Assessment of the Impact of a 100% Smoke-Free Ordinance on Restaurant Sales -- West Lake Hills, Texas, 1992-1994

Exposure to environmental tobacco smoke (ETS), which is associated with adverse health effects among nonsmokers (1), is a health hazard of particular concern for patrons and employees in restaurants (2). To protect nonsmokers, many local governments have enacted ordinances requiring restaurants to be smoke-free. However, the potential economic impact of these laws on restaurants is an important concern for restaurant owners. On June 1, 1993, the city of West Lake Hills (a suburb of Austin), Texas (1995 population: 3000), implemented an ordinance requiring a 100% smoke-free environment in all commercial establishments to which the public has access, including all restaurants and restaurants with bar areas. This report summarizes an assessment of sales in restaurants during June 1993-December 1994 compared with January 1992-May 1993.

Restaurants in West Lake Hills had a variety of menus and food-pricing scales. Restaurant sales data for West Lake Hills were obtained from the Texas State Comptroller's office. Aggregate monthly sales data * from January 1992 through December 1994 were obtained for the eight restaurants in West Lake Hills that had indoor dining areas and were in operation during all of 1992 and until the ordinance went into effect in June 1993 (one of these restaurants closed in April 1994 because its lease expired). These sales data included the 17-month period preceding implementation of the ordinance (January 1992-May 1993) and the 19-month period following implementation (June 1993-December 1994). Restaurants that opened during the assessment period were not included in the analysis because the purpose of the study was to assess the impact of the ordinance on a consistent panel of restaurants (five restaurants opened during September 1992-July 1994).

Data were analyzed using a linear regression model (3) that examined the relation between total restaurant sales and the presence of a smoke-free ordinance and that incorporated seasonal variations in sales and temporal economic trends. For each factor examined (i.e., time {year and month}, quarter of the year, and presence of the implemented ordinance), a corresponding regression coefficient was calculated to measure the effect of that factor on total restaurant sales. A positive regression coefficient suggests that the factor was associated with increased total restaurant sales, and a negative value suggests that the factor was associated with decreased total restaurant sales. To test for multicollinearity, variance inflation factors were computed for each independent variable in the model. The Durbin-Watson statistic was computed (4) to test for first-order autocorrelation (correlation of the residuals {error terms} for adjacent observations over time).

Total monthly sales for the restaurants during 1992-1994 varied by season. Sales peaked during the second quarter of each year.

In the initial regression model, the variance inflation factors for the ordinance variable and the year variable were above four, indicating multicollinear involvement between these variables. To address the multicollinearity, the time variable was removed: although reanalysis did not change the regression coefficient for the ordinance variable, the standard error was substantially decreased. The variance inflation factors for this final model indicated that multicollinearity was no longer present, and the Durbin-Watson statistic indicated that significant first-order autocorrelation was not present Table_1.

The regression coefficient for the second quarter of the year was positive, suggesting that restaurant sales were greater in the second quarter of each year than in the first quarter Table_1. The regression coefficient for the ordinance variable was positive, suggesting that the total sales of the restaurants did not decrease after implementation of the ordinance. Reported by: P Huang, MD, Bur of Chronic Disease Prevention and Control; S Tobias, S Kohout, M Harris, D Satterwhite, Office of Smoking and Health; DM Simpson, MD, State Epidemiologist, Texas Dept of Health; L Winn, City of West Lake Hills; J Foehner, L Pedro, Office of the Texas Comptroller of Public Accounts. Office on Smoking and Health, National Center for Chronic Disease Prevention and Health Promotion, CDC.

Editorial Note

Editorial Note: The findings in this report are consistent with assessments using similar methods in other locations that have reported that the implementation of smoke-free ordinances has not been associated with adverse economic effects on restaurants (3,5,6).

Previous reports of decreases in restaurant sales following the enactment of clean indoor air ordinances have been based on anecdotal information (7-10), on studies that used restaurant owners' self-reports of the impact on their business instead of validated sales data (7,8), and on studies that used tax data to measure restaurant sales but collected data for only one or two quarters following implementation of ordinances (9,10). In comparison, the assessment in West Lake Hills was based on sales data that were validated by tax revenue reported by the State Comptroller's office, included data for periods of time sufficient for statistical analysis, and employed multiple linear regression techniques to account for temporal trends and seasonal variations in sales.

The findings in this assessment are subject to at least three limitations. First, because of limitations in data, an ordinary least squares regression model -- which assumes no autocorrelation

• was used in place of a more specific time series model; however, the Durbin-Watson statistic indicated that significant autocorrelation was not present. Second, the model only explained 33% of the variation in total restaurant sales; future studies may benefit from the inclusion of other variables that can affect restaurant sales. Third, because the assessment focused on a consistent panel of restaurants and excluded restaurants that opened during the assessment period, the findings cannot be generalized to all restaurants in West Lake Hills.

The economic impact of smoke-free ordinances is an important consideration for policymakers concerned about the ETS exposure of nonsmokers; assessment of the potential economic impact of these laws should be based on the most objective, scientific evidence available. The findings from the assessment in West Lake Hills has provided policymakers in that community with a scientific appraisal of the impact of public health measures to reduce exposure to tobacco smoke. In addition, the assessment in West Lake Hills provides a model for other local and state public agencies to consider when evaluating tobacco-control programs.

References

1. US Environmental Protection Agency. Respiratory health effects of passive smoking: lung cancer and other disorders. Washington, DC: US Environmental Protection Agency, Office of Health and Environmental Assessment, Office of Atmospheric and Indoor Air Programs, 1992; publication no. EPA-600/6-90/006F.

2. Siegel M. Involuntary smoking in the restaurant workplace: a review of employee exposure and health effects. JAMA 1993;270:490-3.

3. Glantz SA, Smith LR. The effect of ordinances requiring smoke-free restaurants on restaurant sales. Am J Public Health 1994;84:1081-5.

4. Durbin J, Watson GS. Testing for serial correlation in least squares regression. Biometrika 1951;37:409-28.

5. Maroney N, Sherwood D, Stubblebine WC. The impact of tobacco control ordinances on restaurant revenues in California. Claremont, California: The Claremont Graduate School, The Claremont Institute for Economic Policy Studies, 1994.

6. Taylor Consulting Group. The San Luis Obispo ordinance: a study of the economic impacts on San Luis Obispo restaurants and bars. San Luis Obispo, California: Taylor Consulting Group, 1993.

7. Gambee P. Economic impacts of smoking ban in Bellflower, California: analysis of survey data, February-May, 1991. Bellflower, California: California Business and Restaurant Alliance, 1991.

8. Charlton Research Company. Pacific Dining Car Restaurant and Southern California Business Association, December 11, 1993-January 15, 1994. San Francisco, California: Charlton Research Company, 1994.

9. Laventhol & Horwath, Certified Public Accountants. Preliminary analysis of the impact of the proposed Los Angeles ban on smoking in restaurants. Los Angeles, California: Laventhol & Horwath, Certified Public Accountants, 1990.

10. Masotti LH, Creticos PA. The effects of a ban on smoking in public places in San Luis Obispo, California. Evanston, Illinois: Creticos & Associates, Inc, 1992.

* To protect confidentiality, individual restaurant sales data are not released by the Comptroller's office .

TABLE 1. Results of multiple linear regression analysis of the effects
of a 100% smoke-free ordinance implemented June 1, 1993, on sales
in eight restaurants -- West Lake Hills, Texas, 1992-1994
=========================================================================
                                          Variance
                  Regression              inflation
Variable         coefficient    (SE *)     factor +
-------------------------------------------------------------------------
Second quarter &    21,085      (8806)      1.5
Third quarter &     -4,199      (9040)      1.6
Fourth quarter &       757      (9040)      1.6
Ordinance           23,539      (6493)      1.1

Adjusted R2 for model: 0.33
Durbin-Watson statistic @: 2.64

-------------------------------------------------------------------------
* Standard error.
+ Values above 2 suggest that multicollinearity may be a problem
  in the model.
& Indicates the effect of the variable on monthly restaurant sales
  (in dollars). The first quarter is the reference for the
  quarterly sales coefficients.
@ In a model with four independent variables and 36 observations,
  a Durbin-Watson statistic below 1.24 indicates significant
  positive autocorrelation and a value above 2.76 indicates
  significant negative autocorrelation.
=========================================================================

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