There’s an old saying that tells us that pizza is like sex; when it’s good, it’s great and when it’s bad, it’s still pretty darn good. As with most good things in our life, former President Obama decided to tamper with one of those. Thankfully it’s the pizza this time (though I wouldn’t put the other past him). As sacred as you’d think everyone’s favorite binge food would be, in a sweeping federal register that topped 81,640 pages in length there’s a portion about franchise restaurants that might just put your neighborhood pizza joint in a real pinch.
Former President Obama set out so many regulations during his presidency, he apparently holds the record for the greatest number of pages of regulations added to the federal register in both a single day and a single year. And while he’s (thankfully) no longer president, some of his insane regulations will take effect next month if President Trump doesn’t step in.
Thanks to the good old Affordable Care Act rearing it’s ugly head again, any franchise restaurant that has more than 20 locations will be required to provide calorie counts for every item on the menu AND every possible variant of that item. This isn’t such a huge issue for your basic entree and side restaurants where the dishes are all straight forward, but with places like pizza restaurants, or your local Starbucks, the number of ways you can customize your order is almost limitless.
Via Allen B. West:
According to the National Review’s Kevin Williamson, Dominos executive Tim McIntyre said “We did the math. With gluten-free crusts to thick to hand-tossed to pan pizza, multiple sizes, cheeses, toppings . . . there are about 34 million possible combinations. That is difficult to put on a menu.”
Not that anybody is ever going to use it. The great majority of Domino’s orders are placed over the Internet and almost all the rest are placed by phone. The number of people who walk into a Domino’s outlet, look at a menu, and order a pizza is relatively small, representing only a few percentage points of Domino’s customers. Other pizza chains see roughly the same thing. So the signs are going to be largely useless, but they’re also kind of expensive, “Useless + Expensive” being the classic federal regulatory equation.
McIntyre estimates a price between $3,500 and $5,000 per location. That isn’t very much to a big corporation like Domino’s, but the Domino’s corporation doesn’t operate all those Domino’s shops: Those are franchises, run by independent owner-operators. The profit margins are low, and five grand is a lot to put on a business that might only be throwing off $40,000 or $50,000 in profit a year. Or less: Franchise chains are pretty tight-lipped about what their stores actually earn, but if we assume a 5 percent profit margin, typical of such restaurants, and an average sales volume of about $730,000, as reported in 2013 by the Motley Fool, then that’s only $36,500 per store, meaning that a $3,500–$5,000 sign could easily eat up a tenth of a year’s profit.
If you want to think of it this way, that’s over a month’s pure profit eaten up in a way that is probably not even helpful to 95% of customers. One can understand the importance of requiring allergen information, but at the point that you’re ordering pizza, who has counting calories at the top of their list? There have actually been studies done that assessed the change in ordering habits of McDonald users before and after the calorie count was put on their menu. Turns out, on average, people’s orders were about 50 calories more when they were made aware of the exact amount that they would be consuming. So in reality, as with much of his legislation, it looks like this Obama policy might turn out to be as big of a failure as his tenure in office. Personally, I prefer to order my indulgence with a little plausible deniability added in, but it looks like I won’t even have that anymore.
(Source: Allen B West)