Restaurants: Continuing to see wage pressures beyond minimum wage issues  

Monday, March 06, 2017 2:28:00 PM

Source: Goldman Sachs

09 Jan 2017


The Bureau of Labor Statistics (BLS) reported the detailed breakdown of wages data for November on 01/06. It continues to show a significant gap between the impact of minimum wage increases vs actual restaurant wage inflation, which supports our view that restaurant wage inflation will remain a headwind into 2017 regardless of any federal minimum wage increases. More broadly, low-end wage growth accelerated in November, remains elevated relative to post-recession levels, and continues to outpace higher-end wage inflation. We provide other key takeaways below:


Limited service wage pressures in excess of minimum wages continue: Limited service restaurant wages tend to correlate strongly with changes in minimum wages (as they fall at or just above minimum wages, Exhibit 4); however, this relation broke starting in 2014 and suggests additional pressure as a result of tighter labor markets. Even with limited service inflation moving down sequentially (+5.1% yoy vs +4.6% in October), it is outpacing the impact of minimum wages by 2.8%. Taking into account an additional 70bps of national pressure from state minimum wages increases taking effect 12/31/16 or 1/1/17 and maintaining this 2.8% gap suggests 5.0% inflation in 2017 vs 4.4% in 2016.


Casual dining inflation also remains elevated: Casual dining wage inflation remained flat at 5.1% yoy, which is ahead of the guidance ranges provided by companies.


Low-end income growth moderates, but supportive of industry demand: Low-end wage growth accelerated to 2.7% in November (vs 2.6% in October); however, income growth (the sum of wage and job growth) slowed slightly (at 4.5% in November, 3m moving average). We continue to view this as supportive of industry demand trends; however, would note secular share losses are acting as a meaningful offset (particularly among casual diners).


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Binny's Continues Expansion 

Monday, March 06, 2017 1:25:00 PM

Chicago Chain focuses on remodels and new locations



by Liza B. Zimmerman

January 04, 2017


"We want to grow at a healthy pace, but organically, not ever sacrificing standards along the way," said Doug Jeffirs, the Lincolnwood, Illinois-based director of wine sales for the 35-location chain. Binny's has been opening an average of three stores a year, all of which are currently in Illinois, although Jeffirs added that the company is eyeing the neighboring state of Wisconsin. Plans had been in the works to open locations in neighboring Indiana before recent laws changed, mandating that wine store owners must live in Indiana in order to open stores there.


Harold Binstein founded the operation in 1948 as Gold Standard Enterprises and Binny's superstore opened in Des Plaines in 1993. Michael left his career as a journalist in Washington D.C. to join the business when his father passed away in 1995.


The newest stores' range from 20,000 to 30,000 feet and carry 4,000 to 6,000 of wine SKUs. "All have walk-in wine cellars, humidors and rare and collectible spirits rooms," said Jeffirs. Some of them even have, space permitting, tasting bars and classrooms.


Four new stores opened last year [ed: 2016]--in the suburbs of Mokena, Montgomery, Lincolnwood and the city location of Logan Square--and three remodels took place. Corporate already has papers signed on the next two locations to open in Portage Park and Springfield in 2017.


In terms of recent remodels, Jeffirs said that "we try to let the customers lead us here. We use comments and surveys and reaction to a lot of feedback." Some of the changes include wider aisles and display signage to make the stores easier to navigate. Reviews from Binny's staff and major wine publications, as well as pricing, are also prominently displayed. Unlike BevMo!'s stores, Binny's locations do not score wines. The new look strives to be boutique in a big box format, he said. He added that the changes "aren't dramatic, but center around staff and service."


When choosing new areas in which to open stores "lots of factors come into play, including customer requests," he noted. "Before we opened our St. Charles store, a customer sent a nice--and compelling!--letter with $20 for gas money [asking us] to come and check out the neighborhood." It was $20 well spent as it lead to Binny's opening a store there in July of 2006.


Service Comes First


Competition in Chicago for wine sales is fierce between Binny's, independent fine-wine shops such as Perman and the Printer's Row Wine Shop, supermarkets and even drug stores like Jewel-Osco. For Jeffirs, what sets the chain apart is a focus on knowledgeable customer service. "We have more than 100 staff members certified by the Wine & Spirit Education Trust [WSET], Court of Master Sommeliers and Cicerone [beer studies] program."


The chain also runs WSET courses at its stores and pays for any level of WSET courses for employees who want to pursue further wine studies, after they have been in their jobs for at least six months. They also host hundreds of classes with special teachers that are free for wine club members, each year.


Their showplace location is the Marcey Street store that used to be Sam's Wine & Spirits. The original warehouse has been built out and connected to a three-story brick building that used to be a 1905 pumping station. The 50,000 square-foot space is now home to both retail space and a tasting room. It is the chain's top-grossing store, bringing in tens of millions in revenue a year.


"We have taken over most of the larger players in Chicago," Jeffirs added. Total Wine & More! had made a brief foray into the city in the 1990s but soon closed up shop. The former's Zimmerman's chain was also absorbed by Binny's. Chain player Jewel-Osco is coming on strong and are "banking 100-percent on the convenience factor as they don't complete on pricing or knowledge."


"We understand the importance of convenience," for consumers, he added. So Binny's tries to offer a combination of "being a destination and being in the right spot." They strive to offer the fullest wine set possible, even in suburban and rural markets.


Stores in the city tend to be more diverse and focus more on imports. There is a minimal core list for all stores and individual buyers have a fair amount of autonomy. For instance, the store in Montgomery stocks three times the amount of Midwestern wines as most of the other stores do.


The next project on the horizon is remodeling and expanding the Highland Park location. "It is our biggest-grossing, suburban store." The revamp will add an additional 8,000 square feet to what is a currently 30,000 square-foot space. The store has already proved itself to be a high earner, as one of handful of stores that are grossing more than half of the revenue of the flagship Marcy Street store.

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Illinois: More suburbs banning alcohol smoking, powdered alcohol 

Friday, March 03, 2017 10:32:00 AM

Source: Daily Herald

Eric Peterson

January 2, 2017


New methods of ingesting alcohol that bring about quicker intoxication are causing some suburban leaders to adopt local prohibitions before they've encountered even a single example.


Schaumburg officials are planning to follow in the footsteps of those in Naperville, Pingree Grove and River Forest on Jan. 10 by outlawing the possession and sale of both powdered alcohol and alcohol-smoking devices.


Powdered alcohol -- known as "Palcohol" -- can be added to already alcoholic beverages to make them more potent.


"Alcohol without liquid" devices, or AWOL machines, vaporize liquid alcohol into fumes that can be inhaled, reaching the bloodstream faster by bypassing the body's digestive system.


The local ordinances give communities prosecution powers and more control over methods of ingesting alcohol that have been deemed dangerous, though they're already banned at the state level, authorities in the suburbs say.


"We're trying to stay in front of it," Schaumburg Police Chief Jim Lamkin said. "For us, it was pre-emptive. From a public safety standpoint, it's something we just don't want here."


Under the pending law, violators would have the option of paying a $250 fine if they don't want to contest the charge, or request a local adjudication hearing, at which the fine could be potentially dropped or go as high as $1,500.


Naperville adopted its bans on Palcohol and AWOL machines in the spring, and it has still not encountered any violations nor received any complaints about the new laws from any business or individual.


Naperville City Prosecutor Kavita Athanikar said Palcohol was developed by a hiker as a way of making alcoholic beverages portable in nonliquid form. Among the problems the powder creates for law enforcement is its ability to more easily conceal a controlled substance, she said.


Naperville Mayor Steve Chirico, whose responsibilities include that of liquor commissioner, said the city's bans were inspired by a national newspaper article that described the practice of alcohol smoking at bars on the East and West coasts as well as Chicago.


"If it happens in Chicago, it will work its way out here," Chirico said. "Hopefully, it won't catch on."


Pingree Grove and River Forest officials also said they've never encountered any such devices before or since the recent approvals of their bans. DeKalb officials could only say they haven't come across any recent violations of their law adopted back in 2006.


Schaumburg is expected to soon join Naperville on the growing list of suburbs that are enacting bans on the use of alcohol-smoking devices and powdered alcohol. The inventor of this device, known as the Vaportini, says such laws are well-meaning but ill-informed.


Palmer said most laws against AWOL machines are well-intentioned, though some can be ill-informed.


Though she acknowledges the devices can be dangerous if their primary goal is to provide faster intoxication, Palmer said hers is significantly different in both design and intent.


Because only an ounce and a half of alcohol can be vaporized at any one time with the Vaportini, its effect is more like sniffing a glass of spirits rather than quick intoxication, Palmer said.


Among 100,000 units sold in three years, there have been no complaints of health risks, she said.


"As a responsible business owner, I did not want to sell a product that would be dangerous in any way," Palmer said.


Though there are 23 states that ban AWOL machines -- including Illinois since 2007 -- those laws describe the devices in such detail that the Vaportini is exempt, Palmer said.


However, the pending Schaumburg law defines the machines broadly enough -- a device that vaporizes alcohol for any but medical reasons -- that the Vaportini would be included in the ban, Schaumburg Village Attorney Rita Elsner said.


And Dr. Salahuddin Syed, an addictionologist at the Amita Health Alexian Brothers Behavioral Health Hospital in Hoffman Estates, said there are no variations of an alcohol vaporization device he could endorse from a medical perspective.


"I don't believe these are safe in any capacity," Syed said. "If (users) don't get an effect, they often keep going until they get an effect."


The devices seem to have caught on more with teens and young adults who would have difficulty getting alcohol legally, he said.


While outlawing the devices has kept them out of the mainstream, unsupervised parties and other private settings are where they're most often used, Syed said. Local bans like the one in Naperville increase awareness and ensure that users can't argue ignorance of state law as a defense, he said.


The medical reasons local officials are citing are also valid, Syed said, because the quickness of the inebriation they cause is more likely to create an addiction -- especially in young people.


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Your state is soaking you for beer money 

Friday, March 03, 2017 10:32:00 AM

Source: MarketWatch


Mar 1, 2017


There are a whole lot of taxes behind the price of your six-pack of beer. But how much you pay depends largely on where you live, and how beer-friendly your state is in general.


Before you even purchase a pint, six-pack or case of beer, excise taxes are imposed on that beer on both the federal and state levels. In the untamed corners of state beer law, excise taxes range from a scant 2 cents per gallon in Wisconsin to $1.29 in Tennessee, more than double the federal levy.


Currently, the federal beer excise tax sits at $18 a barrel, or 58 cents per gallon. That translates to roughly 5 cents for every 12-ounce bottle or can. However, there's a provision that limits the hit to $7 for every barrel for breweries that produce 60,000 barrels or fewer. As noted by Bart Watson, economist for the Boulder, Colo.-based Brewers Association craft beer industry group, 91.8% of the breweries that existed at the end of 2015 brewed 7,500 barrels or fewer, meaning they paid just 22 cents per gallon, or 2 cents per 12-ounce serving.


Even if a brewer makes up to 2 million barrels - which applies to every brewer other than Boston Beer Co. SAM, +1.36% Diageo-Guinness DEO, -0.52% Pabst, Heineken, North American Breweries (Genesee, Magic Hat), Constellation Brands STZ, +0.50%  (Corona, Ballast Point), MillerCoors and Anheuser-Busch In-Bev BUD, +0.41%   - it receives the $7-a-barrel rate on the first 60,000 barrels before paying $18 for every barrel thereafter.


However, that rate was set in 1991, when there were only 312 breweries in the United States. Last year, after years of pushing competing legislation designed to cut those excise taxes, the D.C.-based Beer Institute industry lobbying group and the Brewers Association jointly introduced the Craft Beverage Modernization and Tax Reform Act (CBMTRA). The legislation's stated tax goals are to reduce the excise tax on the first 60,000 barrels from $7 to $3.50 for domestic brewers producing fewer than 2 million barrels annually, reduce the standard $18 rate to $16 per barrel on the first 6 million barrels for all brewers and importers, and keep the tax at $18 per barrel for any barrels over 6 million.


With 5,005 breweries in the U.S. at the end of last year, that legislation would have broad, significant impact if passed.


When last year's version was introduced, it seemed like not only a way to lessen the tax levy, but a means of sorting different-sized brewers by the Brewers Association's definition of a craft brewer. At the time, Brewers Association CEO Bob Pease told us that he saw the CBMTRA as a means of not just defining smaller brewers, but helping them grow and hire more workers.


"We came very close at the end of the last session of Congress, due in no small part to collective effort of the assembled beverage alcohol coalition," he said at the time. "At the end of the day, we are most interested in achieving tax recalibration for America's small, Main Street brewers. If that means that large brewers, or distillers or wine makers, have their excise taxes recalibrated, too, we are comfortable with that."


This year, the CBMTRA has been reintroduced in both the Senate (S. 236) by Sens. Ron Wyden (D-OR) and Roy Blunt (R-MO) and the House of Representatives (H.R. 747) by Reps. Erik Paulsen (R-MN) and Ron Kind (D-WI). Last year, those bills drew 52 supporters in the Senate and 289 in the House, which would have bode well for its chances if it had actually made it to a vote.


"The Craft Beverage Modernization and Tax Reform Act is common-sense legislation that will keep America's beer industry dynamic and growing," said Jim McGreevy, president and CEO of the Beer Institute, in a statement made after the bill was introduced. "Today, the beer industry supports more than 1.75 million U.S. jobs and generates nearly $253 billion in economic activity, which is equal to about 1.5% of the U.S. GDP."


The Brewers Association's Watson notes that, by his group's 2015 estimates, brewers would save $131 million through those changes in tax law. He posits that brewer growth would quickly offset the change in tax revenue and estimates that the bill would create $8 in GDP growth for every $1 in lost government revenue.


While both the Beer Institute and Brewers Association envision that newfound cash being plowed back into breweries through investments in infrastructure and personnel, there's a strong chance that, in many states, it just helps offset the cost of the state excise tax.


According to the Federation of Tax Administrators, median beer excise tax rates among U.S. states sits at 20 cents per gallon, but the disparity between the excise taxes imposed by various states has tangible consequences for beer's growth in those states.


In Wisconsin (6 cents per gallon), Oregon (8 cents), Colorado (8 cents) and Pennsylvania (8 cents), brewers face a beer excise tax that's well below that of not only neighboring states, but the rest of the nation collectively. Unsurprisingly, Wisconsin (121 breweries in 2015, 2.9 brewers per 100,000), Oregon (228, 7.7 per capita), Colorado (284, 7.3 per capita) and Pennsylvania (178, 1.9 per capita) all rank among the most bustling beer states in the union. Even Wyoming and its 2-cents-per-gallon excise tax - for a state with a population smaller than most major U.S. cities - still manages to have upwards of 23 breweries and 5.5 breweries per capita.


Meanwhile, Alaska ($1.07 per gallon), Hawaii (93 cents, not counting the additional 54 cents per gallon for draft beer), Alabama ($1.02 between state and local taxes), Georgia (85 cents between state and local taxes) and Tennessee ($1.29 between excise and wholesale taxes), impose some of the highest beer taxes in the land. Alaska's 23 breweries are the fewest in the Pacific Northwest (even though it ranks eighth in breweries per capita). Meanwhile, Hawaii's 13 breweries, Alabama's 24, Georgia's 45 and Tennessee's 52 don't seems so bad until you realize it ranks them 37th, 47th, 48th and 40th in breweries per capita, respectively.


Also, since beer excise taxes aren't static, states like Louisiana and Ohio can raise them whenever they're looking for added revenue. This is where it pays for brewers to respond with a strong, politically active brewers' guild.


"As for state issues - that's always in conjunction with the relevant state guild," BA's Watson says. "We certainly help our guilds to tell the story of job creation going on with small brewers and how raising the state excise tax could jeopardize that."


That said, both federal and state beer excise taxes are only part of the broader equation. Washington state imposes a beer excise tax of 26 cents per gallon - more than three times that of neighboring Oregon - yet has more than 300 breweries and nearly 6 per capita (sixth-best in the country). Having friendly laws governing beer sales and distribution in a state with a long craft beer history and mature base of drinkers tends to offset costs a bit. The same applies in Illinois, where a 23-cent state excise tax is enhanced by an additional 29-cent tax in Chicago and 9-cent tax in surrounding Cook County. However, there are 66 breweries in Chicago itself and more than 100 in the surrounding suburbs. That's more than the brewery count in all of neighboring Indiana, where beer excise taxes are a flat 12 cents.


Beer excise taxes, laws governing sales and distribution, and a passionate base of both local brewers and drinkers willing to lobby for changes to both of the above all play a role in making a great beer experience. While it would be nice if it cost you less to drink a beer, there are greater forces influencing the price of every bottle or can you drink than the 2 to 5 cents that Uncle Sam tacks on to each serving.


Jason Notte is a freelance writer based in Portland, Ore. His writing has appeared in The New York Times, The Huffington Post and Esquire. Follow him on Twitter @Notteham.

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Will Anheuser-Busch InBev Now Dominate Craft-Beer Brewpubs? 

Wednesday, March 01, 2017 5:47:00 PM


Source: NASDAQ


By Rich Duprey, Motley Fool 


December 24, 2016




Anheuser-Busch InBev (NYSE: BUD) has tried everything to assert itself in the craft-beer industry. First it launched its Shock Top brand of craft-y beer, then it started buying up craft brewers, followed by acquiring distributors and demanding others carry only its brands of beer. It even bought the two biggest suppliers to the homebrew market, the seeding ground for future craft brewers.




Its latest venture is just another step in its efforts to dominate craft beer as it does mass-brewed suds: It's now opening craft-beer brewpubs.




On the house




On Dec. 16, Anheuser-Busch's first Goose Island Vintage Ale House opened its doors in London and the brewer plans on opening a string of the craft-beer-inspired pubs based on the Goose Island brand, which itself began as a brewpub on Chicago's North Side in 1988.




In 2011, A-B InBev acquired Goose Island from Craft Brew Alliance (NASDAQ: BREW) , which had a 42% stake in the brand, for $39 million. In a way, A-B was already invested in the small craft brewer because it owns 32% of Craft Brew Alliance, but Goose Island was also the first craft brewery the megabrewer purchased outright. From there, it has made about a dozen other acquisitions , including Blue Point Brewing, 10 Barrel Brewing, Elysian Brewing, and Breckenridge Brewery.




Anheuser-Busch's acquisition also sparked a frenzy of craft-beer buyouts by bigger brewers. Heineken bought half of Lagunitas in 2014; Constellation Brands paid $1 billion for Ballast Point Brewing last year; MillerCoors owns a portfolio of craft-y beers, including Blue Moon; and a private equity firm recently bought a stake in Dogfish Head Craft Brewery.




Pub crawl




The brewpub formula is something different, though -- a completely new direction to cash in on craft beer's popularity. It's not that Anheuser-Busch doesn't own or hasn't operated pubs in the U.S. or in the past. As noted, Goose Island operated brewpubs when it was acquired, and A-B opened one this past June at the Hard Rock Hotel & Casino in Las Vegas. It also intends to open a pub in Philadelphia next summer. In addition, Anheuser-Busch runs several dozen Belgian Beer Cafes.




What makes this latest initiative noteworthy is that Anheuser-Busch is launching the pub in London with plans to expand elsewhere in Europe. Compared to the U.S., where the craft-beer industry has matured significantly over the past 20 years, despite its relative small size in relation to mass-produced beer, the craft-beer movement in Europe is still in its infancy.




Well, not quite: The beer market there is different than in the U.S. For example, there are more than 1,500 beers in Belgium, the home of Anheuser-Busch InBev; Belgium reportedly has more breweries per person than any other country, as well as more than half of the world's Trappist monastery breweries. Regional beers are also important in the country. The Belgian beer industry as a whole could probably be described as "craft," while Germany's beer-purity law, the Reinheitsgebot, imposes a near-craft-beer requirement on German brewers that make them more artisans than anything else.




Crafting global growth




Yet according to the Brewers Association, the trade group representing the American craft-beer industry, craft-beer export volumes increased more than 16% in 2015; exports hit 446,151 barrels and $116 million, with Western Europe witnessing a 33.4% increase.




So it makes sense for Anheuser-Busch InBev to target Europe for expansion for its brewpubs, as opposed to the U.S., where there are more than 5,000 breweries in operation -- 99% of which are craft brewers -- and 1,650 brewpubs as of last year.




A-B's Goose Island pub in London will offer the brand's various barrel-aged beers along with an American smokehouse-style menu, which makes it a decidedly American-flavored effort that capitalizes on the growing popularity of U.S. craft beers. It's easy to see how Anheuser-Busch could replicate the model here and become totally vertically integrated: from the brewing and distribution of the beer, to serving it in its own alehouses that allow it to own the craft-beer market.



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CDC: Three Chicago Neighborhoods Rank In Highest Binge Drinking Rates 

Wednesday, March 01, 2017 5:44:00 PM

Source: CBS

December 21, 2016


Data from the Centers for Disease Control and Prevention revealed that three Chicago neighborhoods are among areas with the highest rates of binge drinking in the country.


As part of the 500 Cities project, data found that large areas of Lakeview, as well as the Bucktown/Wicker Park neighboorhood and the South Loop, rank among the highest in the country, with 31 percent or more residents engaging in the behavior.


 "The purpose of the 500 Cities project is to provide city- and census tract-level small area estimates for chronic disease risk factors, health outcomes, and clinical preventive service use for the largest 500 cities in the United States," according to the CDC. "These small area estimates allow cities and local health departments to better understand the burden and geographic distribution of health-related variables in their jurisdictions, and help them plan public health interventions."


The most recent data, taken in 2014, estimates more than one-third of residents in these areas engage in binge drinking. The highest is Wrigleyville (34 percent), which ranks No. 20 out of more than 29,000 neighborhoods nationwide in the CDC data.


Binge Drinking, defined by The National Institute on Alcohol Abuse and Alcoholism, is a pattern of drinking that brings a person's blood alcohol concentration to 0.08 grams percent or above. It typically occurs when men consume five or more drinks, and when women consume four or more drinks, in about a two hour time span.


The CDC says binge drinking among men is twice as common, than among women.


Binge drinking is the most common pattern of excessive alcohol use in the United States, according to the CDC, with one in six U.S. adults binge drinking about four times a month, consuming about eight drinks per binge.


Binge drinking can lead to unintentional injuries, such as, car crashes, falls, burns and drowning; it can also lead to intentional injuries, such as, firearm injuries, sexual assault and domestic violence.


Binge drinking is linked to many other health problems including alcohol poisoning, high blood pressure, stroke, and other cardiovascular diseases; poor control of diabetes, liver disease, neurological damage; sexual dysfunction, STDs, unintended pregnancy, children born with Fetal Alcohol Spectrum disorders.


Binge drinking does not just cost the drinker, but it costs the country.


Drinking, including binge drinking, cost the United States $249-billion in 2010, or $2.05 a drink, from losses in productivity, health care, crime, and other expenses, according to the CDC. Binge drinking was responsible for 77 percent of these costs, or $191-billion.


While Lakeview, Wicker Park, Bucktown and the South Loop residents like to drink, they don't smoke much. Data revealed smoking is highest on West and South Sides. The data also reveals unhealthy behaviors, such as, physical activity, obesity and sleep; health outcomes, such as, arthitis, asthma, cancer and mental health; and uses of preventative services. To see how your neighborhood matches up to these behaviors and health issues, view the CDC's data maps.

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Does a soda tax work? Philadelphia gains $5.7m in tax revenue and sees drop in soda drinking 

Wednesday, March 01, 2017 9:49:00 AM


February 27, 2017

In its first month of existence, the Philadelphia soda tax has brought in $5.7m, more than double its original projection of $2.3m, according to the figures from the city's revenue department. The rise in tax revenue also corresponded with a decline in soda consumption.

The 1.5-cent-per-ounce Philadelphia soda tax went into effect January 2017.  Cook County, Illinois, also approved a soda tax that will go into effect July 1, 2017. Other US locations including Boulder, Colorado, and three cities in California: Albany, Oakland, and San Francisco have also passed a similar tax legislation.

Broken down soda tax revenue

The $5.7m of city revenue translates into roughly 32m 12-ounce cans, meaning that each of Philadelphia's 1.5m residents drank an average of 21 sugary beverages last month.

According to recent data from the city of Philadelphia's public health department, residents consume an average of 60m gallons of sugar-sweetened beverages annually, which equals to roughly 53m 12-ounce cans per month or 35 cans per person every month, marking a nearly 40% decline in average consumption.

Philadelphia Mayor Jim Kenney said that the soda industry "makes enormous profits on the backs of poor people" and estimates that the soda tax could generate up to $91m in revenue, which would go towards the city's education programs and expanding pre-kindergarten opportunities for lower-income residents.

Philadelphia officials also said that the tax would reduce healthcare costs by $200m and 700 lives in the treatment of diabetes over the next ten years, according to a Harvard Study.

Coalition says soda tax hurts local business

Ax the Bev Tax Coalition, an organization engaged in the local community, said that the "steep drop-off in sales" will only get worst and hurt the Philadelphia community.

Mexico study finds soda tax does deter sales

A study conducted by the University of North Carolina at Chapel Hill found that a tax on sugar in Mexico was effective in curbing consumption of sugar-sweetened beverages in stores. Authors of the study pulled from date on beverages purchases by 6,253 households between January 2012 and December 2014.

Purchases of taxed sugary beverages decreased by an average of 6% in 2012, and rose to a decline 14% of sales by December 2014.

"Regardless of how much money the administration says it collected in the first month of this tax, the pain Philadelphia families and businesses are feeling is very real. The beverage tax is causing prices on thousands of items to skyrocket, sending shoppers outside the city and forcing steep declines in sales," the coalition said in a statement.

"This steep drop-off in sales is already causing layoffs and a reduction in hours in family-sustaining, union jobs. For the working families paying drastically higher prices and the businesses impacted by the tax, the pain is only going to worsen over time."

ABA holding strong against soda tax

The American Beverage Association (ABA) has been fighting the soda tax (called the Sweetened Beverage Act or SBT) in the Philadelphia County Court of Common Pleas, on the grounds that it is unconstitutional and that it adds to a sales tax already imposed on soda and sugary beverages.

The ABA also funded and formed a coalition called the Philadelphians Against the Grocery Store Tax made up of business owners, teachers, and faith organizations, who said in survey that 58% of Philadelphia residents oppose the tax.

Consumers experience sticker shock

While 33 US states already have a sales tax associated with sugar-sweetened beverages, the SBT per ounce surcharge can add up to a 50% additional tax as evidenced by the following receipts from Philadelphia retail stores.

Chicago has sights set on filling budget deficit

In Cook County, which includes the city of Chicago, a penny-per-ounce soda tax was passed and is expected to generate $74m in 2017 once it goes into effect July 1st. Officials hope it will put a dent in $174.3m county deficit.

The tax applies to all sugar and artificially-sweetened drinks including fountain drinks, carbonated soft drinks, energy drinks, and fruit beverages.

However, families in the Supplemental Nutrition Assistance Program will not be affected by the additional tax.

"I don't think that soda is a staple for every family, and I would be concerned if people were drinking soda all the time," Cook County Commissioner Larry Suffredin said during the approval process of the soda tax.

"This is not gasoline we're talking about. It's a consumption tax. It's a specific product."


















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Why casual-dining restaurants should close thousands of units 

Monday, February 27, 2017 5:53:00 PM

Source: NRN

Jonathan Maze



Casual-dining restaurants have seen declining sales and traffic for a decade now, and as a result, there are fewer of them. The segment's share of the supply of restaurants in the U.S. has shrunk since 2007, according to BMO Capital Markets analyst Andrew Strelzik.


Yet there are still too many locations. Strelzik estimates the market is oversupplied by as many as 4,500 units, based on demand trends since the recession.


Closing restaurants, however, is easier said than done. For various reasons, the segment's oversupply is likely to persist - shifting sales from one chain to another as concepts work to lure from a declining share of the nation's restaurant business.


"When you look at the chains, they've been slow to adapt to the changing environment," Strelzik said. "There's just a pervasive optimism among management teams. When you're thinking of ways you can improve and ways in which your brand is different, there's an optimism that the brand can win."


Casual-dining restaurants are struggling for many reasons. For one thing, there are a growing number of competitors in the food business. Fast-casual concepts have been growing and adding units at a breakneck pace, and they get much of their business from casual dining.


In addition, grocers have added prepared food options. Consumers are also putting a premium on convenience and speed where casual dining is weakest.


"There are a lot more eating options out there," Strelzik said. "There's obviously a huge trend towards convenience, and casual dining doesn't hit on convenience."


As such, the share of restaurant traffic going to casual dining has been in a steady decline. Casual-dining traffic has increased in only four months since 2012, according to data from the MillerPulse restaurant survey.


Casual dining's share of restaurant industry transactions has fallen by 20 percent over the past eight years, according to Strelzik, to 8 percent in 2015, from 10 percent in 2007.


But the segment's share of restaurant industry locations has only declined by 10 percent, according to Strelzik. Twenty-three percent of restaurant locations were casual dining in 2015, down from 26 percent in 2007.


In his report, Strelzik estimates that for every 100-basis-point decline in transactions, the sector needs to close 800 to 850 locations to balance supply and demand. Casual-dining transactions have declined by 100 basis points every year for the past seven years, but unit count has not declined by more than 800 locations since 2009 and 2010.


Strelzik therefore estimates the sector is oversupplied by 3,000-4,500 locations in the U.S.


But closing units is not so simple. Executives are trying to grow sales and add locations, not reduce them. All of them believe they have plans that could reverse sales slides. Many of these strategies succeed, at least in the short term, so there's little incentive to shrink.


And there's always someone willing to take a chance on a brand name. A number of investors are willing to gamble on chains being sold for ultra-cheap prices.


Many brands are franchises, with franchisees who are not eager to close locations. And then there are independents, which are even less likely to close locations. Those operators are earning a living and are more likely to hold onto locations as long as they're generating cash flow - same-store sales and traffic are thus less important.


Also, a shift in focus over the years from owned real estate to leased locations makes closing units more difficult, Strelzik noted.


Several companies have declared bankruptcy this year and others have closed units, such as Ruby Tuesday's decision to shut 95 locations. Continued sales and traffic declines - and there's little to suggest an improvement - could force more of these decisions.


Still, demand for real estate is so high that many closed locations are quickly filled.


Also, there continues to be money flowing into the restaurant space from bankers and investors. For all of the industry's struggles, it is still in better shape than, say, brick-and-mortar retailers, and is thus a popular target for those looking to generate returns.


This continued investment promises that a correction is unlikely anytime soon.

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Industry: Philadelphia Soda Tax Killing Sales, Layoffs Loom 

Monday, February 27, 2017 10:41:00 AM

Source: Associated Press

February 23rd


Some Philadelphia supermarkets and beverage distributors say they're gearing up for layoffs because the city's new tax on soft drinks has cut beverage sales by 30 percent to 50 percent - worse than the city predicted.


Jeff Brown, who owns six local ShopRite supermarkets, told The Philadelphia Inquirer he expects to cut 300 jobs. Bob Brockway, chief operating officer of Canada Dry Delaware Valley, has predicted a 20 percent workforce reduction by March.


City officials expect business to rebound once customers get over sticker shock. They suggest the industry may be engaging in fearmongering to stop the spread of the tax to other cities.


Mayor Jim Kenney pushed through the 1.5 cent-per-ounce tax on sweetened and diet beverages to pay for nearly 2,000 pre-kindergarten slots and other programs. The tax amounts to $1.44 on a six-pack of 16-ounce bottles.


In dismissing reports of forthcoming layoffs, the Democratic mayor told the Inquirer he doesn't think it's possible for the industry "to be any greedier."


"They are so committed to stopping this tax from spreading to other cities, that they are not only passing the tax they should be paying onto their customer, they are actually willing to threaten working men and women's jobs rather than marginally reduce their seven-figure bonuses," Kenney said.


The city initially predicted a 27 percent decline in sales industrywide as a result of the tax. But Brockway said sales in Philadelphia were down 45 percent for his company, which distributes about 20 percent of the soft drinks sold in the city.


Brown said beverage sales decreased 50 percent at his stores from Jan. 1 to Feb. 17 compared with the same period in 2016.


"People didn't change what they drink," Brown said. "They changed where they're buying it."


Brockway claims beverage sales are up about 20 percent in suburban municipalities, and even that hasn't helped Canada Dry Delaware Valley break even.


To hit its annual target, the city needs to collect $7.6 million a month in tax revenue. The first collection was due Feb. 21, although details won't be available until next month.


Early projections from Philadelphia's quarterly manager's report have the city bringing in just $2.3 million from its first collection. City spokesman Mike Dunn said that number is expected to rise and Kenney's administration still believes it will hit its goal for the year.

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Washington: Should Washington lower the legal alcohol limit? 

Monday, February 27, 2017 10:40:00 AM

Source: K5

Heather Bosch

February 21, 2017


Washington state lawmakers are considering lowering the legal limit for driving under intoxication from .08 to .05.


"The research shows impairment begins with the first drink," said Representative John Lovick, D-44th District. "And I believe this after being a state trooper for 31 years."


Lovick said he based his legislation, House Bill 1874, on recommendations from the National Transportation Safety Board.


But the American Beverage Institute opposes the bill and similar legislation being proposed in Hawaii and Utah. The industry group claims only a small percentage of deadly car crashes are caused by drivers with a blood alcohol concentration between .05 and .08, and that a 120-pound woman could reach .05 with just little more than one drink. A 150-pound man could reach it after two.


"The move would target responsible and moderate social drinkers while ignoring the hardcore drunk drivers who pose the greatest threat to safety," said American Beverage Institute Managing Director Sarah Longwell.


Longwell says what's needed is better enforcement of current laws.


"We have to focus on the real problem and not be distracted by feel-good legislation that criminalizes perfectly responsible behavior," said Longwell.


Lovick agrees that current laws could be better enforced, but says lowering the alcohol limit to .05 would be "a great first step in letting the public know that we are serious about keeping people who drive drunk, off the streets."


Some bar patrons debated the proposal during happy hour Monday.


"Lowering it, I have no problem with it.   think people should be safe and .05 doesn't seem incredibly low to me," said Kevin Klein of Seattle.


Klein and his friends said they expect it to be an intensely debated topic in Olympia as well.


"As far as drunk driving goes -- the .08 versus point .05 limit -- it's not going to make any difference unless they actually start being really serious about enforcing it," said Gabriel Mathews.


A public hearing before the House Transportation Committee will be held Tuesday. The bill already cleared the House Public Safety committee, but not without controversy.


"There will be a few 'no' votes on this side of the aisle," Representative Dave Hayes (R-10th District) said during that hearing. "My personal viewpoint on this is just the fact that I don't believe it's necessary to reduce the blood alcohol level, based on testimony and my own personal experience in processing DUIs."


Hayes is a sergeant with the Snohomish County Sheriff's Office.  Lovick is the former Snohomish County Sheriff.


The National Transportation Safety Board has said that if every state lowered the legal blood alcohol limit to .05, it would save 1,000 lives every year.

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