs a punch.
Alexandra Kogan, who co-owns a Bryant Park branch of Subway with her father, is one who may suffer because of the ban. “We might lose customers,” she said, “We have customers that come in specifically for the 40-ounce drink.” In fact, the smallest fountain soda size they offer is 21 ounces – five ounces over the limit.
Kogan hasn’t started preparing for the ban, but her customers have. “They’re dealing with it, buying water or bringing soda from home,” she said. While Subway hasn’t notified Kogan of any changes, she said the company will probably send them new cups to use when the ban takes effect. “We can’t compete with other franchises on this one because it’s the law,” she said. There won’t be anywhere else for customers to go.
Other fast-food outlets are in the same boat. Octavia Williams, a manager at a Burger King near Rockefeller Plaza, said the branch has been preparing for financial losses. “Yeah, we’ll lose money,” she said, “We’re tracking how many [sodas] we sell in a day so we know. We sell 100 a day of larges, so that’s a lot of money.” Williams noted that soda sales change depending on traffic – but at $2.49 per large soda, that’s at least $249 a day.
A large soda at Burger King is 32 ounces – and like Subway, the smallest fountain cup is 21 ounces. Williams doesn’t know how customers will change their habits in March. “They’re going to be thirsty!” she said.
But there is a chance that customers won’t change their habits, and will instead find new ways to consume more than 16 ounces. A 2010 study in the National Bureau of Economic Research’s Working Papers found that mandatory calorie counts at Starbucks led to almost no change in purchases of beverage calories, Starbucks’ main source of revenue.
At My Place Deli, a deli near the western edge of Madison Square Park that sells coffee and snacks, a customer and employee discussed the ban. “He [Bloomberg] shouldn’t have any say telling people what to drink,” said customer Louie Covati, who admitted that he enjoyed the occasional soda. Covati paid for his black coffee and Adam Fayyed chimed in as he worked the cash register. “Yeah, if he wants to control what we drink, he can go screw himself,” said Fayyed. “If you want to drink a large soda, you’re going to order twice, it will cost the consumer more.”
Having the freedom to choose what – and how much – to drink drives New Yorkers for Beverage Choices, a coalition composed of businesses and individuals against the ban. Eliot Hoff, the organization’s spokesperson and senior director of the communications firm APCO Worldwide’s New York office, said the ban will impact many sectors of the food service industry economically, from beverage companies to unions representing workers who deliver beverages. “Businesses will absolutely lose profits from this ban… if you can’t make drinks then you can’t get customers to buy drinks,” he said.
With over 330,000 supporters to date, New Yorkers for Beverage Choices will focus on adding more members in the coming months. “We could have three times as many [coalition members], but they’re afraid of retribution by the Department of Health. They give them a letter grade… they’re nervous about being outspoken,” said Hoff. The coalition is also looking into the possibility of a legal challenge before the ban it takes effect.
Not everyone in the food service business is opposed to the ban. Dakasheesh Patel, who owns a hole-in-the-wall coffee shop by Herald Square, supports it. He said that families come into his shop all the time and buy sodas for their kids, who cry and stomp their feet for a Coke. “They give small kids these things… [they’re] not good for their system,” Patel said, gesturing to his soda stand. “The ban is good because only water is good for the health of the people.”