Economy and Environment and Government

Studies: Bans don't burn biz: Restrictions in other cities didn't reduce overall sales, but some taverns were hurt

February 21, 2005

"My business was down 15 percent at first," recalled Gina Scott, co-owner of the Lexington pub. Lately, she added, "It's still down a bit. I don't know with the ban it will ever go up to where it was."

This ban-in the heart of tobacco country-may offer a glimpse of what's to come for Indianapolis bars and restaurants if proponents of a smoking ban prevail in the City-County Council.

The proposed Indianapolis ordinance is one of the most stringent in the nation. It would ban smoking inside and outside of restaurants, bars and even in city parks. The final form of the measure will emerge after a series of public hearings in the months ahead-the first on Feb. 24.

Those who don't want Indianapolis to join the more than 1,700 communities with smok- ing laws already are unleashing the same dire predictions raised by critics in other cities: Restaurant sales will plummet. Corner taverns will close. Millions of dollars in revenue and hundreds of jobs will go up in smoke.

Meanwhile, proponents of the ban will fling cancer statistics and what could prove a potent weapon-dozens of studies conducted in the last decade that suggest bans tend to have a negligible economic impact on establishments in the long run. For example:

New York state. "Smoke-free regulations were not associated with adverse economic outcomes in restaurants and hotels. On the contrary, sales and employment generally increased in counties that implemented smoke-free regulations," according to a 2002 Cornell University study that assessed changes in taxable sales and employment.

El Paso, Texas. The Texas Department of Health and the Centers for Disease Control and Prevention analyzed sales tax and mixed-beverage tax data for the 12 years preceding and one year after a 2002 smoking ban in the city. "No statistically significant changes in restaurant and bar revenues occurred after the smoking ban took effect," it found.

Massachusetts. Tax data for 235 towns, including 32 that adopted smoking bans, "failed to find a significant community-wide effect of local smoke-free policies on restaurant businesses," said a 1999 study by the Center for Health Economics Research in Waltham, Mass.

"There is no scientifically credible evidence that the bans analyzed have any negative impact on aggregate restaurant and bar sales," said John R. Bartle, an associate professor of public administration at the University of Nebraska at Omaha, who reviewed nine "high-quality" studies published in peer-review academic journals. "I was pretty surprised, I must say."

Meanwhile, University of Kansas Medical Center professor Michael H. Fox reviewed studies assessing the impact of bans in Arizona, California, Canada, New York City, North Carolina and Massachusetts.

"In fact, there appears to be consistent evidence that supports either no effect of a smoking ban on a community's economic health or an improvement, based on scientific studies that use objective, non-opinion data such as tax or business revenues to evaluate outcomes," Fox wrote.

But opponents of smoking bans say such studies tend to reflect aggregate results and trivialize the impact on particular types of establishments.

"We'll lose business, definitely. They say you won't, but I don't believe that one bit," said Owen "O.B." Brant, owner of Bourbon Street Distillery, 136 Indiana Ave.

Brant worries most about his cocktail business. His often-wealthier patrons settle back to enjoy a cigar and a drink. They'll probably go home if they can't smoke, Brant figures.

That's exactly what happened to Nicholson's, a cigar bar in Lexington.

"Essentially, we've been put out of business," said Tony Atwood, whose cigar bar couldn't survive selling liquors after the ban and later stowed its humidor.

"The last day you could smoke, we did about $3,000 in business. The very next day, we did $14. It was pretty upfront that this was not going to work," Atwood said. He hopes to make a go of the space as a British-themed pub, but only after investing thousands of dollars on remodeling.

In general, bars are twice as likely to experience financial losses as restaurants, said Michael Marlow, an economics professor at California Polytechnic State University at San Luis Obispo and one of the few researchers to study the impact on different types of establishments.

Keeping both smokers and non-smokers happy has always been trickier for bars, Marlow noted, since they can't afford to have two areas to listen to a band or shoot pool.

"It's more of a social environment. People like to walk around," he said.

Smokers who are willing to forgo a cigarette during a meal at a restaurant might be unwilling to go to a bar where they won't be able to smoke all evening, tavern owners say, in part because many people smoke more when they're drinking.

Neighborhood bars also don't have the financial resources of a national restaurant chain to endure a downturn, so they must mirror what their clientele wants, said Don Hall, who owns several Fort Wayne restaurants as well as Hall's Castleton Grill on the northeast side.

"These neighborhood bars are doing what the neighborhood, not what politicians, want them to do," said Hall, a critic of a partial smoking ban adopted in Fort Wayne in 1999. The ordinance, which excludes taverns, allows smokers in restaurants that seal off an area for them.

Because so many Indianapolis residents smoke, a ban could hit the city's bars especially hard, opponents say. Twenty-eight percent of Marion County residents light up, compared with 23 percent nationally, according to a 2002 report prepared for the Marion County Health Department.

According to a study for the New York Nightlife Association, which represents taverns and bars, that state took a $70 million hit in 2003 from a smoking ban, including $50 million in lost wages and the loss of 2,650 jobs.

The study looking exclusively at bars and taverns contrasts with a rosy report from New York City government that said business tax receipts in bars and restaurants rose 9 percent and that 10,600 jobs were created in those establishments.

The tavern association countered that the growth noted in the city study was due to an improving economy and from adding restaurants to the mix.

In Lexington, it's too soon to conclude what impact the ban had on businesses. Anecdotally, at least, in downtown, "I'd say it's pretty obvious their patronage is down," said Mark Turner, a vice president of the Greater Lexington Chamber of Commerce. The business group wants that city's leaders to determine whether the ban has made it tougher to attract shows and conventions. As a result of the smoking ban, some employees have moved on to other jobs or now work extra hours, Turner said. "They can't make the tips they used to make at the bars," he said. Lynagh's Scott said food sales have helped sustain her pub. "Those little neighborhood places have been hurt more than me," she said. Hudson Institute economist William Styring III, who studied the Fort Wayne ban, concluded it was not possible to say "with any degree of statistical confidence" that the ban had any impact on restaurant sales. "This does not mean that a given restaurant with a given clientele might not have seen some loss of business, only that the restaurant business as a whole cannot be shown to have been affected," he said.

The smoking ban had a peculiar impact at Fort Wayne landmark Coney Island, known for its plump hot dogs and employees clad in uniforms declaring: "Our buns are steamed." Owner Russ Choka used to be steamed about the city's smoking ban, saying it killed his breakfast and after-lunch business, in which patrons used to sit down with a coffee, cigarette and a snack.

Since then, business has "normalized," Choka said, except for employees who go out back to smoke and who, he grumbles, "You have to constantly search for outside."

Business owners thought "the world was going to come to an end, [but] there is life after cigarettes," Choka said. "It was worth it. The air is a hell of a lot better."

Tim Smeehuyzen worried his Indianapolis bar and grill would come to an end. He launched a self-imposed ban on smoking in August at his Smee's Place, at 86th Street and Ditch Road.

"Both of my parents smoked. It killed both of them. I've always wanted to be smoke-free," he said. But "I spent months worrying, 'If I do it, will anybody come in?'"

He took the leap after watching a lone man saddle up to the bar and puff down a cigar that filled his restaurant with smoke. So he began to ask his regulars if they would continue to visit if he banned smoking. "There was an overwhelmingly positive response to doing it," he said.

After the ban, though, about 80 percent of smokers who voiced support for the ban didn't come back. Sales fell back, initially.

"If the [Indianapolis] law passes, there may be a momentary decline in their sales just because people are boycotting," Smeehuyzen said of his fellow restaurant operators.

But shortly after his self-imposed ban, Smeehuyzen's food sales increased, bringing his overall revenue up about 10 percent. He said a number of patrons told him they now come in more often. "They said, 'We liked to come here, but we didn't come here that frequently [before] because it was a smoking place.'"

Smee's regular David Duncan, CEO of Indianapolis medical communications firm OnRamp, remembers how the smoke used to bother him even while he sat in the nonsmoking section.

"I'm a reformed smoker myself. When you do quit smoking and are around people who smoke, you find that it bothers you more," he said.

The ban at Smee's "doesn't seem to have hurt their business," Duncan added. "There's still standing room only on some days."

The impact of a government-imposed smoking ban in Marion County likely would depend largely on its severity and enforcement.

For example, smoking outdoors is still permitted in Lexington, so patrons at Lynagh's can duck out to a makeshift patio Scott set up in the parking lot, with plastic table and chairs.

"Most nights, there will be 30 or 40 people out there," she said.

Outdoor smoking areas within 50 feet of a building wouldn't be an option in Indianapolis, at least in the ordinance's current draft.

All of which leaves Fort Wayne restaurateur Hall incredulous.

"It will hurt you forever," he warned. "When you thumb your nose at 20 to 25 percent of the market and say, 'We don't want you the way you are,' you can't explain that away to me."
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