Tobacco Scam: Smokefree Restaurants: Fake Economics - Cooking the Books

The 30% Myth

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Consumer Reports, May 1994
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When pro-tobacco forces in California want to scare communities away from public-smoking bans, they sometimes use seemingly objective surveys that show restaurants losing an average of 30 percent of their revenue after bans go into effect. The figure and the surveys that produced it are far less scientific than they have been made to appear.

Restaurants in Beverly Hills, for example, are said to have lost 30 percent of their business during a smoking ban that became effective in 1987. The number has been quoted in The Los Angeles Times and Time magazine. It comes from a survey by the Beverly Hills Restaurant Association, a group organized by a public-affairs consultant named Rudy Cole. The survey asked restaurants how much business they thought they lost during the ban; it didn't attempt to quantify those losses using any sort of objective measure. "That was not a scientific survey," Cole admits.

A more rigorous study, this one of taxable sales at Beverly Hills restaurants, was later conducted by the accounting firm Laventhol & Horwath. It showed a more modest average drop: 6.7 percent.

The 30 percent figure surfaced again in the city of Bellflower, a Los Angeles suburb that banned restaurant smoking from March 1991 to June 1992. Shortly after the rule took effect, restaurateurs received survey questionnaires sponsored by Restaurants for a Sensible Voluntary Policy. That group was supported by the Tobacco Institute and had Rudy Cole as its executive vice president. The survey itself was prepared by an employee of the Dolphin Group, a public-relations agency that serves Philip Morris USA.

The Bellflower survey-again based on anecdotal responses-also reported that restaurants lost an average of about 30 percent of their customers. But a study of sales receipts commissioned by they city of Bellflower showed that restaurant revenues actually rose by 2.4 percent during the smoking ban. Stanton Glantz and Lisa Smith, researchers at the University of California, San Francisco, studied sales data in 13 communities that had banned restaurant smoking-including Bellflower and Beverly Hills. They found no significant long-term drop anywhere.

Pro-tobacco forces circulated the Bellflower survey in California towns considering anti-smoking rules. One version said the survey was sponsored by the California Business and Restaurant Alliance. It didn't mention that the alliance is run by an executive of the Dolphin Group, Philip Morris's PR firm. The statistic gained even wider currency when the Tobacco Institute cited the Beverly Hills survey in ads run in restaurant-industry publications, urging restaurateurs to fight smoking bans.

A stat is born [figure caption] An informal survey of restaurateurs in Bellflower, Calif., (top) became a formal report showing the alleged economic impact of a smoking ban. Both were sponsored by groups connected to the tobacco industry. One version of the report (middle) suggested-incorrectly -that it was commissioned by the city's mayor. Survey statistics were reported as news in Bellflower (bottom) and other California towns considering smoking bans.