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Just slap a label on food that says it's 'local', and expect it to sell?

Clear labeling is a big issue that customers want when it comes to food or any other item. Experience helps restaurant managers stick with local foods, says a new study, "Restaurant's decision to purchase local foods: Influence of value chain activities," published in the May 2014 issue of the International Journal of Hospitality Management. Restaurant chefs and food purchasing managers who have bought local foods in the past are more likely to continue adding them to menus and store shelves, according to a team of researchers.

Just slap a label on food that says it's 'local', and expect it to sell?
Photo by Nurcholis Anhari Lubis/Getty Images

"Past experiences will have an impact on buying local foods," said Amit Sharma, according to the April 7, 2014 news release, "Experience helps restaurant managers stick with local foods." Sharma is an associate professor of hospitality management at Penn State. "Restaurant managers who buy local foods currently are significantly more likely to keep purchasing locally."

In a study of the cost and benefits of purchasing local foods in restaurants, managers and chefs indicated that certain actions of local food producers stand out as reasons why they continue to buy local foods. For instance, managers said that a local farmer's or producer's response time -- the time it took a business to respond and process an order -- was more important than delivery time -- how long it takes to actually receive the goods -- as a factor when they considered buying local food products.

"Interestingly, we did not find that delivery time mattered as much for those who purchased food, not to say that delivery time wasn't a concern at all," said Sharma. "However, what was more important to these managers was the response time of a local food producer."

Food purchasers also indicated that they would not stock local food just because it is local. Local foods must have a unique selling point, according to the researchers, who report their findings in the May 2014 issue of the International Journal of Hospitality Management.

For instance, a special variety apple used in an apple pie may be more important to the food manager than just a locally grown apple

"Simply saying 'local food' was not enough, chefs really want to provide their customers with a dish that is unique," said Sharma, according to the news release. "You can't just slap a label on it that says it's 'local', and expect it to sell, in other words." While many studies have explored the reasons that customers would want local food, this study was focused on management's buying decisions.

"We're not discounting customer demand, we recognize that consumers have to want it -- in fact our previous studies suggest consumers are willing to pay more for local foods," said Sharma. "But the manager has to make decisions before the food is served."

Clear labeling is another selling point for restaurant managers who are purchasing foods in grocery stores and markets

The labels should be accurate and easy to read, containing specifications including weight, date and product details, for example, according to Sharma, who worked with Joonho Moon, doctoral student in hospitality management, Penn State, and Catherine Strohbehn, state extension specialist and adjunct professor in apparel, events and hospitality management, Iowa State University.

Training staff to handle local foods properly and to communicate the advantages of local foods with customer was also an important factor that could explain the decision to purchase local foods.

Commitment of a business to offer local foods

"Training tells us a lot about the commitment of an operation to local foods," said Sharma. "Local foods may or may not be delivered or processed in the same way as non-local foods, so the staff should be trained and, particularly, chefs need to be trained in developing unique menus using local foods."

Managers did not seem to think food safety was an issue with handling local food. "That's not to say food safety isn't important to managers, it just isn't an obstacle to purchasing locally," said Sharma, according to the news release. "It's not a constraint."

The researchers sent surveys to independently owned restaurants in Midwestern states to investigate management's attitudes toward the decision to purchase locally grown foods. "In this project, we investigated the cost-benefit analysis of restaurants purchasing local foods, along the foodservice value chain, which ranged from the sourcing of local food all the way to serving local foods to customers," said Sharma in the news release. The Leopold Center for Sustainable Agriculture at Iowa State University supported this work.

When food crises spill over

You also may wish to check out the abstract of another article also published in the May 2014 issue of the International Journal of Hospitality Management. "The negative spillover effect of food crises on restaurant firms: Did Jack in the Box really recover from an E. coli scare?" In that study, the abstract notes that despite the enormous impact of food crises on restaurants, limited understanding of their long-term impacts and associated factors has undermined crisis managers’ ability to handle crisis situations effectively.

In the article, researchers investigated the long-term impact of food crises on the financial performance of restaurant firms and identified the factors that influenced this impact. This explanatory study examined the case of Jack in the Box, whose 1993 Escherichia coli scare was the first and largest restaurant-associated food crisis in modern times. An event study method was used to uncover stock price movements of Jack in the Box, in conjunction with 73 unrelated food crises that occurred from 1994 to 2010.

Stock prices of Jack in the Box exhibited significantly negative responses to other firms’ food crises, moreover, the negative spillover effect was stronger if the crisis occurred closer in time, was similar in nature, and was accompanied with no recall execution. These findings shed light on the long-term financial impact of food crises and offer insights for crisis managers to develop more effective crisis management strategies, according to the study's abstract.

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