I franchisin.g

December 3, 2010

Los Angeles City Council Planning and Land Use Management Committee 200 N. Spring Street Los Angeles, CA 90012

RE: Case No. CPC-201 0-2278-GPA

Dear Committee Members,

On behalf of the International Franchise Association (!FA), I am writing to express opposition to the proposed "Fast Food Establishment Footnote" before the Planning and Land Use Management Committee. Enacting this footnote would arbitrarily and unfairly prohibit the ability of certain franchised small business owners to offer their goods and services.

The I FA's mission is to safeguard the business environment for franchising worldwide. The association represents businesses in more than 85 industries, including more than 11,000 franchisee, 1,100 franchisor and 500 supplier members nationwide. According to a 2008 study conducted by PricewaterhouseCoopers, there are more than 900,000 franchised establishments in the U.S. that are responsible for creating 21 million American jobs and generating $2.3.trillion in economic output. In California alone, there are more than 97,000 franchised businesses, employing over 1.1 million workers. This activity contributes $105 billion annually to the state's economy.

Quick service restaurants are often franchised businesses that combine local small business investors with a known national brand to create an expectation of quality, consistency and value to consumers. franchise's success depends on the franchisee's own capital, hard work and long hours. Like any other entrepreneur in Los Angeles, a franchise operating there would pay taxes, be involved in supporting community activities and create economic opportunities for employees and suppliers who would directly benefit from the existence of the enterprise.

The proposed restrictions on building and remodeling of quick service restaurants would impact an area equal to 20% of the city. The proposed restrictions would require permit applicants to get a General Plan Amendment in order to proceed with a new building or remodeling project. The proposed process would subject these small business owners to significant costs arising from application filings, numerous public hearings, Mayoral approval, and environmental review-with no guarantee of approval.

In today's challenging economic environment, there is no doubt that the proposed restriction would have an adverse affect on the value of existing restaurants in the affected area as well as the ability of business owners to open new locations and hire additional employees. Once enacted, these new restrictions would set a troubling precedent that could spread to other areas of Los Angeles and the State of California.

Therefore, the IFA respectfully urges members of the Committee to reject the proposed "Fast Food Establishment Footnote." Such drastic steps not only harm your community by weakening its economy, but they are contrary to the spirit of American entrepreneurship and fairness.

Thank you for your consideration in this matter.

Sincerely,

David French Senior Vice President, Government Relations & Public Policy

1501 K Street, N.W. Suite 350 Washington, DC 20005 Telephone: 202/628~8000 Fax: 202/628--0812 E~Mal!: ifa@franchise.org Internet: www.franchise.org

December I, 20 I 0

Englander Knabe & Allen

The Honorable City Councilmember Ed Reyes Chair-Planning Landuse Committee 200 n. Spring Street Los Angeles, Ca. 900 I 2

Dear Couneilmember Reyes,

I am writing you on behalf of the Califomia Restaurant Association's position to oppose the Fast Food Footnote to the General Plan which will replace the recently expired Fast Food !CO until the Community Plan is finished in August of20 II. This item was passed by the CPC and signed by the Mayor.

The California Restaurant Association feels that the Footnote unfairly targets one industry and creates an uneven business climate making it tougher for one unfairly singled out industry to open in South and South East Los Angeles.

This Footnote will enforce the current opinion that the City of Los Angeles is business unfriendly. This will also eliminate job opportunities during a down economic period when jobs are very difi!cult to tinct.

We respectfully ask the Planning and Land use Committee to vote against the Fast rood Footnote to the General Plan.

Thank you for your time.

Sincere~/~

Andrew Casana Partner Englander, Knabe and Allen 31 0-800-4 734

c. c. Council member Hu.izar Councilmember Krekorian

November 17, 2010

Councilman Ed Reyes Chair, Planning and Land Use Management Committee City of Los Angeles 200 North Spring Street, Room 410 Los Angeles, CA 90012

SUBJECT: CASE NO. CPC-2010-2278-GPA

Dear Council member Reyes:

On behalf of Valley Industry and Commerce Association (VICA), we are requesting that you oppose council motion CPC-201 0-2278-GPA, which would put cumbersome restrictions on new stand-alone Quick Service Restaurants (QSR) and remodeled QSRs (if there is an increase in floor area) in certain areas of South Los Angeles.

Under the measure, applicants wishing to invest in these types of projects will be required to get a General Plan Amendment. The General Plan Amendment process is time consuming, costly and uncertain and will put much-needed investment in the City at risk during a time of economic crisis. For this reason VICA opposes this proposal.

By enacting extra regulation in the opening of fast-food restaurants, we believe this to be costly to business, as it hinders the ability for businesses to operate profitably. In addition, the measure defines "fast food restaurant" very broadly and could capture a variety of "mom and pop" establishments, as well as "fast food" restaurants, with a variety of healthy options.

In addition, VICA does not recommend moving forward with this measure, even if amended, as VICA opposes any actions forced upon business that would impede their ability to conduct exchange. A policy that risks sorely-needed investment and jobs without a strong likelihood of achieving its purpose should not be rushed through the political process.

For the above stated reasons, we encourage the City Council to oppose this motion.

Sincerely,

Daymond Rice 2010 Chair

.. ~Ul Stuart Waldman President

5121 Van Nuys Blvd., Suite 203, Sherman Oaks, CA 91403 Tel. 818.817-0545 Fax. 818.907-7934 hffp:/lwww.vica.com

It'' ·"'

America's Hamburger Helper By EDWIN M. REINGOLD LOS ANGELES

When the smoke cleared after mobs burned through South Central Los Angeles in

April, hundreds of businesses, many ofthem black owned, had been destroyed. Yet

not a single McDonald's restaurant had been torched. Within hours after the curfew

was lifted, all South Central's Golden Arches were back up and running, feeding fire

fighters, police and National Guard troops as well as burned-out citizens. The St.

Thomas Aquinas Elementary School, with 300 hungry students and no utilities,

called for lunches and got them free -- with delivery to boot.

For Edward H. Rensi, president and ceo of McDonald's U.S.A., the explanation of

what happened, or didn't happen, in South Central L.A. was simple: "Our businesses

there are owned by Mrican-American entrepreneurs who hired Mrican-American

managers who hired Mrican-American employees who served everybody in the

community, whether they be Korean, Mrican American or Caucasian."

The $19-billion-a-year company has often been the target of those who disparage

everything from its entry-level wage structure to the aesthetic blight of its cookie­

cutter proliferation. But the Los Angeles experience was vindication of enlightened

social policies begun more than three decades ago. The late Ray Kroc, a crusty but

imaginative salesman who forged the chain in 1955, insisted that both franchise

buyers and company executives get involved in community affairs. l'If you are going

to take money out of a community, give something back," Kroc enjoined. "It's only

good business."

As a result, McDonald's stands out not only as one of the more socially responsible

companies in America but also as one of the nation's few truly effective social

engineers. Both its franchise operators, who own 83% of all McDonald's restaurants,

and company officials sit on boards oflocal and national minority service .

organizations, allowing the company to claim that its total involvement in everything

from the Urban League and the n.a.a.c.p. to the U.S. Hispanic Chamber of Commerce

may constitute the biggest volunteer program of any business in the nation.

Because their original prosperity came from hamburger stands in middle-class

. suburbs, McDonald's managers were at first reluctant to move into inner-city

markets. But company executives say their first tentative steps in the '70s showed

those fears to be unfounded. The policy practiced in the suburbs, which dictated that

McDonald's stores reflect the communities in which they operate, was applied to the

new urban markets. As a result, nearly 70% of McDonald's restaurant management

and 25% of the company's executives are minorities and women, and so are about

half its corporate department heads. This year McDonald's will nearly double its

purchases from companies that are minority or female owned, from last year's $157

million to $300 million. Several of the biggest are owned and operated by former

McDonald's managers or franchise holders.

The spawning ground for many of the new ideas and programs designed to integrate

the franchises into neighborhoods in which they operate has been the company's

moral and intellectual McCenter, Hamburger University, set in its own So-acre

nature preserve near Oak Brook, Ill. Since 1979 the company has held affirmative­

action seminars for its executives and managers there, as well as in many of the

company's 40 regional offices, on such topics as how to manage the changing work

force and handle career development for women, blacks and Hispanics. Each year

3,000 employees complete affirmative-action training programs that last 11/2 to 3

days. Ideas originated at headquarters and by individual franchisees have led to

programs such as McJobs, which takes on mentally and physically impaired

employees, and McPride,.which keeps students in school and rewards them for

academic achievement while they work.

Through a program devised by its store owners, the company has helped establish

153 Ronald McDonald Houses, named for the chain's trademark clown, where

families of seriously ill children can stay while the child is undergoing extensive

medical treatment, such as chemotherapy or bone-marrow transplants. Each house

serves an average of 15 families who pay from $5 to $15 a night, if they can afford it.

The local projects are supported by local fund drives, and all the money collected

goes directly to the houses; McDonald's pays all administrative costs of the program,

which extends to Canada, France, Germany, Holland, Australia and New Zealand.

But McDonald's broadest impact has been through its basic job-training system. Its

8,8oo U.S. restaurants (there are an additional3,6oo overseas from Beijing to

Belgrade) train American youth of every ethnic hue. "Sending a kid to the Army used

,,

to be the standard way to teach kids values, discipline, respect for authority, to be a

member of a team, get to work on time, brush your teeth, comb your hair, clean your

fingernails," says Ed Rensi. "Now, somehow, McDonald's has become the new entry­

level job· training institution in America. We find ourselves doing things in that role

that we would never imagine we would do." Arnongthem: paying kids to study,

rewarding them for staying in school, hiring physically and mentally handicapped

youngsters and adults and giving sensitivity training to co-workers. In a program

called McMasters, older people, usually retirees, are hired to work alongside young

crew members to give the workplace a sense of family and to set an example of

caring, courtesy and responsibility.

In conjunction with the vocational-rehabilitation services of several states, nearly

7,ooo disabled and handicapped people have been trained to function as full

McDonald's employees by job coaches drawn from within the company. Before these

less fortunate employees take their places, company trainers often put young able­

bodied workers in blindfolds, gloves or dark glasses to demonstrate the kind of

handicaps their new colleagues have to deal with in doing the same jobs ..

At Pat Newbury's McDonald's restaurant in Renton, Wash., some young employees

earn an hour's pay not for flipping burgers but for studying an hour before their work

shift begins. In a Chicago-area restaurant, Hispanic teenagers are being tutored in

English. In Tulsa, a McDonald's crew is studying algebra after work. At a Honolulu

restaurant, student workers get an extra hour's pay to study for an hour after closing.

In Colorado, Virginia and Massachusetts there are Stay in School programs offering

bonus money for employees who receive good grades. Reading-improvement classes

frequently take place at restaurants in Kansas and New Jersey.

Despite the initial skepticism of educators, McDonald's programs have managed to

allay the fears of many that work and school could not mix. In February the National

Association of Secondary School Principals passed a resolution commending the

company for "exemplary and motivational efforts to support education, students and

assistant principals."

-Bob Charles, the owner of a McDonald's in Boulder, has seen some of his employed

at-risk students begin to get A's after joining his McPride program, which limits

them to a 14-hour workweek and pays bonuses for improvement and school

attendance. Many of them have a very low level of self-esteem, says Charles. But once

".

they come to work as part of a team and gain a sense of confidence, "you'd almost

never believe the change in these kids."

Mark Brownstein's company owns 13 restaurants in Orange County, Calif., and hires

elderly and handicapped workers aggressively. "They are people who need work, and

we need people to work. You wonder why everybody makes a big deal about it,"

shrugs Brownstein. "Besides, the seniors and the special-ed kids in our stores create

a sense of humanity." Owner Jonah Kaufman has 26 handicapped people, mainly

with Down syndrome, on the payroll in his 12 Long Island stores. One of them, Joe

King, trains new employees. Kaufman says the key to his success with the disabled is

"to try not to treat them differently." McDonald's has used Braille and its own kind of

sign language as aids for impaired employees. At McDonald's Oak Brook

headquarters, staff workers are sought from specialized schools, such as Gallaudet

University and the Rochester Institute for Technology, which has an educational

center for the deaf.

Senior vice president Robert H. Beavers Jr., who gave up plans to become an

electrical engineer 19 years ago to stay with McDonald's, says the company's socially

minded business practices have made the company stronger: "Our energy level and

our understanding of the market today are much better because of the cultural

diversity we have." He points out that in the inner city, where he grew up, they say, /

"If you talk the talk, you better walk the walk."

In Los Angeles, they talked and they walked-- and they didn't burn. So Rensi and his

team intend to keep on keeping on. After all, it's only good business.

RAND I News Release I Los Angeles Fast-Food Restaurant Ban Unlikely to Have Impact ... Page I of3

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News Release

FOR RELEASE Tuesday October 6, 2009

OFFICE OF MEDIA RELATIONS 703-413-1100 x5117 and 310-451-6913 media@rand .o_rg

Los Angeles Fast-Food Restaurant Ban Unlikely to Have Impact on Obesity

Restrictions on fast-food chain restaurants in South Los Angeles are not addressing the main differences between neighborhood food environments and are unlikely to improve the diet of residents or reduce obesity, according to a new RAND Corporation study.

Researchers from RAND Health found that the South Los Angeles region has no more fast-food chain establishments on a per capita basis than other parts of the city, but rather many more small food stores and other food outlets.

Those outlets are more likely to be the source of high-calorie snacks and soda consumed substantially more often by residents of South Los Angeles as compared to other parts of the city, according to the study published online by the journal Health Affairs.

"The Los Angeles ordinance may have been an important first by being concerned with health outcomes, but it is not the most promising approach to lowering the high rate of obesity in South Los Angeles," said Roland Sturm, the study's lead author and a senior economist at RAND, a nonprofit research organization. "It does not address the main differences we see in the food environment between Los Angeles neighborhoods nor in the diet of residents."

The Los Angeles City Council in August 2008 approved a ban on opening or expanding fast-food restaurants in an area of the city known as South Los Angeles. The ordinance focused on fast food restaurants characterized by "excessive signage, little or no landscaping, large expanses of surface parking, drive-through windows, multiple driveways, parking lots fronting the street" and argued that the low-income region had a higher concentration of fast-food establishments than more­affluent sections of the city.

But an analysis by Sturm and study co-author Dr. Deborah Cohen found that South Los Angeles actually has a lower concentration of fast-food chain restaurants than other parts of the city.

http://www.rand.org/news/press/2009/l 0/06/ 12/3/2010

RAND I News Release I Los Angeles Fast-Food Restaurant Ban Unlikely to Have Impact ... Page 2 of 3

Researchers found there were about 19 fast-food chain restaurants per 100,000 residents in South Los Angeles, while there were 29 per 100,000 people in affluent West Los Angeles and 30 per 100,000 residents for all of Los Angeles County. There are significantly fewer restaurants of any type per person in South Los Angeles compared to Los Angeles County overall, according to the study.

In contrast, the density of small food stores was about double that of the county average and more than three times the number in West Los Angeles. This was partially offset by a lower density of large supermarkets in South Los Angeles.

Researchers also analyzed information from a survey of 1,480 adults from across Los Angeles County that asked residents about their food purchases and habits of eating out. The results showed that adults in South Los Angeles consumed significantly more "discretionary" calories from sugary or salty snacks and soft drinks compared with residents of wealthier neighborhoods.

Residents of South Los Angeles and residents of more-affluent areas reported eating similar amounts of fruits and vegetables each day and had fairly similar levels of physical activity, although residents of South Los Angeles did report watching more television.

Researchers say their work suggests that focusing on the sources of snack calories would address the differences between South Los Angeles and other parts of Los Angeles better than the current ban on new fast­food establishments.

"The ubiquitous availability of food can be overwhelming and stimulate hunger and cravings for food, regardless of whether an individual has a physiological need for nutrition," Cohen said. "Research has made it clear that frequency and saliency of food cues in the environment, the type of foods available, and the portion sizes served, are key issues that effective policies need to address."

One of the goals of the Los Angeles regulation is the creation of more sit­down restaurants, but in terms of diet, this is not necessarily an improvement, according to researchers.

"There is a misconception that sit-down restaurants provide "healthier" food and are less likely to lead to obesity," Sturm says. "However, when we looked at some common offerings, an average lunch sandwich in a sit -down restaurant had more than the combined calories of three Big Mac hamburgers; many dinner choices have over 2,000 calories and cover the energy needs for a full day. And that does not even include possible appetizers or desserts."

The study also found that residents of South Los Angeles and those from wealthier areas reported eating out in restaurants at about the same frequency, although South Los Angeles residents are more likely to purchase items from a food cart or mobile vender and less likely to eat in a sit-down restaurant.

While residents of South Los Angeles and those from more-affluent areas seem to shop at similar types of stores, there was one dramatic difference-many South Los Angeles residents walk or take public transit to the market, something seldom done in higher-income areas.

http://www.rand.org/news/press/2009/l 0/06/ 12/3/2010

RAND I News Release I Los Angeles Fast-Food Restaurant Ban Unlikely to Have Impact... Page 3 of 3

Support for the study was provided by the National Institutes of Health.

RAND Health, a division of the RAND Corporation, is the nation's largest independent health policy research program, with a broad research portfolio that focuses on quality, costs and health services delivery, among other topics. RAND Health is the developer of COMPARE (Comprehensive Assessment of Reform Efforts), a one-of-a-kind online resource that provides objective analysis about national health care reform proposals. Visit www.randcompare.org to learn more.

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OBESITY

F A S T F 0 0 D B A N

06 October 2009

Zoning For Health? The Year-Old Ban On New Fast-Food Restaurants In South LA

The ordinance isn't a promising approach to attacking obesity.

by Roland Sturm and Deborah A. Cohen

ABSTRACT: A regulation banning new fast-food establishments for one year in Los Angeles, California, was passed unanimously by the cjty council in July 2008. It was motivated by health concerns and excessive obesity rates in South Los Angeles. However, it might not have had the impact tha.t was intended. This paper reviews the empirical evidence for the regulation and whether it is likely to target the primary levers of obesity. We argue that the premises for the ban were questionable. For example, the density of fast-food chain restaurants per capita is actually higher in other parts of Los Angeles than in South LA. Other changes, such as menu calorie labeling, are likely to have a bigger impact on overweight and obesity. [Health Affairs 28, no. 6 (2009): w1088-w1097 (published online 6 October 2009; 10.1377/hlthaff.28.6.w1088)]

With obesity in the headlines daily, policymakers want to take quick action, even without clear evidence of what to do. Obesity takes a disproportionate toll on minority populations, especially among African American and Hispanic youth .. In media reports on obesity, common themes include blaming a toxic food environment in which poor and minority neighborhoods are overrun with fast-food chains. These outlets are believed to serve unhealthier food than full-service sit­down restaurants and to cause higher obesity rates where they are prevalent. It is also frequently reported that poor and minority neighborhoods are "food deserts" and lack grocery stores, which leads to diets that lack fresh fruit and vegetables and thereby increases obesity rates.

A recent policy influenced by these ideas is the "fast-food ban" in Los Angeles, a one-year ordinance passed in July 2008 that prohibited the establishment of new stand-alone fast-food restaurants in a South Los Angeles area with about 700,000 residents (out of 3.7 million throughout the city of Los Angeles). Articles and guides for planners to address obesity have suggested restrictions on fast-food restaurants1 However, the Los Angeles ordinance may be the

, first regulation in a major city that was influenced by health concerns and aims to attract full­service restaurants and grocery stores. Probably for legal reasons, the ordinance included references to neighborhood aesthetics that parallel existing regulations in other cities. Although the final version did not mention obesity, it stated that there "is an over-concentration of fast-food restaurants in the South Los Angeles region," resulting in "over-concentration of uses which are detrimental to the health and welfare of the people of the community."'

The term "fast-food restaurant" conjures up the image of franchises with standardized menus, food preparation, decor, external facade, uniforms, and logos. These characteristics have defined previous limits on "formula restaurants" in several municipalities, mainly for aesthetic reasons or to protect local businesses. As long as zoning ordinances are reasonable in substance and are not arbitrarily enforced, they constitute a justifiable exercise of police power and are upheld by the

courts. Typical examples of such restrictions are in Calistoga, California (population 5,000) and Port Jefferson, New York (pop~lation 8,000). However, the Los Angeles rule is different in scope. and justification; it applies only to a portion of the city (South Los Angeles). This area has a population of 700,000, which by itself would rank among the largest twenty cities in the United States--between Columbus, Ohio, and Fort Worth, Texas. The ordinance invokes health reasons for preventing new fast-food establishments from opening or existing ones from expanding, not the reason of maintaining the charm of a historic area.

This paper reviews the empirical evidence for the regulation; assesses whether the regulation is likely to target the primary levers of obesity; and discusses the effectiveness of land-use policies to address obesity. We conclude that the data do not support the premises of the Los Angeles ban and that even if the premises had been correct, this type of trade restraint would not address the health problems of the population.

Fast Food And The Business Structure In South LA

Data source. We used 2008 lnfoUSA to compare the business environments across areas and in selected businesses by North American Industry Classification System codes. We used franchise codes to identify fast-food restaurants and derive two variables: the number of restaurants of six market leaders per 100,000 residents (McDonald's, Burger King, Wendy's, KFC, Taco Bell, and Pizza Hut) and the number of restaurants of the seventy-eight largest chains per 100,000 residents. There is no specific "fast-food" category in either NAICS or its predecessor.

Population characteristics. The Los Angeles city ordinance applies only to South Los Angeles, comprising the planning areas Baldwin Hills, Leimer\ Park, South Los Angeles, and Southeast Los Angeles. More than 50 percent of the area's residents are Hispanic, 36 percent are black, and 2 percent are Asian; the median annual household income is $24,000.

In contrast, the much wealthier area of West Los Angeles (which includes Brentwood, Bel Air, Mar Vista, Marina del Rey, Pacific Palisades, Palms, Playa del Rey, Playa Vista, Venice, West Los Angeles, and Westchester) has a median annual household income of $64,000. In West Los Angeles, 17 percent of the residents are Hispanic, 5 percent are black, and 12 percent are Asian.

Density of food outlets. Whether we consider the six fast-food market leaders or seventy-eight major chains, South Los Angeles has a lower density of fast-food restaurants per 1 00,000 residents than either West Los Angeles or Los Angeles County overall (Exhibit 1 ). For major chains, there are about nineteen fast-food restaurants per 100,000 residents in the South Los Angeles area that is subject to the new ban. The average per capita density for West Los Angeles is 50 percent higher, and the average per capita density in Los Angeles County is 60 percent higher.

Exhibit 1.

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Restaurants. There' are fewer restaurants of any type (not just major fast-tood chains) per capita in South Los Angeles than in Los Angeles County overall. Los Angeles is not special in this respect, and this holds nationwide: Racially mixed or black neighborhoods nationwide have fewer restaurants and fewer fast-food franchises per resident than other areas do.~ The highest per

capita density of fast-food restaurants tends to be in neither "poor" nor "rich" areas, but in middle­income neighborhoods. Compared to these very large differences in fast-food outlet density by income, differences in the mix between fast-food and other restaurants appear small.

· Convenience stores. The per capita density of convenience stores such as ?-Eleven or Fast Mart is not very different in South Los Angeles than in West Los Angeles or the county average (Exhibit 1). What is very different is the density of small grocery stores, which is double that of the county average and more than three times th.e number in West Los Angeles: This is partially offset by a lower density of large supermarkets.

Density per roadway mile. A different way to conceptualize the number of outlets (instead of per capita) is the number per 100 roadway miles (Exhibit 1). Although this is a less common measure, it has emerged in the alcohol-use literature and reflects the odds that any single person would encounter an outlet in his or her daily iravel. It also provides a sensitivity analysis.± Examining the data in this way does not change the numbers for West Los Angeles or the county, but it increases the densities for South Los Angeles. Using the roadway-miles measure, we conclude that South Los Angeles has slightly higher densities of fast-food chains, an intermediate number of any restaurant (less than West Los Angeles but more than the county average), and a similar density of large supermarkets as the other areas. However, there is twice the density of convenience stores in South Los Angeles compared to the county average and four times the density of small grocery stores.

Reconciling the numbers witli media reports. These numbers are difficult to reconcile with media reports about an "over-concentration of fast-food restaurants in the South Los Angeles region" that is enshrined in the Los Angeles ordinance, at least when we look at the type of fast­food chain it targeted• On a population basis, the density of fast-food chains per capita and restaurants is much lower than in other areas; on a street-mile basis, it is fairly similar, but big discrepancies exist with other types of food retailers.

One data point that was repeatedly mentioned in the policy debate--a Los Angeles Times calculation of the ratio of fast-food restaurants to other restaurants--suggested that South Los Angeles had a higher ratio of fast-food restaurants to other restaurants (44 percent) than other areas had. However, restaurants with seating for ten or fewer were counted as fast-food in the Times study, regardless of what type of food they produced2 Many restaurants in South Los Angeles are small, with seating for fewer than ten people and employing either only family members or fewer than four workers. They do not share the characteristics of the restaurants depicted in the news reports: large expanses of surface parking, multiple driveways, and drive­through windows. As Exhibit 1 shows, the ratio of fast-food chains to total restaurants does not differ dramatically between South Los Angeles and the other areas.

Food Purchase And Consumption In Los Angeles

Data source. The data regarding food purchasing and patterns of eating out in South Los Angeles come frorn a RAND survey that used a multistage random sample of households in densely populated (more than 2,000 residents per square mile) census tracts in Los Angeles County. Interviews were completed with 1,480 adults, with complete data on all variables used in this analysis. With this small sample, we could not calculate numbers for West Los Angeles (only eighteen respondents), but instead we compared tracts in South Los Angeles (202 respondents) with other tracts in Los Angeles County. To provide a stronger contrast, we excluded all other tracts with a median household income of less than $40,000 in the comparison, resulting in tracts with an average median household income of $63,000 (similar to West Los Angeles and much higher than the $24,000 median household income in South Los Angeles). Our results are unadjusted for sociodemographic differences because we selected the tracts so that they would be different. It is not easy to assess diets in surveys, and there are biases toward underreporting,

..

similar to those existing in alcohol studies. The dietary questions were twenty-four-hour recall: which reduces recall biases compared to longer recall periods or questions about "typical" consumption but increases variances across individuals because of day-to-day fluctuations.

Discretionary calorie intake. Residents of South Los Angeles have a significantly higher body­mass index (BMI) and are more likely to be obese than residents in higher-income tracts of Los Angeles County (Exhibit 2). The first variable in this analysis, "snack" calories, looks at discretionary calories from cookies, candy, salty snacks. soda, and alcohol. According to the U.S. Department of Agriculture dietary guidelines, discretionary calories are calories "left over" to achieve energy balance after people satisfy their nutritional needs (other than energy balance) from recommended food itemsZ Thus. foods that do not satisfy other nutritional needs, such as candy, alcohol, and soda, always count as discretionary calories.

Exhibit 2.

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We estimated energy intake assuming that a serving of salty snacks averaged 140 calories; a serving of cookies, 140 calories; a serving of candy, 200 calories; and a 12-ounce can of soda, 150 calories for people who said they usually drink regular soda and zero calories for people who said they usually drink diet soda. We counted only 50 percent of calories from cookies and salty snacks as discretionary calories, since some of their ingredients (such as grains and nuts) could satisfy some recommended food intake needs. Calories associated with alcohol use in the past twenty-four hours were estimated from responses to average frequency, the amount consumed on a typical drinking occasion, and the respondent's report of the name of the drink most frequently consumed in the past ninety days, using 150 calories per drink for beer, 100 calories per glass of wine, and 200 calories for mixed drinks.

Consumption of these sources of discretionary calories is significantly higher in South Los Angeles than in higher-income tracts in Los Angeles County, and about half of that difference is attributable to soda consumption, which itself is statistically significant. Compared with residents of the wealthier neighborhoods, South Los Angeles residents consumed significantly morEl calories from candy (122 versus 87 calories) and cookies (49 versus 32 calories) in the prior twenty-four hours than residents in higher-income tracts did. The maximum number of discretionary calories that can be consumed while still allowing for recommended nutrients and maintaining energy balance takes into account age, sex, size, and physical activity levels and is typically less than 15 percent of total calories needed daily. Although there are many additional sources of discretionary calories, residents in South Los Angeles already exceed the maximum advisable discretionary calories just from the snack categories we assessed (Exhibit 2).

Other healthy behavior. In contrast to these highly significant differences in obesity and snacking, there are essentially no differences in fruit and vegetable consumption between South Los Angeles residents and others--in the proportion of the population having five servings of fruit or vegetables a day, average daily servings of fruit, or average daily servings of vegetables (Exhibit 2). There is no difference in the proportion of the population with at least 300 minutes of moderate or vigorous physical activity per week, although there is a bigger difference when using the lower threshold of 150 minutes (which is not quite statistically significant). However, there is one highly significant difference between the two areas: Residents in South Los Angeles watch more television.

Eating out. Residents in both areas report similar number oftimes eating out (Exhibit 3). We do not know the share of each type of outlet they patronize, only whether they eat at a particular type at least once a week. There are two significant differences: Residents in South Los Angeles are significantly more likely to purchase food from a food cart or mobile vendor, and they are less likely to go to a sit-down restaurant. Most likely, more of their meals away from home are at fast­food outlets, but the measure is not sensitive to that. We also do not have measures of how often residents use vending machines or the frequency of visits to convenience and grocery stores, which commonly sell salty snacks, cookies, candy, and sweetened beverages (for which we see significant differences in consumption patterns).

Exhibit 3.

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Grocery shopping. Residents in higher-income tracts and South Los Angeles do not seem to shop at different types of stores, despite differences in the density of food outlets (Exhibit 3), which is consistent with the similarity in their fruit/vegetable consumption (Exhibit 2). However, there is a dramatic difference in how they get to the store, with far more residents in South Los Angeles walking or using public transportation; the latter is virtually unreported in higher-income areas.

Discussion

Regulating the food environment may be a promising direction for preventing obesity. However, based on our research findings, the one-year ordinance restricting fast-food outlets is not the right application. On a per capita measure, the South Los Angeles area has fewer, not more, fast-food chains than other areas. On a roadway-mile basis, the density in South Los Angeles is slightly higher (19 percent), but this is minor compared to the two- and fourfold differences in the density of convenience and small grocery stores. Media coverage, however, continues to focus on fast­food chains, which is a misleading picture of actual differences.~

Portion sizes. Of course, it is plausible that fast-food restaurants can contribute to obesity. Over time, the competition among fast-food outlets has led to the serving of increasingly larger portions of food (known as supersizing), although there has been some retreat from this practice more recently. However, the increase in portion size is not unique to fast-food establishments.~ A study ·of 300 restaurant chefs found that although 76 percent thought that they served "regular" portions, they actually served portions of steak and pasta that were tWo to four times larger than serving sizes recommended by the U.S. government.1Q

Fast-food versus sit-down restaurants. One of the stated goals of the ban was the hope that sit-down restaurants would replace fast-food outlets, reflecting the misconception that sit-down restaurants provide "healthier" food. At Romano's Macaroni Grill, for example, the average lunch sandwich has 1,680 calories--more than the combined calories of three Big Macs; many dinner choices have more than 2,000 calories and cover the energy needs of a full day; the appetizers average 800 calories, and the desserts average 1,000 calories.11

It is unlikely that food is healthier at the large number of chains that refuse to provide nutritional information. One independent food database shows that appetizers at Outback Steakhouse and

Chili's Bar and Grill exceed 2,000 calories--far in excess of anything offered by major fast-food chains.11

How much people eat is governed by portion sizes and time spent at the dinner table.lllf people stay longer at a. sit-down restaurant, especially those that offer free baskets of bread or taco chips and free refills of sweetened beverages, they are bound to consume more calories.

Influence of external cues. Fast-fooo restaurants are not the.ohly source:~and are riot evell the major source--of too many convenient and. cheap calories. For the most part, people are unaware of how much external cues influence what and how much they consurne14 Cues include anything associated with food {pictures, ads) and, of course, food itself.

Nonperishable candy, cookies, and sodas are also sold widely in nonfood establishments such as car washes, bookstores, hardware stores, laundromats, and office buildin~s, which do not need special food licenses nor are subject to health regulations or inspectionsL The ubiquitous availability of food can be overwhelming and artificially stimulate hunger and cravings for food, regardless of physiological needs.

Promising directions. Regulations on the horizon may be more likely to address the problem of overconsumption than the action in los Angeles. Menu labeling is one such provision that provides information consumers need to make informed choices (the economist's view) as well as cues that help people restrain themselves from ordering portions that have too many calories {the psychologist's interpretation). Some localities have recently implemented such rules, and California passed a menu-labeling Jaw in September 2008 that will take effect in 2011 1§.

Reducing the exposure to food cues and the immediate availability of snacks is likely to reduce consumption of discretionary calories, which constitute one of the nutritional differences between South LA and other areas in our data. If regulations of business density were desirable at all, a focus on convenience stores and small grocery stores would seem to be more directly related to differences between South LA and other parts of the city than the ban on fast-food restaurants.

But limiting the number of stores might not be a desirable policy, because of Jack of transportation among residents, among other many factors. However, making sales of discretionary calories from snacks less profitable appears to be a promising direction. This underlies the City of San Francisco's proposed idea to levy fees on stores that sell sugar-sweetened bevera9es and the proposed beverage tax in the executive budget of the State of New York for 201 oL The main

. argument against such taxes--namely, that they are regressive, given current consumption patterns--would be easily overcome by linking them to the needs ·of populations. In San Francisco, the money generated from the fees would recoup the public-sector costs of treating the effects of obesity.

The los Angeles ordinance may be an important first, but it is not the most promising approach if obesity is the concern. Other interventions such as portion control or counteradvertising may be more likely to lead to change as far as diet and obesity are concerned. Evidence-based regulations that enable people to avoid poor diets and choose healthy ones are needed, but first there must be some changes that can be evaluated for effectiveness. Few exist, because the conceptualization of the obesity epidemic has so far focused on individual choice rather than on the role of environmental influences on diet and physical activity.

The Los Angeles ordinance is the first to explicitly recognize the need for regulations to create environments that facilitate better diets and to acknowledge that people's behavior is not independent of their environment. Although the actual policy was based on questionable premises, this represents an important conceptual step forward. Research has made it clear that

frequency and saliency of food cues in the environment, the types of food available, and the portion sizes served are key issues that effective policies need to address.

This research was funded by the National Institutes of Health (Grant no. R01 AA0137 49).

NOTES

1, M. Ashe et al., "Land Use Planning and the Control of Alcohol, Tobacco, Firearms, and Fast Food Restaurants," American Journal of Public Health 93, no. 9 (2003): 1404-1408; and J.S. Mair, M.W. Pierce, and S.P. Teret, "The City Planner's Guide to the Obesity Epidemic: Zoning and Fast Food," October 2005, http://www.publichealthlaw.net/Projects/ZoningObesity.php (accessed 2 August 2008).

2. Los Angeles City Council, Office of the City Clerk, Council File Number: 07-1658, 25 May 2007, http://cityclerk.lacity.org/CFI/DisplayOnlineDocument.cfm?SRT=D1 &cfnum=07 -1658 (accessed 2 August 2008).

3. L.M. Powell, F.J. Chaloupka, andY. Bao, "The Availability of Fast-Food and Full-Service Restaurants in the United States: Associations with Neighborhood Characteristics," American Journal of Preventive Medicine 33, no. 4 Supp. (2007): S240-S245.

4. J.A. Remley eta!., "Alcohol and Environmental Justice: The Density of Liquor Stores and Bars . in Urban Neighborhoods in the United States," Journal of Studies on Alcohol and Drugs 68, no. 1

(2007): 48-55.

5. Los Angeles City Council, Council File Number: 07-1658.

6. Doug Smith, Los Angeles Times, personal communication, July 2008.

7. The concept is defined in the food pyramid. See U.S. Department of Agriculture, "Inside the Pyramid," http://www.mypyramid.gov/pyramid/discretionary calories.html (accessed 5 January 2009).

8. The Guardian (london) summarizes that "fast-food chains such as McDonald's have become ubiquitous in America's poor urban areas." National Public Radio's All Things Considered begins with the reporter observing a McDonald's, Taco Bell, Pizza Hut, KFC, and three other chain restaurants on a South Los Angeles Street and concludes that only bigger fast-food franchises locate in such areas. USA Today, Los Angeles Times, Associated Press, Reuters, and Yahoo coverage were framed by pictures of major food chains or their products. See E. Schor, "Los Angeles City Council Issues Fast-Food Ban for Poor Neighbourhoods," 30 July 2008, htto:l/www.quardian.eo.uk/world/2008/jul/30/usa2?gusrc=rss&feed=worldnews (accessed 4 August 2008); M. Hennessy-Fiske and D. Zahniser, "Council Bans New Fast-Food Outlets in South," 30 July 2008, http://www.latimes.com/news/local/la-me-fastfood30-2008ju130.0,5189990.storv (accessed 4 August 2008); M. del Barco, "Fast-Food Ban Proposed in South Los Angeles," All Things Considered (National Public Radio), 16 September 2007, http://www.npr.org/templates/story/story.php?storyld=14459040 (accessed 1 September 2009); L. Bartle in, "Los Angeles City Councii·Passes Fast-Food Ban," 30 July 2008, http:/lwww.reuters.com/article/healthNewslidUSCOL06846020080730?feedType=RSS&feedNam e=healthNews (accessed 4 August 2008); "L.A. Council Poised to Ban Fast Food in Poor Neighborhood," USA Today, 29 July 2008, http://www.usatoday.com/news/nationl2008-07-29-los-angeles-fast-food N.htm (accessed 4 August 2008); and Yahoo, "L.A. City Council Bars New Fast-Food Joints from Poor Area," 29 July 2008, http://news.yahoo.com/s/afp/200807301hl afp/ushealthobesityfoodlosangeles 080730004110 (accessed 1 September 2009).

(

9. S.J. Nielsen and B.M. Popkin, "Patterns and Trends in Food Portion Sizes, 1977-1998," Journal of the American Medical Association 289, no. 4 (2003): 450-453.

10. M. Condrasky et al., "Chefs' Opinions of Restaurant Portion Sizes," Obesity 15, no. 8 (2007): 2086-2094.

11. Romano's Macaroni Grill, "Nutrition Information," http:/lwww.macaroniqrill.com/Menu/LocationSearch.aspx (accessed 4 August 2008).

12. Outback Steak House: Aussie-Tizers; Chili's Bar and Grill: Awesome Blossom, according to CalorieKing.com, "Food Database," http://www.calorieking.com (accessed 4 August 2008).

13. B. Wansink, Mindless Eating: Why We Eat More than We Think (New York: Bantam Books, 2006); and B.J. Rolls, L.S. Roe, and J.S. Meengs, "The Effect of Large Portion Sizes on Energy Intake Is Sustained for Eleven Days," Obesity 15, no. 6 (2007): 1535-1543.

14. D.A. Cohen, "Neurophysiological Pathways to Obesity: Below Awareness and Beyond Individual Control," Diabetes 57, no. 7 (2008): 1768-1773; Wansink, Mindless Eating; and D. Cohen and T.A. Farley, "Eating as an Automatic Behavior," Preventing Chronic Disease 5, no. 1 (2008): A23.

15. Los Angeles County Public Health Environmental Services, personal communication, December 2008.

16. On 30 September 2008, Gov. Arnold Schwarzenegger signed the legislation that made California the first state in the nation to require menu labeling at chain restaurants. By 2011, restaurants with twenty or more outlets in the state will be required to post calorie information on their menus and menu boards. For more on a similar action in New York City, see B. Elbel et al., "Calorie Labeling and Food Choices: A First Look at the Effects on Low-Income People in Nelli York City," Health Affairs 28, no. 6 (2009): w1110-w1121 (published online 6 October 2009; 1 0.1377/hlthaff.28.6.w111 0).

17. New York State, 2009-2010 Executive Budget, Briefing ~oak, Revenue Actions, 16 December 2008, http:/ I publications. budget. state: ny. us/eBudget091 0/ExecutiveBudqet. html (accessed 28 September 2009); and J. McKinley, "S<!n Francisco's Mayor Proposes Fee on Sales of Sugary Soft Drinks," New York Times, 18 December 2007.

Roland Sturm (sturm@rand.org) is a senior economist, and Deborah Cohen a senior natural scientist, at RAND in Santa Monica, California.

DOl: 1 0.13771hlthaff.28.6.w1 088 ©2009 Project HOPE-The People-to-People Health Foundation, Inc.