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Savvy operators turn to marketing tactics to overcome regulatory surge

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It's been a hectic time for the so-called "food police." In December New York City's board of health banned trans fats in restaurants. Also in 2006, Chicago's city council passed a law prohibiting foie gras in restaurants. Meanwhile, smoking bans abound across the entire country.

"Cities are becoming food regulators," explained Kevin Moll, chief executive of National Food Service Advisors, a Denver-based consulting firm. "Cities are determining what can and can't be sold."

As more restaurants fall prey to new rules and prohibitions, many in the industry are screaming uncle. But both chains and independent restaurants also are taking innovative approaches, such as adjusting early, before the bans take effect, or using the new regulations to their advantage.

Starbucks, which has nearly 12,000 retail locations around the world, has been pushing the regulatory curve. Earlier this month the Seattle-based coffee giant disclosed it would cut trans fats, which are derived from partially hydrogenated oils, in half of its stores. However, the company said the decision wasn't motivated by New York's action. Experts in the industry regard the move as progressive.

"It speaks volumes to the fact that the industry is already moving down the path of removing trans fats from product lines … and I think those companies should be applauded," said Donna Garren, vice president of health and safety regulatory affairs for the National Restaurant Association.

She added that such a move actually resulted from years of research and product development. But local governments that decide to ban trans fats should be aware that restaurants do need time to adjust their offerings and ingredients, Garen said.

"It is disheartening with cities or municipalities when they go on a path without consideration or knowledge of our industry," she said.

But some restaurants have managed to adapt well to regulations. Restaurants in warmer climates, for example, cope better with smoking bans because they can use their outdoor seating areas, according to Scott Adams, a professor in the Department of Economics at the University of Wisconsin-Milwaukee. "It puts restaurants at an advantage to have an outdoor seating area," Adams added. In addition, restaurants in areas of the country where there are fewer smokers also fare better, he said.

Adams, along with colleague Chad Cotti, is studying the economic impact of smoking bans around the country. Together the duo wrote a paper entitled, "The Effect of Smoking Bans on Bars and Restaurants: An Analysis of Changes in Employment." A total of 16 states have adopted smoking bans, according to the National Restaurant Association.

Some restaurants have seen a boost in business prior to the implementation of a ban because of early marketing efforts. Tom Spenseller, president of the Hospitality Association of South Carolina, said that in areas of the state where local bans didn't exist, a few restaurateurs held press conferences publicizing their plans to go smoke free without a government mandate. But such success often was short-lived, Spenseller said, particularly if bans ultimately went into effect.

"It paid off where there were no bans in place," he said. "Now that [the bans] are in place, the only ones marketing are the ones saying they are smoking locations."

New York Prime A Steakhouse, located in the Buckhead section of Atlanta, has experienced strong sales since a smoking ban took effect about two years ago precisely because he has a smoking establishment.

"We saw an increase because we remained [a smoking establishment]," said Bobby Donlan, a partner in the restaurant, which is part of the CentraArchy, a chain based in Charleston, S.C. "Some of those bars that went nonsmoking lost that customer to us."

He cites about 12 customers who started coming to his restaurant as a result of the ban. New York Prime A Steakhouse, which has 32 tables, offers nine tables for smokers. The restaurant is located in the front of the restaurant. A bar also provides a place for patrons to smoke. The ban mandates that smoking restaurants not seat patrons under 18 in those areas.

"It's not something we're flaunting," Donlan said of the smoking section. "But amongst the smokers, they know where the smoking bars are."

Although no smoking ban is in effect in her city, Van Eure, owner of The Angus Bar in Raleigh, N.C., already has thought about what it might do to business. Her restaurant's Wild Turkey Lounge is a favorite spot for patrons who want an after-dinner drink and a cigar.

"I think it's a terrible thing for the government to do," she said. "Let a restaurateur choose for themselves whether they will make themselves smoking or nonsmoking."

Still, not all regulations are bad, she admitted. Eure is in favor of a new regulation that puts limits on the amounts of fats, oils and grease that are released into the septic system.

"That is not even a question," she said. "We have to do that. That is the right thing to do."

The government also is now beginning to look at recycling, but Eure is already on that bandwagon. The Angus Barn, which serves between 750 and 1,000 people each night, started recycling about seven years ago. It was a conscious choice, Eure said.

"Now we recycle every single thing," she said, adding that the amount of waste the restaurant produces is "unbelievable."

The restaurant has won an environmental award from the state for its efforts. Its menus also indicate to diners that the restaurant recycles.

Eure noted that the restaurant would have had a hard time setting up the program, which takes about two years to implement, under a government mandate with a tighter deadline.

"It's harder when you're behind the eight ball," she said.

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