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Beverage

The status of soda sales

Sweetened-beverage taxes are leaving behind a bitter taste for operators.

Next month, San Francisco will be the latest city hit with a sweetened-beverage tax. It joins others across the country, including Philadelphia and Boulder, Colo., that have added a 1- to 2-cent-per-ounce tax to sweetened drinks—another financial burden for restaurants that already operate on tight margins. 

In Philadelphia, Melissa Kelsey, whose family owns family-style American restaurant Southern Inn, is struggling with the effects of the tax. While Kelsey supports the initiatives being supported by funds from the tax, it has had a detrimental effect both on her and her customers, she wrote in an opinion piece for the Philadelphia Inquirer.

“My business operates on very thin margins. Sales of soft drinks, iced teas and other beverages helped keep my restaurant profitable—especially in my neighborhood, which still hasn’t recovered from the last recession, and where eating out is a luxury,” Kelsey wrote. Since raising beverage prices due to the tax at the start of the year, she’s seen drink sales drop more than 20%. “We simply can’t withstand this decrease in sales.”

The Sink in Boulder has also felt the pinch of the tax. While co-owner Chris Heinritz says he’s been able to raise bevarage prices without pushback from consumers, the hike causes a longer-term issue. “The tax has hampered our ability to raise prices in the near future on beverages to help offset other rising costs like labor, rent and property taxes,” he says.

Subway franchisee Timothy Schiel, who also operates in Boulder, has combated the tax by switching out many soda flavors in his fountains for sugar-free options—much to the disappointment of his customers. “It definitely has impacted my businesses negatively,” he says. “Many customers don’t understand that this is not a tax passed down to them, but a cost
of doing business increase
to me.” 

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