The Cost of Complying With NYC’s Soda Ban
By Zachary Stieber On February 21, 2013 @ 1:03 am In New York City | 2 Comments
NEW YORK—The controversial large sugary drink ban will impact thousands of businesses in New York City financially but will also leave many others unscathed.
The large sugary drink ban, proposed by Mayor Michael Bloomberg last spring and passed by the Board of Health last September, prohibits establishments regulated by the Department of Health and Mental Hygiene from serving any beverages larger than 16 ounces that contain more than 50 calories.
The ban does not apply to alcoholic drinks, beverages that are more than 50 percent milk, or 100 percent fruit or vegetable juice.
The ban is being challenged in court by a coalition of organizations representing small-business owners; workers in the industry, such as bottlers; and beverage manufacturers. They say the ban will be costly. The coalition is pressing the judge in charge of the case to postpone the ban’s start date, currently slated for March 12.
There are roughly 24,000 restaurants in New York City, according to a Department of Health representative.
But how many of these will have to spend money to comply with the ban?
Though it’s not clear, thousands of restaurants will have to change some things if the ban makes it past the lawsuit.
Dinesh Venkata, 36, a manager at a Subway restaurant on the Upper East Side, estimates he will lose at least $500 a week.
There are two parts: one is the refillable cups. The three current sizes he carries are all over 16 ounces. If the ban goes through, they’ll all be replaced. Venkata said customers mostly buy the middle size, a 30-ounce cup for $1.75.
Predicting the store will shift to 12- and 16-ounce cups, Venkata said there’s no way he can sell a cup for $1, so the 16-ounce cup will have to be priced at $1.50. With about 1,200 middle-size cups being sold per week, he estimates lost revenue of at least $300.
Then there’s a fridge with bottled drinks, many of which—sodas and Powerade—would be prohibited under the ban. The store sells about 800 of these bottles a week. The 20-ounce bottles ($1.75) would be replaced with 16-ounce bottles ($1.50). That’s another $200 a week, “at least,” said Venkata.
Venkata thinks the loss could climb to $700 a month because right next door is a market that isn’t under the purview of the Department of Health. The market will still be able to continue selling 20-ounce bottles for $1.75, as well as larger sodas and beverages.
“The other store is two feet away, you can get a two-liter bottle and guzzle it down,” he said.
Smaller food establishments such as Subway locations will have to bear significant costs to comply with the upcoming ban. But higher end places will not have to worry about the ban.
“We serve 12-ounce sodas, so we don’t have anything larger than that,” said Tom McCarthy, a manager at Vic & Anthony’s Steakhouse, on Park Avenue and 19th Street. “With the white tablecloth restaurants, you usually don’t have any issues with that.”
The Department of Health’s board, often seen as a rubber stamp for Mayor Bloomberg (who appoints board members), passed the ban in September last year. Board members and Bloomberg cited health concerns, including a range of studies linking obesity and soda consumption. Some studies examined whether people eat or drink less if they are given smaller portion sizes, and found they do, according to Susan Klitzman, director of the Urban Public Health Program at Hunter College, and member of the Board of Health.
The impact of the ban could help put a dent in the $4.7 billion in annual obesity-related medical costs, according to the Department of Health.
But the anti-soda ban coalition submitted a lengthy document arguing against the link between soda and obesity.
Can soda, heavy in high fructose corn syrup and other chemicals, be considered healthy?
“It’s completely safe,” said Chris Gindlesperger, spokesman for the American Beverage Association and the coalition. People can still have a healthy lifestyle while drinking soda, he added. The association produces a range of drinks, including juice and water.
Candle Cafe, located on the Upper East Side, is a high-end restaurant not affected by the potential ban. It serves natural sodas, such as house made pomegranate and Concord grape chia fresca. Manager Benay Vynerib said she supports the ban.
“I think it’s the right thing to do,” she said. “I think it’s outrageous that there’s even a conversation about it. I mean we are literally poisoning our society.”
Lawyers representing the coalition of organizations against the ban argued the slated March 12 start date should be delayed until State Supreme Court Judge Milton Tingling rules on the primary case—whether or not to strike down the ban completely.
“Every single dollar spent between now and the time the court rules is wasted if the court strikes down the law,” said James Brandt, an attorney representing the coalition.
The city’s representatives said the coalition chose not to name a single store that would be affected, misrepresenting the number of places that would actually be affected by the ban—whether highlighting the potential economic impact on movie theaters or small food establishments.
“What they’re trying to do is bootstrap all the businesses that are not being harmed,” said Mark Muschenheim, counsel for the city. Brandt countered, saying if a store were named, the Department of Health might punitively target it, giving the owner a bad letter grade for speaking out.
Some places that would have to comply have received notices; others, such as the Subway Venkata manages, have not. He said he’ll take one more shipment of cups, then cancel the other two slated for this month, and work with Subway’s corporate office to get new sizes.Fines won’t be levied against businesses until June 12, according to the city. Meanwhile, the city will inform restaurant owners what changes need to be made to comply with the new rules—for example, getting smaller cups.
The judge on Wednesday told the coalition it should work out final paperwork with the city for the preliminary injunction, which would delay the ban’s start date, and submit it to him within several days. He did not give an expected date for either ruling.
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