Philadelphia is on the verge of passing a sweeping soda tax that could herald the end of restaurants offering free refills for Philadelphians.
It’s a dark day indeed for the City of Brotherly love.
So far, most of the media coverage of the proposal focuses on the two cents per-ounce tax it would impose on bottled and canned sodas and other sweet drinks. This would increase the cost of a typical can or bottle of Coke by about 60 percent. But little noticed in the legislation is an eighteen-cents-per-ounce tax on the syrup that restaurants use to mix coke. This tax would increase the cost of serving a fountain drink by between 100 and 350 percent.
To see how, let’s take a look at the cost structure of fountain drinks and free refills.
Restaurant industry blog Foodservice Friends estimates that the total cost of serving a 20-oz soda is about 22 cents.
Here is their estimate of how that cost breaks down:
Syrup for a 20-oz cup of soda (8.75 oz with ice): $0.12
20 oz foam cup: $0.07
Lid for cup: $0.01
Total Cost = $0.215 or rounded up $0.22 per soda
The point here is not the specific figures, but to show that syrup is the primary cost in every soda restaurants serve. And this assumes you’re paying $50 for a standard five-gallon case of syrup. That price seems right for off-brand sodas, but is rather low for Coca-Cola or Pepsi, which typically run about twice that price and are likely to cost even more.
So if the restaurant offers free refills—as it should—the syrup used in each glass is pretty much the only cost the restaurant incurs (other than labor) for each refill.
But what happens if the Philadelphia soda tax is imposed? The price of syrup is tippled. The proposal’s eighteen cent per-ounce tax on soda syrup, which seems small, causes a huge spike in the price per cup. On a typical five-gallon case of syrup, there would be $115.20 of taxes—which would double the cost of name-brand syrup and more than triple the cost of off-brand syrup.
What would happen if each refill of soda cost a restaurant 35-50 cents instead of the 10-15 cents it costs now? Well, I can’t image they’d offer free refills for too much longer. Either that or the price of a soda would have to start at $5 to maintain profit margins.
So what can you do to help stop the free refills killing Philadelphia soda tax? Head over to savephillyjobs.com and sign their petition. Then call your representatives and tell them you oppose a soda tax—it’s a good idea even if you don’t live in Philly —because a soda tax may be coming to your town next.