Restricting the promotion of high fat, salt and sugar foods: implementation guidance - Part 2: which businesses must comply with the promotion restrictions

Businesses in scope of restrictions

Businesses in scope of the restrictions are referred to as qualifying businesses, and are defined in regulation 4. Qualifying businesses could include, but are not limited to, retail establishments with 50 or more employees (in store and online) such as:

• supermarkets
• online food retailers
• online retailers who sell any pre-packed food (for example, gifting websites)
• convenience stores
• department stores
• clothing stores
• pharmacies
• petrol forecourts and service stations
• florists
• DIY stores
• garden centres
• retail at transportation hubs (this includes airside and landside retailers, duty-free retailers at airports, and retailers at train stations or ferry ports)
• retail in visitor attraction or entertainment venues (for example, gift shops that sell prepacked chocolate)
• retailers in hospitals

Businesses offering any drink to which regulation 8(1) applies for sale which has 50 or more employees is a qualifying business for the purposes of the free refill restrictions, unless they fall within a relevant exemption.

Businesses exempt from the location and volume price promotion restrictions

The following businesses are exempt from the location and volume price promotion restrictions:

• Micro or small businesses (businesses with under 50 employees).
• Schools, colleges and other such educational institutions that provide only education and that education is wholly or mainly provided to children aged under 18.
• Restaurants, even if they sell prepacked HFSS food suitable for immediate consumption. However, restaurants are subject to the restriction on free refills of sugary drinks. Please see the "restaurants" section below for more information.
• Care homes that provide a service wholly or mainly to persons aged 18 or over and which provide food solely to residents without requiring payment per food item. This exemption could include social care settings such as:
  • residential homes
  • rest homes
  • convalescent homes
  • respite care
  • mental health crisis houses
• Military establishments for operational personnel (sea, land and air), prisons, young offenders’ institutions and hospitals, and other institutions not operating a business when providing food to residents. A restaurant that offers any drink to which regulation 8(1) applies to the public in return for payment may be however a qualifying business for the purposes of regulation 8 on free refills.
• Food that is provided by a charity in the course of its charitable activities (whether it is free or for a price that is less than the cost of providing that food), or food offered for sale by or on behalf of a charity to raise funds for its charitable activities at a single event. However, specified food that is sold by a non-charitable retailer with a percentage or set amount of the cost going to charity (for example, "20p from the sale of this product is donated to charity") is in scope of the promotions restrictions and therefore subject to the location and volume price promotion restrictions.
• Manufacturers unless they are selling directly to consumers.
• Businesses (for example, wholesalers) who only sell food to other businesses and not directly to consumers. Non-transactional software, such as websites or apps where you cannot purchase a product (for example, a manufacturer’s brand website, which may contain information about their range of products but a consumer cannot purchase the product on that site). If a non-transactional website includes a link to a transactional website, the non-transactional website itself is still not in scope of the promotions restrictions.

Businesses exempt only from the location restrictions

The following businesses, if qualifying businesses, will be exempt from location restrictions but still be subject to volume price promotion restrictions:

• A business that would otherwise be in scope but which has a relevant floor area of less than 185.8m2 (2,000 square feet) taking it outside of scope of the location restrictions.
• A business that would otherwise be in scope but is a specialist retailer that only or mainly sells food from a single category in schedule 1 (included under the what food is in scope section). Examples of specialist retailers may include, but are not limited to:
  • a chocolatier selling mainly chocolates, but also some biscuit and cake products
  • a sweet shop selling mainly confectionary, but also some biscuit and ice cream products
  • a chocolatier selling only chocolates
  • a sweet shop selling only confectionary
  • an online shop selling only cakes and cupcakes
  • an online shop selling mainly cakes
  • an online chocolatier selling mainly chocolates

Stores that claim they are a specialist store will need to be assessed on a case-by-case basis by the enforcement authority.

To be a qualifying business, a business must have 50 or more employees on the first day of the financial year during which an offer for sale took place.

The number of employees is not restricted to Wales, it is the total number of employees a business has in its entirety.

Whether individuals engaged on a zero hours contract are considered as employees for these purposes will depend on the individual case and their contract and would ultimately be a question of employment law.

The restrictions will apply to medium and large businesses (which we consider to be 50 or more employees) that sell food or drink in Wales.

For franchises or arrangements (like symbol groups) where multiple businesses operate under the same name, a business carried on pursuant to a franchise agreement is to be treated as part of the business of the franchisor and not as a separate business carried on by the franchisee for the purpose of determining how many employees a business has, and therefore whether they are in scope of the regulations.

If symbol group retailers operate as part of a franchise arrangement where the total sum of employees operating under the franchise are at least 50, they may be in scope of the regulations. Symbol groups are typically a form of a franchise of convenience stores. For the purpose of determining how many employees a business has and therefore whether the restrictions apply, the business of the symbol group retailer will be treated as part of the business of a franchisor with whom it has a franchise agreement.

Under these regulations, a franchise agreement is seen to exist where one undertaking (the franchisee) and another undertaking (the franchisor) agree that the franchisee carries on a business activity that includes the sale or distribution of food (the franchise business).

The following 3 matters must also be agreed by the franchisor for a franchise agreement to exist and be similar to those of other undertakings entered into by the franchisor under comparable contractual arrangements:

• the food provided in the franchise business
• the internal or external appearance of the premises where the franchise business is carried on
• the business model used for the operation of the franchise business

If these features of the business are agreed by the franchisor and are similar to that of other undertakings in respect of which the franchisor has entered into comparable contractual arrangements, then for the purposes of the regulations a franchise may be a qualifying business. Contractual arrangements can vary from business to business.

Restaurants do not need to comply with location and volume price restrictions but must comply with the restrictions on the free refills promotion of certain drinks.

A restaurant is defined in the regulations as a business whose premises are used mainly for the preparation or sale of food intended for immediate consumption, whether on or off the premises (including a café, coffee shop, fast food or takeaway business).

Food sold in restaurants may be considered intended for immediate consumption if it is either:

• offered for sale for immediate consumption on the premises on which it is sold
• offered for sale for consumption off the premises and does not require any preparation by the consumer before it is consumed (preparation may include peeling, hulling or washing, cooking, thawing, and heating or reheating pre-cooked food)

Examples of out of home businesses (restaurants) where the promotions restrictions (aside from free refills) may not apply include but are not limited to:

• coffee shops or cafes (including cafes located in department stores, supermarkets, convenience stores and petrol stations)
• sandwich bars or shops
• dessert shops or houses
• bakery stores
• restaurants at travel hubs
• hotel restaurants
• pub restaurants
• chain restaurants or branded casual dining restaurants
• quick service restaurants
• visitor attraction or entertainment venues (such as cinemas and restaurants in theme parks)
• contract catering including:
  • workplace canteens (including staff canteens in hospitals)
  • university or further education canteens
  • event catering in venues such as arenas or stadiums and so on
  • hospital visitor canteens

Concessions are commonly considered to be separate businesses occupying an area within the store premises of another business which is primarily responsible for managing and operating the store (“the primary business”). Concessions may be excluded when calculating the relevant floor area of the primary businesses store, if they operate their own payment facilities.

However, a concession located within a primary business’s store, but not part of its business, is treated as a separate business that must comply with any restrictions that apply to it, if it meets the criteria to be considered a qualifying business in its own right.

Examples to determine a potential concession

Example 1: retail concessions

A retail concession located inside a supermarket may be a qualifying business in its own right, if it meets the criteria as stated in the regulations.

If a retail concession is a qualifying business in its own right, any in scope prepacked food being sold in the business will be subject to the volume price promotions restrictions and the location restrictions. However, the concession will only be subject to the in-store location restrictions if its relevant floor area is over 185.8m2 (2,000 square feet). If the retail concession is not a qualifying business in its own right, it will not be subject to any of the restrictions.

Example 2: restaurant concessions

Restaurant concessions located within a retailer (for example, a café that is a separate business operated in a supermarket), are not subject to the volume price or location promotion restrictions because restaurants are exempt from those restrictions. However, a restaurant concession may be a qualifying business in its own right for the purposes of the free refill restriction.

Example 3: vending machines

Vending machines that have payment facilities owned and operated by a business other than the primary business may be considered a concession, and therefore not part of the calculation of the relevant floor area of the store of the primary business.

Vending machines which are a concession may not be subject to the location restrictions if they have a relevant floor area of less than 185.8m2. They may also not be subject to the location restrictions applicable to the primary business they are placed in, where that primary business is a qualifying business. However, in any event we would encourage qualifying businesses not to allow vending machine concessions selling specified food to be placed in restricted areas of their stores. Vending machines may be subject to the volume price promotion restrictions if operated by a qualifying business.

Example 4: areas within retail stores

Areas within retail stores, for example, the bakery section or deli section within a supermarket that is owned and operated by that supermarket, are not concessions as they form part of the same business.