Smoking bans had no economic impact

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GRAND FORKS — Restaurant and bar sales in the city were unaffected by two smoking bans approved in the past decade, according to a new economic impact study.

“Neither benefited or were hurt by the legislation,” University of North Dakota economics professor Cullen Goenner, who conducted the study, told the City Council Monday.

Instead, outside factors such as growth in Grand Forks’ economy and a strengthened Canadian dollar pointed to an increase in overall restaurant and bar sales during the study’s timeframe.

The state banned smoking in restaurants in 2005 and the city banned smoking in bars in 2010.

The neutral results were good news to anti-tobacco activists who had pushed for the bans.

“Even a neutral impact is a positive thing,” said Theresa Knox, a public health nurse and member of the Grand Forks Tobacco Free Coalition.

The study was sponsored by the tobacco coalition, and Knox said it’s a standard procedure for communities wondering about the effects of a new law. In the past, the coalition has conducted surveys of community attitude and perception toward the anti-tobacco laws.

“This (study) has a little more weight to it,” Knox said.

Methods

The study, released Monday, analyzed quarterly sales data for Grand Forks businesses from 2002 to the second quarter of 2012.

Factors such as weather, the city’s overall economy, economic trends and the U.S.-Canadian exchange rate were considered in the study, according to Goenner.

Simple analysis of sales figures makes it appear that restaurant sales increased following the 2005 ban while bar sales declined following the 2010 ban.

Goenner said the cyclic nature of bar sales is responsible for the apparent decline as sales are usually weaker in the second and third quarters. Restaurant sales increase each quarter, according to the study.

When controlling for the outside factors, the study concluded neither ban impacted industry sales.

“Most of these studies result in a neutral or positive effect,” Knox said. “That’s what we were expecting to see.”

The study doesn’t deny the possibility that individual establishments were affected for better or worse by the laws, as the data is based on industry and not individual sales.

Positive trends

Though the smoking bans didn’t affect bar and restaurant sales, Goenner did find growth in those areas. Sales in both industries followed Grand Forks’ overall economic upswing.

“Restaurant sales increased an average of 1.4 percent a quarter or 5.6 percent annually,” Goenner said. “Bar sales increased 1.2 on average each quarter or 4.8 percent annually.”

Alcohol sales at restaurants did not increase during the time period, while bar alcohol sales grew by 3.04 percent annually.

“We wanted to know (the legislation) isn’t a bad thing for business,” Knox said of the study. “I wasn’t just hoping for the best. I know it’s true.”

The growth seems to reflect the results of a May 2012 community attitude on smoking survey conducted by the tobacco coalition.

In the survey, almost half of responding bar patrons said the 2010 smoking ban affected the frequency of their visits. Of those individuals, two-thirds said they had started going out to bars more often. Fifteen percent said they went somewhat or much less often.

More than 860 phone interviews were conducted for the survey.

Other findings

Goenner said the study also showed Canadian visitors taking advantage of a favorable exchange rate accounted for growth in sales.

In 2002, a dollar was worth $1.60 Canadian dollars. Since then, the dollar and Canadian dollar have reached near equal value — resulting in more Canadian spending and a 15 percent increase in restaurant sales over the study’s 10-year timeframe.

Thirty-one percent of respondents to a Canadian visitor survey reported spending between $251 and $500 on their trips to the United States, according to the Greater Grand Forks Convention and Visitors Bureau.

Another 29 percent say they spend between $501 and $750 during a trip.

Tags: smoking ban, economic impact, north dakota, news