News for the Hospitality Executive
|By Louise Taylor, Lexington Herald-Leader, Ky.
Knight Ridder/Tribune Business News
Feb. 17, 2003 -- The Blue White Grill in Martinsburg, a West Virginia town about 90 miles from the nation's capital, was a smoker's paradise.
By the owners' estimate, 95 percent of the folks who gathered there smoked.
Then came Sept. 15, 2001, when a strict ban on smoking in restaurants and bars, mandated by the local health department, went into effect. For the first time in 56 years, the Blue White had to tell its patrons to extinguish their cigarettes.
Bill Brown, Blue White's vice president, expected business to falter.
Since then, however, Brown, a smoker who dislikes the law, has come to an unexpected conclusion, one shared by many studies of how such bans affect restaurant and bar business.
Smoking bans do affect business -- positively.
"It increased our business because our table turn is quicker," Brown said. "People just don't linger to smoke. And we have some new customers."
Brown's experience is anecdotal, but more than 80 scientific studies, most peer-reviewed and published in economic and medical magazines such as the Journal of the American Medical Association, back it up. Those studies, undertaken by academics, individual states, cities and the federal Centers for Disease Control, looked at restaurant or bar sales-tax collections in Texas, Indiana, California, New York and several other states -- and found that smoking bans have no adverse financial effect on restaurants and bars. Sometimes business increases by going smoke-free.
The ban bandwagon that Lexington is considering boarding has picked up a lot of speed lately: Boston and New York City are among the heavyweights to pass smoking bans, but small towns and counties from Alaska to Utah have, too. Why? For one thing, the federal Centers for Disease Control is advocating bans, and health officials say public awareness of the dangers of second-hand smoke is increasing.
Lexington is the first city in Kentucky to ponder a smoking ban in bars and restaurants. It's a move some consider bold since Kentucky is not only a tobacco-growing state but has a higher percentage of smokers -- 30.5 percent of the population -- than any other.
Profits aren't going up in smoke
Many restaurants and bars are fighting the idea in Lexington, fearful their business will erode. It is a familiar battle to health officials, but the fears do not usually pan out after bans are enacted, according to economists.
In El Paso, Texas, which has one of the toughest bans in the nation, officials report the effects were stunningly positive for businesses that fought the ban hardest: an 18 percent increase in bar liquor sales in the first nine months after the ban compared with the same nine months a year earlier. Restaurants showed a smaller increase, about 4 percent.
A 1998 study by the California State Board of Equalization found annual revenue increases of 7 percent in small restaurants and bars in the two years after smoking bans went into effect -- greater growth than in previous years. In Massachusetts, the Department of Public Health gathered sales-tax data and found that restaurant receipts increased by 5 percent to 9 percent in towns that had enacted various smoking bans between 1992 and 1995.
The city of Boulder, Colo., found in 1996 that restaurants increased revenues by 4 percent in the 10 months after going smoke-free. In New York City, sales went up 2 percent in restaurants and 37 percent in hotels after a 1995 ban on smoking in eating and drinking places with more than 35 seats. That New York ordinance did allow smoking in separate bar areas.
Stanton Glantz, the director of the Center for Tobacco Control, Research and Education at the University of California at San Francisco -- and an advocate of smoking bans -- studied all California bar revenues before and after a total smoking ban took effect statewide in 1998. His findings: "As with the claims of adverse effects on the restaurant and tourist industries, the data further discredit tobacco industry claims that smoke-free bar laws are bad for the bar business. Quite the contrary, these laws appear to be good for business."
In Massachusetts, an unrelated study echoed Glantz's findings, this time specifically in restaurants. "Local restaurant industries are not substantially affected by highly restrictive restaurant smoking policies, confirming our previous work and similar studies that have been conducted in other regions of the country," concluded economists William Bartosch and Gregory Pope of the Center for Health Economics Research in a six-year study of restaurant sales in 239 Massachusetts cities with and without smoking bans.
One reason "may be that smokers are not sufficiently inconvenienced by such policies to alter their demand for restaurant meals. Alternatively, non-smokers may increase their demand for restaurant meals, potentially offsetting any reduction in sales from smokers."
The Bartosch study does, however, acknowledge that certain classes of restaurants may be affected by bans, although overall the effect is nil. Restaurateurs say they think blue-collar restaurants are affected negatively. Fast-food eateries and upscale "white tablecloth" restaurants, they say, tend to be immune.
Other studies -- at least 45 of them -- reach a different conclusion and suggest that smoking bans do hurt business. The majority of them were funded by tobacco companies, and most were not subject to peer-review.
Most studies that report bans have an adverse effect on bars and restaurants center on perceptions or rely on sales estimates from proprietors instead of tax-collection figures that economists say are more objective.
In Ontario, Canada, the provincial Pub and Bar Coalition looked at beer sales reported by brewers and reported declines of more than 10 percent.
Another study, published in Applied Economics in 1996, found restaurant revenues dropped by a third after a smoking ban was enacted in Mesa, Ariz., where the ban remains controversial.
The study, however, was lambasted by critics because it was funded by Phillip Morris, and the only businesses surveyed were those that had complained about the ban. Another Philip Morris-funded study last year found bar and restaurant business in Mesa had dropped, contradicting a study published a few months earlier and funded by the National Cancer Institute that said revenues had increased.
The only real losers in areas with smoking bans, said Cynthia Hallett, executive director of the American Nonsmokers' Rights Foundation, are the tobacco companies.
"The financial impact is tremendous on tobacco companies' bottom lines," said Hallett, a former smoker.
"If everyone smokes four or five fewer cigarettes a day, it adds up to billions. And when there are fewer hours in a day to smoke, consumption goes down. Then smokers start saying, 'Wait a minute. If I can get through the work day without smoking, I can quit.'
"That is a big problem for Big Tobacco."
The experiences of restaurant owners who have lived through smoking bans can be as contradictory as the studies experts on both sides like to cite.
Ken Conrad owns a "middle-of-the-road" restaurant chain called Libby Hill, based in North Carolina, and has been buffeted by a variety of smoking ordinances North Carolina counties passed in the 1990s. Most stopped short of smoking bans, instead requiring separate ventilation for smoking areas.
Conrad wanted to comply. At one Libby Hill outlet in Catawba County, there was no way because the layout was such that he couldn't segregate smokers. So he made the whole restaurant non-smoking.
"Six months later, business was eroding. Our business was off 25-30 percent, and 25 percent of our population still smokes."
He said he talked to the regulators, who admitted they weren't really enforcing the smoking law. That Libby Hill restaurant went back to smoking, recapturing its lost business, Conrad said.
"A lot of white-tablecloth restaurants have opted to go totally non-smoking," said Conrad, who is on the board of the North Carolina Restaurant Association and heads The Guilford County Restaurant Association in Greensboro, where his company is based.
"Smoking bans just don't affect them as much as middle-of-the-road restaurants like ours."
Conrad, however, is resigned to the idea that smoking bans will envelop the country, even in states like his, the No. 1 tobacco producer in the United States.
"Here, the restaurateurs' feeling is 'Don't put us in the middle. Don't make us the enforcers. We have customers who smoke and customers who don't smoke. We'd love to have all of their business.'
"But there is so much antagonism from those people who don't smoke toward those who do that the non-smokers are going to win."
El Paso has had one of the strictest bans in the nation in place for more than a year. It affects smoking just about everywhere in the city of 564,000 except inside private homes and free-standing tobacco stores.
Mayor pro-tem Larry Medina said he was "100 percent against" the ordinance when it was first proposed -- but made a complete about-face after he researched the issue. He now travels internationally to promote smoking bans.
"Research and education changed my mind," he said. "I came to one conclusion: second-hand smoke kills, and we have known that for 32 years. I decided that government has to do anything within its power to ban secondhand smoke."
Jack Crandall, who owns the Eagles Nest, a classic rock bar in the city, says he'd like to blame the ban for poor business, but has no direct evidence that such a claim is true. "We bought the bar in March, three months after the law took effect," he said. "The previous owner had done a fine business of killing the business on her own."
Crandall does pin another problem on the smoking ban, however: "It has made us paranoid. We put cameras in the parking lot to look after cars, but now we use them more to watch out for cops with the Fresh Air Task Force."
On Oct. 24, the enforcers came to the Eagles Nest and cited three smokers and the bar, which they accused of "encouraging illegal activities" by providing patrons with ashtrays. Crandall's reaction: He'd rather have customers putting their cigarettes in ashtrays than burning holes in carpets and sofas.
Crandall is now organizing a petition drive to exempt bars from El Paso's ban, and has gathered 3,000 of the 5,000 signatures he needs.
"This is not a smoking issue," he said. "It's a freedom issue. No government should be allowed to go into a privately owned enterprise to regulate legal behavior."
That's an argument echoed by many bar and restaurant proprietors, including Brown of the Blue White Grill in Martinsburg, W.Va. Fears that the ban would hurt business turned out to be fiction, but Brown still dislikes the law.
"We feel it's an infringement on the rights of business owners as well as those of people who do smoke," Brown said. "In our situation, we've been here since 1945. We own the building free and clear, and the government is telling us we can't smoke in our own building."
But proponents of smoking bans and health officials beg to differ and say they do have that right. Health regulators mandate all sorts of rules that affect public well-being in restaurants.
"To me, what the business people say is basically true," said Medina of El Paso. "Of course it is an intrusion. But on the other side, it protects the public's right to not be harmed. Bars and restaurants have to use clean plates, their workers have to wash their hands after using the restroom, there are temperature controls on food -- those are laws. Why? Because in the past we've seen the need to regulate business to protect people from harm. That is the price of doing business in our society."
Crandall complained that the El Paso ban was pushed by a small special interest group. "There's a group called the Coalition for Smoke-Free Paso Del Norte. If nobody smoked, they would have formed the Coalition for Bug-Free Paso Del Norte or Carbon Monoxide-Free Paso Del Norte."
Medina, however, says that the vast majority of residents love the ban and that businesses have not suffered because of it. The head of the restaurant association who fought the measure is now one of its most vocal supporters, Medina said. He said he's proud that his city, which is impoverished and not known for being progressive, "took the bull by the horns" and enacted the tough law.
"The whole country is going non-smoking. I'm sure tobacco states like Kentucky will be the last to go, but they'll go."
-----To see more of the Lexington Herald-Leader, or to subscribe to the newspaper, go to http://www.kentucky.com.
(c) 2003, Lexington Herald-Leader, Ky. Distributed by Knight Ridder/Tribune Business News.