Over one-third of adults consume fast food daily, including sugar-sweetened beverages (SSBs) that contain more than the recommended daily allowance of calories from added sugars in just one serving. Taxes on sweetened beverages are a promising solution to reduce the consumption of these beverages and their potential contribution to obesity. Sugary drink tax policies have been implemented in several U.S. jurisdictions; however, we know little about the impact of tax policies on calories purchased in fast food restaurants and how the impact varies by jurisdiction.
This paper focuses on the effects of implementing excise taxes on sweetened beverages on the number of calories per transaction purchased in a fast-food restaurant setting. We focus on five cities that enacted this type of tax between 2017 and 2018: Albany, CA; Cook County, IL; Oakland, CA; Philadelphia, PA; and Seattle, WA. Our earlier research finds evidence of a complete pass-through on single-served beverages in cities taxing sugar and artificially sweetened beverages (Philadelphia, PA, and Cook County, IL). Conversely, we find no significant price changes in locations that taxed only sugar-sweetened beverages.
In this study, we leverage six years of detailed national transaction-level data (2015-2020) of one of the largest fast-food restaurant chains in the US, Taco Bell. Our detailed item-transaction-level data allows us to input calorie data for individual items based on information from MenuStat. Using an event-study design and a synthetic control counterfactual, we tested for differences in average monthly beverage calories purchased per transaction and changes in overall calories purchased from individual items and combo meals. Specifically, we define our treatment group as the 60 Taco Bell restaurant locations located in cities affected by this tax with complete information from fourteen months before the start of the tax until 24 months after the start. We develop a synthetic control unit for each restaurant in the treatment group as its counterfactual from a donor pool of restaurants in locations without sweetened beverage taxes.
Our results show negligibly small changes in beverage calories purchased across jurisdictions, except for a decrease of ~12 and ~20 calories from beverages in the first and second years of follow-up, respectively, in Oakland, CA. During the post-tax period, calories purchased from combo meals decreased by ~15 to ~20 calories in Oakland, CA, Cook County, IL, and Philadelphia, PA. Finally, changes in calories purchased from individual items were inconsistent over time and across jurisdictions.
Compared to previous results in the literature, taxes over sweetened beverages resulted in negligible changes in beverage calories purchased, with some differences by jurisdiction. At the time, the mechanism behind our results remains unclear.