Economic evaluation of the Iowa City smoke-free restaurant ordinance on the Iowa City restaurant industry

Current evidence demonstrates that smoke-free restaurant ordinances (SFRO) do not have an impact on a restaurant industry. However, these studies fail to explain the impact within the local restaurant market. As it is possible that some restaurants (those affected by a SFRO and those already smoke-free) may lose revenue while others (those exempt and those in nearby locations without a SFRO) may gain revenue at their expense. Determining the response of restaurant sales to a SFRO within a local market will lend insight into consumer behavioral response to a SFRO and assist policy makers in drawing up evidenced-based health policy.; 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 the local market. Iowa City and Coralville (control group without a SFRO) 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 for each group were analyzed by multiple regression, including a time trend and a dummy variable for the ordinance.; The IC-SFRO did not have a statistically significant effect on the Iowa City restaurant industry; however, the small increase experienced by the Coralville restaurant industry was statistically significant (p≤0.05). The IC-SFRO did not have an impact on the different groups of Iowa City restaurants; however, the increase of the fraction of retail sales that went to restaurant sales was statistically significant (p≤0.05) for Coralville restaurants that permit smoking. In conclusion, the IC-SFRO did not have an adverse impact on Iowa City restaurant sales. Although sales increased in Coralville, it does not appear to have been at the expense of the Iowa City restaurant industry.