Do Alabama's Restaurant Preferences For Local Translate To Other States, Especially The Garden State?
Jim Prevor’s Perishable Pundit, November 30, 2015
The Ideation Fresh Foodservice Forum has become an important part of the New York Produce show and Conference with operators, distributors, producers all joining together to find ways to boost produce consumption and bring us closer to the USDA goal of half the plate being accounted for by fruits and vegetables.
So when we heard that a new hire at Rutgers had brought with her some research tying together produce farmers and independent restaurants we signed her up quick and we asked Carol Bareuther, Contributing Editor at Pundit sister publication PRODUCE BUSINESS to find out more:
New Jersey Agricultural Experiment Station
Q: Rutgers has been a part of The New York Produce Show and Conference since its launch, where Dr. Ramu Govindasamy first introduced his ongoing research on ethnic marketing, broadening the scope and depth for attendees each year. And Dr. Mary Nikola took her expertise in leadership, management and organizational development across the pond to our London Show with a dynamic interactive micro session.
A: Now, we’re delighted you’ll be presenting in New York. We’re interested to learn more about your initial research in Alabama, continuing research on the restaurant industry in New Jersey and the possible parallels you might draw.
Q: What can New York Produce Show attendees glean from your study: Alabama Restaurant Preferences and Willingness to Pay for Local Food: A Choice-Based Approach?
A: The abstract: health-conscious consumers are leading a growing local food marketing trend in the U.S. This demand for local food has expanded to the restaurant market, and chefs are consistently searching for local products to appeal to consumers and also for product quality and freshness.
However, there are barriers that prevent restaurants from purchasing from small local farmers. The study was done to determine if restaurants in the state are interested in purchasing locally, to identify the barriers preventing them from doing so, and to understand restaurant/chefs’ preferences for purchasing local food.
Q: And you’re looking to expand your Alabama research to New Jersey?
A: Because of the number of small farmers in New Jersey seeking additional intermediate markets (restaurants, grocery stores, etc.), the study will be replicated here in New Jersey. Initial secondary data that will be collected will include the number of independently owned restaurants in the state, an approximate number of these restaurants that are currently purchasing local, and the number of small to medium farms that could benefit from this marketing outlet.
Q: Interest in local is a long established trend at this point. Isn’t it a given that most independently owned restaurant chefs would prefer to use local if available? What are the key barriers?
A: I started the research in Alabama, where I was doing my Ph.D. study at the time, and this was part of my dissertation work, mainly working with small farmers who sold their product at farm stands and farmers markets, where at the end of the season they still had produce left. Those outlets were not enough to sell all their products, so they were looking for additional markets. They did not have enough produce to sell to wholesale markets, where volume was the number one problem, but even if they could supply, price was also an issue.
These farmers wanted to see how they could tap into other retail and foodservice markets, which would require focusing on the smaller grocery stores and restaurants. So we decided to do a study to look into the independently owned restaurants, because they can easily make decisions unlike the chain restaurants, which we know have to go through different management levels to implement change.
We wanted to find out their preferences for different attributes of buying local foods. We asked them first of all, do you currently purchase local foods, and for those who did not purchase, we asked them the reasons why. Then we sought out their interest in purchasing local based on a number of criteria.
Q: What were the reasons why an independent restaurant wouldn’t be buying local foods?
A: One reason would be that they didn’t know where to find the produce. Or it was a supply issue. They would have to buy from too many small farmers to get the quantity they were looking for. Consistent supply was another. And since these were seasonal growers, they weren’t able to supply them the year-round availability they needed.
At certain times of year, they’d still have to go back to buying from those food chain suppliers. Those were the top reasons why they didn’t purchase. However, if they could alleviate their issues of concern, the majority of restaurants in our study were interested in purchasing local foods.
There were a number of important factors we wanted them to rank in terms of influencing local purchase decisions, which I’ll go into in more detail at the Show. We gave them a list… consistent quality, consistent supply, year-round availability, price, food safety issues, delivery, packaging and labeling, processed versus fresh, ease of ordering and paying. We asked them to rate each of those factors from 0 not important to 10 very important.
Q: What factors stood out in the ratings?
A: I do think the ratings correlated with what people in the audience would generally think. Consistent supply, consistent quality, year-round availability and price were top factors in making the decision to purchase local foods, which you’d think would be important.
Q: But local by its nature isn’t going to be available year round.
A: Right, and that’s the dilemma. The restaurant wants the product to be available when they want it, but you’re not always able to get it from the local farmers, which is a major drawback for many of these restaurants.
Q: This does surprise me because overwhelmingly when we interview independent restaurant chefs, they are so excited to bring in local product and are big on promoting seasonal items to their patrons.
A: I will say in our study, 51 percent of participants actually did purchase local, and 49 percent did not. So it was really close.
Q: Could you further describe the independent restaurants in the study? Did you break down different characteristics of those participating? For instance, high end white table cloth restaurants, or ones with a natural foods bent, etc. Did you consider what demographic they were targeting, such as a college town, or elderly community, and perhaps more importantly, whether they were in a more rural area surrounded by farms versus an urban setting, etc.?
A: We surveyed all the independent restaurants given to us from the Alabama Restaurant Association. So this wasn’t from just one area; we got responses from all over the state.
Q: For those unfamiliar with the local produce scene in Alabama, could you give us a picture of the landscape. How would it compare to a state like New Jersey?
A: It’s pretty similar, the only difference is in the South, because of the warmer climate, the season is prolonged so they’ll have local produce a little bit longer in Alabama than here in New Jersey. A lot of people are pushing local and using greenhouses and other growing techniques to extend the season and to have more supply during the winter months. But still it’s not a year-round thing.
Q: Doesn’t it also matter how you define local, since a broader definition will provide extended local options?
A: When we referred to local in our study, there was no real definition. Because there is only the USDA definition of local within 400 miles from its origin, and no standard definition, we didn’t specify to participants, we’re talking 50 miles from your place or just Alabama, or any other limits.
When we do ask them what their definition of local is, most of them say a 50 to 100 mile radius, but it wasn’t something we asked them to consider.
Q: In New Jersey, Jersey Fresh has become an aggressive marketing tool…
A: Actually, New Jersey is trying to change the definition of local; to say it’s local in New Jersey, Editor's note see related Pundit pieces here and here) it has to be New Jersey grown, which will obviously have an impact on the supply chain and buying, and probably won’t be a very good thing for us.
Scrolling through our survey, we asked those who purchased local the reasons why, and had them rate the factors, as we did for those who wanted to purchase local but didn’t.
We also asked them background questions like the percentage of local foods delivered to them versus picked up by the restaurant, to see if delivery was a factor.
A big part of the research was the preference part of the study. We used a conjoint analysis.
We gave participants some choices from different attributes: The number of farmers they’d like to work with – three, six, or nine. The reason we came up with those numbers was based on information we learned when we were developing the survey during our visits to local restaurants. We also looked at the producer type -- conventional, natural, or organic, since these are the most popular growing methods. Then we looked at product form — fresh whole from the garden, maybe wash it and that’s it, versus processed, meaning pre chopped or washed or bagged for you. We gave them this information too.
Then we asked them price; what’s your average weekly you’re paying now. Not everyone gave us a price, which we were hoping for, but what’s your average cost you’re buying from the local farmers, and would you be willing to pay 10 percent below or 10 percent above what you’re paying now? Every person who answered the survey whether you purchased locally or not, you still had to answer this part of survey.
Everyone got eight choice sets, and each choice set had three attribute options at different levels. We said go through them, what would be your ideal preference. Participants also were able to opt out of picking a choice in a set because we didn’t want to force them to choose one.
For instance: Let’s say the price is most important to you, option 1 is: you have three conventional farmers giving you fresh whole product, but then the price is 10 percent above, would you still want to pay that price, or would you prefer option 2, buying from six farmers producing naturally at a lower price.
Q: And what did you find out?
A: In terms of the results, I don’t want to give away everything, but overall on average looking at all responses, the ideal bundle of local farmers for independent restaurants is six farmers producing naturally grown food. When their customers come to the restaurant, they don’t care if the product is organic; they want local. Once it’s local, it’s considered healthy and fresh. So the restaurants don’t necessarily want to pay the additional price for organic, but are content with naturally produced food, which is not certified organic.
The restaurant wants to get it fresh whole. Why not processed? It’s because they can use every bit. For example, they can use the bone of the chicken to make soup.
Q: Chef Gerry Ludwig, who will be our keynote speaker at the IDEATION FRESH Foodservice Forum during the New York Produce Show, talks of this trend in produce, celebrating vegetables in their natural state during cooking as well as on the plate -- nubby, misshapen with the stems on.
A: Restaurants are saying give me everything and I’ll figure out how to use it. But when it comes to price, obviously the preference is 10 percent below what they’re currently paying.
Q: To clarify, when you’re saying conventional versus natural, is it assumed it’s local, if it’s natural?
A: No. it’s not assumed. But the chef is thinking when customers come into the restaurant and see on the menu it’s locally grown, they assumes it’s fresher, healthy and natural. If you have locally grown food on the menu, consumers are not thinking about growing methods; they’re just thinking local is better, so the restaurant doesn’t see the need or value in purchasing organic.
We gave participants the definitions of conventional, natural and organic.
Q: How did you define them?
A: So when we say conventional, it means growers use traditional agricultural practices; they rely on traditional pesticides, and synthetic fertilizers. For naturally grown, farms do not use synthetic pesticides or other synthetic chemicals, what some would consider harmful.
And for organic, we say it follows legal guidelines defined by the USDA program, where no GMO’s are permitted and crops are produced without any synthetic pesticides or synthetic fertilizers.
Q: Since fresh fruits and vegetables are GMO-free, are you just asking about local produce, or are you including other local products?
A: The focus is on fruits and vegetables. But on the survey, we just said a basket of goods that are locally grown. We didn’t specify fruits, vegetables, dairy or meats. We just said, in general, across the board.
But then when we followed up, and asked, what are you looking for in local product, most of the responses were fruits and vegetables. Produce clearly was the concentration.
I want to see how this can translate to New Jersey, because the problems are similar here. We have a majority of small farmers, produce specialty crop growers. When I talk to them, they have the same problems. At the end of the day, they have major waste and extra produce because farmers markets or their farm stands are not sufficient. They are looking for additional markets.
Q: How can this study help?
A: We want to say to the farmers, this is what restaurants are looking for. We want to cut out the uncertainties; is it worth your time to connect to these restaurants? We want to go to them, here it is, this is what restaurants want from you, can you supply it?
In the case of the Alabama study, these independent restaurants are looking to buy at the cheaper price. Whatever their average price for a basket of goods, they want 10 percent less. Are you willing to sell your product at a lower price just to tap into these markets? Maybe this is not the market for you. Maybe you should be looking at grocery stores.
Q: But as you point out earlier, if you ask, people are going to want to buy something at 10 percent less… Isn’t there a quality/price value equation?
A: Quality is important too. When we asked the restaurant owners to rate consistent quality, it was a 10 on their ranking scale. Now we can go back to the farmers… if you’re just looking to get rid of products you couldn’t sell, this is not what the restaurants are looking for. Switch it out and give your best quality to the restaurants. Now, of course, some of this depends on what the chef is using it for, if it’s for puree versus a slice of tomato on the plate.
Q: Doesn’t it also depend on type of restaurant? Are these mainly high-end?
A: They had to be independently owned, primarily white table restaurants. We weren’t looking for more mass market or fast food operators because most are not going to pay the price for local for a burger or fried chicken.
Q: You didn’t consider any other outlets, independent grocery stores, which you mentioned as an alternative.
A: We talked about going beyond the independent restaurants and targeting smaller grocery stores and seeing what they’re looking for, but that would be two different audiences, and a different study.
We’re looking to do that down the pipeline. There are not too many middle alternative markets for these small farmers in New Jersey beyond farmers markets, farm stands and pick your own.
You have the wholesale side for the big supermarkets, but it’s a waste of time for these small farmers to go after them because they don’t have the volume and price to go that direction. The opportunities are at the restaurants or smaller grocery stores, or farmers that purchase from other farmers to sell to these wholesale distributors.
Q: I do interviews with larger retail chains, which have developed long-standing arrangements with local farmers at different store locations, highlighting individual growers and the stories of their family farms on signage and farmers’ market-style merchandising, etc.
A: Most of the farmers I talked to about these arrangements are tentative, because they just don’t think they’re going to get the price, or they don’t have the volume, so they’re trying to get top price for their product. So they want this market, but it depends on how much they can get for their product.
We also had the conversation about doing value added product, and then sell to these middle guys. Some do salsas or jams for the supermarkets or restaurants. See if you can get more money selling value-added than you can selling your produce.
Q: Did you also discuss food safety issues?
A: First of all, we asked what they knew about food safety standards, and if this was an important factor to them. We didn’t go into details with food safety. From our study, 83 percent responded they were familiar with food safety standards.
Q: That means 17 percent said they weren’t familiar with food safety standards. That’s a little disturbing…
A: I know. You’d think everyone in the food business would be highly aware.
Q: When you were listing the top attributes restaurants consider when buying local, at first I was surprised food safety wasn’t at the top of the list, but then I figured that was just a given; same as consistent quality, it’s an expected attribute to do business…
A: With some of these smaller players, it can be different. We asked people who bought local what was important to them, and food safety didn’t stand out. However, when we asked people who didn’t buy local what was important to them, food safety was a major priority, which was an interesting finding for us.
I will say, though, from all the factors I mentioned, consistent supply, consistent quality, the price, availability, food safety, the payment, the food processing… every factor was more important to the people who don’t purchase local than they were to the people who do purchase local.
Q: So the people buying local are a little more flexible, or tolerant of these issues.
A: Exactly. These local farmers don’t always have control over a lot of these factors — supply, volume, quality. People not purchasing local are less willing to give up these factors.
This is the very first in-depth conjoint analysis study on restaurant preferences for local foods. We’re in the process of submitting the technical part to a peer-reviewed journal. We want to publish this data to help drive more research in this area and to help small farmers.
Q: Is farming a part of your background?
A: I grew up in Jamaica and my dad was a farmer. He had fruits and vegetables, poultry, and goats. I grew up on the farm with him, and that’s how my passion started for agriculture. I would help him plant. We were literally digging with a machete or hoe, real manual labor!
When we’d water these plants, we would set up our own irrigation system, but also, this was a third world developing country, and we’d have to carry these milk can-style buckets of water, and I’d hand pick the produce. I fell in love with farming.
My dad could grow anything, and it was so good when I tasted it. But he didn’t know anything about the finances and marketing. I went to a university in Jamaica and did my undergraduate degree in accounting to help my dad. Then I had the opportunity to move to the U.S. in 2006, where I pursued my master’s degree at Tuskegee University in Alabama in agricultural economics, focused mainly on the marketing side because I had the finance background.
When I went to Auburn University in 2009, my major professor worked in agricultural extension as well, which was perfect for me. I got to work closely with the farmers on the business side. I did a post doc in extension at Auburn, as an economist for a year. I’m out there with the farmers finding out, what are your financial and marketing issues, and how can we assist you in meeting those challenges. That’s how I got more involved in the local foods movement.
When I got hired here at Rutgers, the department head called in. Because I’m an assistant professor with Rutgers, I’m on a tenure clock, and he said at the time, I think it would be best for you to wait until January, because if you start in November, it means your tenure clock has already started, so you’ll be behind. I know you want to start, and you want the income. And I said this is not why I really want to do extension. It’s not about the income. I just want to get started right away interacting with the farmers.
I absolutely love doing this, and it all started because of growing up on a farm and helping my dad.
What an inspirational story! They better hurry up and give her tenure at Rutgers, schools will be chasing her from all over. And, of course, presenting at The New York Produce Show and Conference perfectly fits in with the requirements for extension appointments to disseminate knowledge.
The idea of tying local food to restaurants is a hot one. A few years ago the Pundit keynoted Sysco’s produce meeting and the whole talk was devoted to the subject.
Yet we think clarity on this issue is better served if we distinguish two issues: The issue of local food and the issue of direct supply.
Every restaurant buys local food – they may get it through a giant, such as Sysco or US Foods, or a massive regional player such as Baldor or Riviera, buy it off the Hunts Point or Philly markets or get it from a small purveyor who splits cases and provides credit – but even the local hamburger or chicken joint buys local tomatoes or cabbage to make coleslaw or potato salad or other products when they are the mainstream items in the region.
That statistic that 49% of the restaurants do not purchase local must mean something else – like they don’t specify local.
One good idea for some follow up research would be on how these growers figure profitability. A few years back Miguel Gómez did a presentation which we wrote up under the title A New Hypothesis On Local: To Boost Sales, Sell It Through Supermarkets … Cornell’s Miguel Gomez Previews His Upcoming Talk At The New York Produce Show And Conference. in this piece he found that the best way to increase sales of local was to utilize traditional distribution channels.
The issue of volume is a red herring. Wegmans has local farmers who grow two or three acres of berries. When the Pundit worked on Hunts Point we helped out plenty of Amish growers who came in with a pickup truck filled with musk melons.
And the issue of price is one that must be looked at closely.
Without a doubt growers that can get white table cloth restaurants to buy direct can get higher prices for their produce – but most white table cloth restaurants buy very low volumes. To sell that one pickup truck of produce they dropped off at Hunts Point could take days of driving, especially in a place like Alabama!
In fact the “higher prices” that most growers get selling direct to restaurants would only be more profitable if their labor was valued at nothing.
Yes in the San Francisco Bay Area and in New York’s Hudson Valley you have a few operators that have direct relationships with top chefs. At our first ever Foodservice Forum our keynote speaker was Farmer Lee Jones, who has a special farm in Ohio (Link) that Fedex’s to chefs all over the country.
But these are wild exceptions.
One thing worth doing would be to quantify the market,... the white tablecloth segment is typically estimated at only 1% of the foodservice segment so it is not clear it is a very large market.
In addition to the concerns for growers killing their time direct selling, delivering, collecting from restaurants, it is also a big pain for restaurants to have all these people delivering at all different times, all different bills coming in, etc.
The food safety issue also needs to be emphasized. These restaurants are not Sysco, they have no ability to vet all these farmers for food safety. They can’t handle the bookkeeping in terms of keeping track of certifications and insurance, they also don’t have the expertise to evaluate the farms. It would be irresponsible to promote an initiative to direct sell from farm to restaurants if this problem is not resolved.
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