Worried that compliance with federal menu-labeling regulations will create problems for the nation’s chain pizza operators, members of a newly formed coalition of pizza companies representing 20,000 locations are traveling to Washington, D.C., to present their concerns directly to legislators.
Gathered under the banner of The American Pizza Community, or TAPC, executives from such usually competitive brands as Domino’s Pizza, Papa John’s Pizza, Little Caesar Enterprises, the International Pizza Hut Franchise Holders Association, Hungry Howie’s and Godfather’s Pizza are banding together to meet with federal lawmakers June 19-20. They will address challenges they expect to face from the yet-to-be enacted menu-labeling provision — which was passed in 2010 as part of President Barack Obama’s sweeping health care reform package.
While most pizza chains previously relied on the National Restaurant Association and the National Council of Chain Restaurants to voice their concerns to legislators, TAPC members said more could be done to effect changes favorable to their specific conditions and operations.
The coalition’s decision to take its individual message to Capitol Hill reflects the wide diversity and sometimes divergent needs inherent within the foodservice industry, which also has given rise to such specialized associations as the International Franchise Association and the now-defunct Council of Independent Restaurants of America.
Nevertheless, TAPC members insist the formation of the new association was not born out of any dissatisfaction with the Washington-based NRA or NCCR. It was created to deliver a more personalized pizza- centric message to lawmakers.
Caroline Oyler, vice president and senior counsel at Papa John’s, said the world’s third-largest pizza chain is an NCCR member and that “we do get value from that. But NCCR represents a cross-section of all chain restaurants and isn’t always able to address issues specific to this one segment.
“We found [pizza chains] were aligned on some of these issues, and we believe that speaking as a group will help,” she added.
Lynn Liddle, executive vice president of communications, investor relations and legislative affairs at Domino’s, agreed.
“Most of us are active members of both groups, and we have had successes in working with them,” Liddle said, citing advances in reduced credit card fees. “We see ourselves as unique, however, and in need of addressing issues specific to pizza.”
NRA and NCCR spokesmen said neither organization views TAPC’s formation negatively or as a sign that their groups aren’t meeting pizza-company member needs. NCCR executive director Rob Green said his association’s obligation to bring a wide range of restaurant chains together to discuss all appropriate issues automatically broadens the scope of its focus.
“What we’ve tried to do is get everyone around the table to discuss what their challenges are, specific to menu labeling,” Green said. “But if there’s some disgruntlement about what we’re doing for the pizza industry, no one’s coming out and saying it on the record.”
NRA executive vice president of policy and government affairs Scott DeFife, agreed, saying the industry’s largest association always works to balance the attention given to each segment’s particular concerns.
“Many members of our board are from the pizza segment, and they talk to us all the time about the needs of their companies and stores,” DeFife said. “So while we are attuned to issues that are somewhat unique to pizza, … we do focus most on the threads that tie the entire industry together as a common business enterprise.”
TAPC members point out they have specific problems when it comes to menu labeling.
“When there are 34 million ways to top a pizza just at Domino’s, it’s easy to understand how the one-size-fits-all situation currently proposed doesn’t work for pizza,” said Liddle, who also serves as chair of TAPC. “We want to go to Washington to offer up alternatives that would work for pizza.”
The industry is still waiting for the U.S. Food and Drug Administration to promulgate the final menu-labeling regulations.
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Meanwhile, TAPC’s members are in the process of defining the goals of the new organization.
Liddle described the nascent TAPC as “young and just beginning,” and added, “It even took a while for us to jump through all the legal hoops to be able to meet as a group.”
Still, Oyler said, TAPC wants to grow its membership rolls even while there is no firm plan for a formal trade association.
For the time being, TAPC’s interests are chain focused since federal menu labeling applies only to restaurant companies with 20 or more units — a stipulation TAPC calls unfair since it exempts at least half the pizza segment’s 70,000 operations. Liddle also said the majority of their brands’ franchisees own three or fewer stores and that the potential costs associated with compliance to menu-labeling regulations would be burdensome to those small enterprises.
“Even though they’re part of a large chain, the majority are still mom-and-pop businesses,” she said, adding that legislators don’t appear to understand that. “That’s part of what we’re hoping to explain by going to the Hill and knocking on some doors.”
What pizza is not, TAPC members say, is quick-service food that customers consume exactly as described on a menu board. Lack of customization allows most restaurants to present a relatively uniform description of all products on the menu, said Jeff Rinke, vice president of marketing at Hungry Howie’s, a 550-unit chain based in Madison Heights, Mich.
“A Big Mac is a Big Mac is a Big Mac wherever you go,” Rinke said. “But pizza is totally customizable with every order. So how do you label an item [that hasn’t been built yet] accurately on a menu board?”
National legislators’ first rendering of menu-labeling requirements, dubbed the LEAN Act — Labeling Education and Nutrition — was widely accepted by pizza operators as flexible enough to work within their operations. However, changes were later made to the act, which became known as the Menu Education and Labeling, or MEAL, Act. Among other things, it specified all nutritional information must be posted on store menus.
That change, Rinke added, remains the sticking point for pizza operators, who say the huge number of specifics cannot fit on a menu board.
“And why would we have that on a menu board anyway, when more than half of our customers order online or use the phone?” he said. “So at the very least, we want to get some clear, concise and understandable rules.”
This is not the first time restaurant chains have voiced dissatisfaction with the MEAL Act. In 2009 20 foodservice brands — including several major pizza chains — sent a letter to members of Congress urging them to broaden the scope of the legislation. Signatories contended it was a mistake to limit the measure’s application to only large chains, which would exempt more than 75 percent of U.S. restaurants. They said it should cover more supermarkets and convenience stores, as well.
But while menu labeling was the chief stimulus for the creation of the new pizza coalition, Liddle said its members have other concerns, as well — for example, fluctuating commodity pricing and labor regulations that routinely erode margins. In addition, state-specific wage regulations for tipped delivery drivers and occasional driver unionization efforts create their own headaches.
TAPC members also hope they can help legislators understand how the current farm bill’s ethanol-friendly aspects boost protein prices and hurt restaurants’ bottom lines.
“We want to see things change in a way that will benefit the group and lessen that volatility,” Liddle said.
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