When the US Food and Drug Administration's (FDA) menu-labelling rule takes effect on December 1 2015, many restaurants and retail food establishments in the United States will be required to disclose calorie information on menus and menu boards for "standard menu items" and provide additional written nutrition information about such items to customers upon request. The new rule explicitly applies to standard menu items; but what about limited-time offers (LTOs)? As long as an LTO is truly for a limited time - 60 days for temporary menu items or 90 days for food that is part of a market test - the LTO is exempt from the FDA's new rule.
LTOs and franchising
LTOs continue to be a "fundamental part of the quick-serve industry".(1) Many franchise systems in the quick-serve restaurant industry use LTOs to bring in new customers, energise existing customers, test new products and generate excitement about the brand and the brand's food items. For example, in February 2015 Wendy's announced that its "North Pacific Cod sandwich" was back for a "limited time only"(2) and Bojangles' Restaurants, Inc announced that it was "bringing back its popular limited-time offer" of "Bojangles' Heart-Shaped Bo-Berry Biscuits".(3) It is thus imperative for franchisors and franchisees in the food industry to understand how the FDA's new rule treats LTOs, so that they can stay compliant with FDA regulations while achieving business objectives.
Exemptions for temporary menu items and market testing
For standard menu items, a covered establishment(4) must:
- list calorie information on the menu or menu board; and
- make additional nutritional information available in writing upon request.(5)
However, these labelling requirements do not apply to "temporary menu items" or "food that is part of a customary market test".(6) Under the FDA's new rule, "[t]emporary menu item means a food that appears on a menu or menu board for less than a total of 60 days per calendar year".(7) This 60-day limit "includes the total of consecutive and non-consecutive days the item appears on the menu".(8) Thus, a menu item that appears on the menu for 40 days in the spring and 40 days in the autumn will exceed the 60-day limit and will not qualify as a temporary menu item.
Like temporary menu items, food that is part of a customary market test is exempt from the new menu-labelling rule: "Food that is part of a customary market test means food that appears on a menu or menu board for less than 90 consecutive days in order to test consumer acceptance of the product."(9)
Although temporary menu items and food that is part of a customary market test are exempt from the FDA's menu-labelling requirements, a covered establishment can voluntarily list calories or provide written nutritional information for such food items. For example, a covered establishment may wish to voluntarily disclose such information for a test product in order to evaluate whether consumers are still likely to purchase the test product if they know how many calories it contains.
LTO exceeding 60 or 90 days
It is not unusual for a restaurant offering an LTO to have excess inventory. Can a covered establishment simply continue its LTO beyond the applicable exemption timeframe (60 or 90 days) until the inventory overage is used up? No. The exemptions applicable to LTOs involve strict calendar counting. Nothing in the statute, regulations or comments suggests that an LTO remains exempt if it was planned for less than 60 days (or 90 days for a market test), but lasts longer due to inventory overage issues; instead, it is the total number of days on the menu that is relevant.(10)
If a covered establishment extends a temporary menu item beyond 60 days or a customary market test beyond 90 days, then the exemption does not apply and the menu-labelling and nutrient-disclosure obligations kick in. At that point, a covered establishment has the following options:
- Remove the LTO from the menu after the allowed time - 60 days for a "temporary menu item" or 90 days for "food that is part of a customary market test" - notwithstanding the excess inventory;
- Continue the LTO and comply with the FDA's menu-labelling and nutrient-disclosure requirements; or
- If the LTO is part of a customary market test, change the item enough that it constitutes a new food, thus restarting the 90-day clock. The FDA's comments to the new rule explain:
"[I]f a food changes in ways such as . . . changes in product makeup, including size, shape, taste profile, and preparation, it would be a new food and the 90-day period would begin again. [The FDA] would consider the food to be a new food if it is not made with the same general recipe or same ingredients or otherwise has a significant change in the nutrient profile during the market test."(11)
This third option above provides a creative solution for covered establishments that want to sell remaining inventory at the end of the exempt time period without the burden or expense of updating menus, menu boards and written nutrition disclosures for a menu item that will be discontinued as soon as an inventory overage is gone.
For further information on this topic please contact Jess A Dance or Rebecca Cohenour at Perkins Coie LLP by telephone (+1 303 291 2300) or email (firstname.lastname@example.org or email@example.com). The Perkins Coie LLP website can be accessed at www.perkinscoie.com.
(1) "The Art of the LTO", QSR (Aug 2012), available at www.qsrmagazine.com/promotions/art-lto.
(2) "Wendy's North Pacific Cod Sandwich is Back on the Line", Wendy's (February 9 2015), http://ir.wendys.com/phoenix.zhtml?c=67548&p=irol-newsArticle&ID=2014759.
(3) "Bojangles' Sweetens Valentine's Day with Heart-Shaped Bo-Berry Biscuits", Bojangles' (February 3 2015), http://newsroom.bojangles.com/press/155/bojangles-sweetens-valentines-day-with-heart-shaped-bo-berry-biscuits.
- "part of a chain with 20 or more locations";
- "doing business under the same name"; and
- "offering for sale substantially the same menu items" (21 CFR § 101.11(a)).
The phrase 'restaurant-type food' is generally defined as food that is "[u]sually eaten on the premises, while walking away, or soon after arriving at another location" (id). As long as they meet these criteria, sit-down restaurants, fast-food restaurants, grocery stores, convenience stores, bakeries, coffee shops and entertainment venues such as cinemas, amusement parks and bowling allies are covered establishments that must comply with the FDA's new menu-labelling rule.
(10) See 79 Fed Reg 71,156, 71,185 (December 1 2014) ("Whether a 'seasonal item' would be exempt would be determined by whether the seasonal item satisfied the definition of a 'temporary menu item' as determined by the total number of consecutive and non-consecutive days per calendar year that the menu item appears on the menu or menu board").
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.