White Collar Posts

Takeaways for the Hospitality Industry from FDA's Draft Food Labeling Guidance

September 16, 2015
By: Charles W. Spitz and Abraham J. Rein

The FDA has issued draft guidance regarding previously announced menu-labeling rules set to take effect on December 1, 2015. The scope of those rules, which require certain businesses to post nutrition information about food offered for sale, has raised questions for the hospitality industry.

The FDA’s draft guidance, issued on September 11, 2015, relates to last year’s nutrition labeling rules promulgated under the Patient Protection and Affordable Care Act, which requires certain “restaurants and similar retail food establishments” to disclose calorie information and provide a “succinct statement concerning suggested daily caloric intake” on or near menus and near self-service food and food on display. The rules, which apply only to restaurant-type establishments that are part of a chain with 20 or more locations doing business under the same name and which offer for sale “substantially the same menu items,” raised questions regarding their applicability to chain hotels that offer food in various capacities.

Four Key Takeaways

• First, the draft guidance clarifies that chain or franchise hotels offering complimentary breakfast would not, by virtue of that fact alone, be considered the sort of “covered establishments” that are subject to the rule: they are not “restaurant[s] or similar retail food establishment[s] that offer[ ] for sale standard menu items.”
• Second – in an important caveat– certain hotel restaurants that “offer for sale” restaurant-type food are covered by the new rules if they meet the criteria qualifying them as a chain. Those criteria include being part of a group of hotel restaurants with 20 or more fixed locations doing business under the same name, and offering for sale substantially the same menu items.  (It should be noted, however, that the nutrition labeling requirements apply only to food offered for sale, so even if a given hotel restaurant is a “covered establishment,” that hotel’s complimentary breakfast likely will not be subject to the new rules.)
• Third, the criteria qualifying the establishment as a chain apply regardless of the type of ownership of the locations – so individual franchises are covered to the same extent as multiple locations under common ownership – and the FDA warns that “persons exercising authority and supervisory responsibility over a restaurant or similar retail food establishment can be held responsible for violations,” suggesting that under some circumstances the FDA could, if it chose, impose vicarious liability on the franchisor or licensor of a restaurant for misbranded food at a franchise location.
• Fourth, the guidance makes clear that covered entities can comply with the labeling requirements by providing the required information via an app or internet link, but that the establishment must provide access to the information (e.g., at a kiosk or other electronic device available at the establishment), without the need for customers to supply their own electronic devices.

Conclusion

The FDA’s food labeling rules are complex and could impact the hospitality industry in a variety of ways. Licensors and franchisors that retain power over hotel restaurants’ menus and menu boards are not insulated from liability for missteps, and all hospitality chain executives, general counsel and franchisees should prioritize getting into compliance with the rules prior to the go live date of December 1, 2015. 

Disclaimer: this E-Flash does not offer specific legal advice, nor does it create an attorney-client relationship. You should not reach any legal conclusions based on the information contained in this E-Flash without first seeking the advice of counsel.