"Ozempic effect" adds pressure to Iowa's struggling eateries
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The "Ozempic effect" is hitting Iowa's struggling restaurant industry as more diners are pulling back from tables, Jessica Dunker, president of the Iowa Restaurant Association, said in a recent interview with "Iowa Press."
Why it matters: The drug's rising use could lead to fewer dining options.
Catch up quick: Ozempic was approved by the FDA in 2017 to treat diabetes.
- Its popularity has grown in recent years after celebrities and influencers shared dramatic weight loss results, with some studies indicating that over 10% of people have used the anti-obesity drugs.
- Iowa ranks among the states with the highest usage rates.
Driving the news: The restaurant industry's foot traffic has declined in recent months for the first time in decades, with Ozempic being a factor, Dunker said.
- Other pressures include rising costs and changing eating habits as more Iowans cook at home, Dunker and Scott Carlson — a local restaurant owner who this month closed Americana in downtown DSM — said on "Iowa Press."
The intrigue: New tax breaks on tips, which expire in 2028, benefit the industry but generally don't provide direct financial gains for restaurant owners, Dunker said.
By the numbers: Iowa's restaurant industry employs roughly 150,000 people.
- About half of Iowa's nearly 6,500 eating and drinking establishments were unprofitable last year, according to the restaurant association.
- As many as 600 could close this year, Radio Iowa reports.
Startling stat: More than half of people on anti-obesity drugs have dined out less since starting the medications, according to a recent Bloomberg Intelligence Survey.
- Some restaurants are trying to attract people on weight loss drugs by offering smaller portions and tiny tasting menus, the New York Times reports.
Reality check: The Ozempic effect is a fun narrative but "totally overblown," Michael Osanloo, the CEO of Portillo's Restaurant Group, told Bloomberg TV last year.
The other side: Restaurants already have narrow margins, and even small changes in behavior can significantly impact a business's bottom line, Dunker tells Axios.
The bottom line: Ozempic isn't the only thing hurting Iowa restaurants, but its rising use may be adding more pressure on the industry.