An economic evaluation of the Iowa City smoke-free restaurant ordinance

Background: Current evidence demonstrates that smoke-free restaurant ordinances (SFRO) do not adversely impact restaurant industry sales. However, these studies fail to explain the impact within the local restaurant market. It is possible certain restaurants (those affected by a SFRO and those already smoke-free) may lose revenue while others (those that are exempt and those in nearby locations without a SFRO) gain revenue at their expense. Determining this response within a local market will provide insight to assist policy makers in drafting evidenced-based health policy. Objectives: The purpose of this study was to determine the impact of the Iowa City SFRO (IC-SFRO) on the restaurant industry as well as within segments of the local market. Methods: Iowa City and Coralville (control group) restaurants were categorized into 5 groups according to smoking policy. Quarterly restaurant and retail sales revenue were acquired from the Iowa Department of Revenue from 1999 to 2004. Sales were analyzed by multiple regression, including a time trend and a dummy variable for the ordinance. Results: The IC-SFRO had no significant effect on the Iowa City restaurant industry; however, Coralville's sales were significant (p<0.05). The IC-SFRO had no impact on the different groups of Iowa City restaurants; however, the sales for Coralville restaurants that permit smoking increased (p<0.05). Conclusions: The IC-SFRO had no adverse impact on sales for any segment of the Iowa City-Coralville metropolitan area restaurants. Although Coralville sales increased, it does not appear to have been at the expense of the Iowa City restaurant industry.