BOBE - SOMETHING TO NOTE


Here is what BOBE had to say:

"There are a number of federal, state and local proposals and regulations to require restaurants to provide nutritional information on menus and/or require that restaurants label menus with the country of origin of meal ingredients. For example, our Mimi's Cafés located in California are subject to a state-wide menu labeling law that will become effective on July 1, 2009. We are concerned that the continued imposition of such regulations, especially at the state and local level with varying requirements, could have an adverse effect on our results of operations and financial position, as well as the restaurant industry in general. In particular, we are concerned about the increased operating costs we will incur to comply with these requirements, as well as the potential impact on our sales and profitability if the disclosures change guest preferences and menu mix. We support the uniform standards that would be implemented across the United States under the Labeling Education and Nutrition Act (LEAN Act), which is pending in Congress."

Here are some details of the new California Law, according to the Arnold and Porter LLP.

On September 30, 2008, Governor Arnold Schwarzenegger signed into law SB 1420, making California the first state in the nation to enact statewide legislation requiring restaurants to provide nutritional information on menus and menu boards. SB 1420 applies to restaurant systems with at least 20 locations in California. Over 17,000 restaurants will be affected.

Requirements

SB 1420's requirements are imposed in a two-stage process:

By July 1, 2009, covered restaurants must provide brochures that disclose calories, saturated fat, carbohydrates, and sodium. The brochures must be available at the point of sale, and drive-through areas must display a conspicuous notice stating that the disclosure of nutrition information is available upon request. Restaurants providing sit-down service may provide the information on a table brochure, table tent, menu, or menu insert.

By January 1, 2011, covered restaurants must additionally post calorie content information next to each menu item on their menus, indoor menu boards, or menu tags (for display case items). Restaurants offering "combination" menu items comprised of one or more other items must disclose both minimum and maximum calorie information for the combination on menus or menu boards, based upon all possible combinations. Furthermore, for menu items that are intended to serve more than one individual, menus and menu boards must state the number of individuals intended to be served as well as the calorie content information per individual serving.

From the CAKE 10K - No mention of the California law only the following comments:

"New information or attitudes regarding diet and health could result in changes in regulations and consumer eating habits that could adversely affect our revenues.

Regulations and consumer eating habits may change as a result of new information or attitudes regarding diet and health. These changes may include regulations that impact the ingredients and nutritional content of our menu items and bakery products. For example, a number of states, counties and cities are enacting menu labeling laws requiring multi-unit restaurant operators to make certain nutritional information available to guests or restrict the sales of certain types of ingredients in restaurants. The success of our restaurant operations is dependent, in part, upon our ability to effectively respond to changes in consumer health and disclosure regulations and to adapt our menu offerings to trends in eating habits. If consumer health regulations or consumer eating habits change significantly, we may be required to modify or delete certain menu items. To the extent we are unable to respond with appropriate changes to our menu offerings, it could materially affect customer demand and have an adverse impact on our revenues."

I asked CKR today on its quarterly earnings call about the potential impact of the law and management stated that a similar law has already gone into effect in parts of Washington St. and has not seemed to impact sales. Additionally, the company already makes the nutritional and caloric content of all of its menu items available on its website. Management does not think this information will change people's eating habits and recognizes the new law as a hassle; though, the company will, of course, comply. Interestingly, management seems to think the posting of such caloric content could help their sales as their young guy consumers tend to use the high fat content and high calories for what the company called "bragging rights."