Contemporary Issues In Hospitality Management | | A critical investigation into the enabling and inhibiting factors effecting restaurants propensity to provide local food | | Student No. 09823206 | 8/12/2011 | HH300UWords: 2485 |

It is apparent there is growing pressure from global, national and social stakeholders for businesses to become more sustainable in their practises. Although defining sustainable food consumption is fraught with difficulties it is widely accepted to include economic, social, cultural and environmental factors (Reisch 2010).

A growing and contentious issue within this framework is the provenance and locality of ingredients within the food-related industries. A change in consumer attitudes towards more ethical consumerism is increasing pressure on food retailers to meet this demand.
It could be said restaurants act as a medium for food producers to reach consumer markets, therefore present a suitable context to investigate this topic. Therefore this paper aims to investigate the contributing factors as to why restaurant operators may choose to either adopt or incorporate a ‘local’ ethos, and the rationale to cater for this contemporary trend.

The government appears to be making some effort to help the local food sector grow.
This could be a result of external pressure from the EU in their commitment to rural affairs
(as seen in the recent Common Agricultural Policy reforms CAP 2003-2004) or simply more representative of the general publics growing environmental concern. The government may also have vested interests in a financial capacity as studies have revealed considerable economic benefits to local economies and consequently the national economy. For example, a study (cited in Pretty 2001) by the New Economics Foundation found that if every person, tourist and business in Cornwall were to switch spending to localised products and services an extra 52 million pounds could be created for the local economy. A proposed benefit for local food systems (LFS) is regional job creation and with UK unemployment at record levels presents a very attractive prospect for the government. However evidence submitted by Genewatch UK (2011) for a government whitepaper claims the government supports local in an ostensible manner. Further criticism arises from Sir Don Curry who claims the ‘plethora’ of supporting bodies creates inefficiencies in local food systems (Defra n.d.). Defra (n.d.) also recognises that the nature of local food requires a de-centralised system. Under the umbrella of Defra many schemes and grants to assist growth in the local sector do exist however many argue these are more agricultural based (Seed 2005) and none are directed a local food sector alone. The government recently trebled the Rural Enterprise Scheme Funding yet only to the amount of 36 million (Defra n.d.). which could be seen as measly comparative to potential revenue.

A key issue for restaurateurs wishing to adopt ‘local food’ as part of their philosophy is the difficulty posed in trying to determine its meaning. Sims (2009 Pg 107) argues that ‘the concept of local food resists precise definition’. Research by the Working Group on Local Food (2003) indentified considerable variations in the definitions provided by stakeholders as to what constituted ‘local food’. Notably however, they were mainly concerned with geographical context which, although common, proves complicated as discrepancies as to where ingredients within the product come from occur (Defra 2003; Working Group on Local Food 2003). Furthermore, Sims (2009 Pg 107) observes that geographical definition is doubtful as “rightly or wrongly, local is often equated with a host of values relating to social, environmental and quality criteria”. The inability to define local, derived from the complexity of its interdisciplinary nature, essentially allows the operator to dictate their interpretation of local. Therefore the level it is advocated and practised is, a) unregulated and b) subjective.

Some restaurants do impose boundaries based on their own adaptation of local. Due south for example, a two rosette restaurant in Brighton, UK, focus their entire operation on local food. They claim to source 80% of their produce from within a 35 mile radius of the restaurant location. Victoria Shenton, a co-founder, states this was their mission statement at the start of the venture and “continues to be central to everything we do” (Shenton cited in Caterer & Hotelkeeper 2011). Shenton notes the increase in demand from consumers for local produce and regards the relationship with suppliers as symbiotic though not without problems. Issues such as logistics and reliability were identified however Shenton asserts “it’s what keeps the business fresh, alive and exciting”. In another interview the head chef, Michael Bremner, regards sourcing locally as forcing “you to think outside the box” (Bremner cited in Restaurant Brighton 2011). This case study demonstrates how industry professionals have incorporated ‘local’ into their core business strategy through imposing geographical boundaries (35 miles), their construal of local. It also highlights some of the implications that arise from sourcing local, some of which will be discussed further on in this paper. Although locality can be largely unregulated there are certain governing bodies, all be it on a voluntary basis, that exist such as the Sustainable Restaurant Association of which Due South has acquired a three star rating.

The sustainable Restaurant Association (SRA) and its American counterpart, The Green Restaurant (GRA), are governing bodies who offer guidance and consultation on how to be more sustainable. Both not-for-profit organisations award businesses marks for their efforts/commitments towards sustainable measures and both claim to save money through there activities. Michael Oshman, Founder and Director of GRA, argues some of the benefits of being a member are; receive great publicity; cut costs; improve staff productivity and morale; stay ahead of legislation, create healthier environment (Oshman cited in Business and the Environment 2008). Interestingly, the majority of these factors are in relation to profitability and only one considers the wider [health of] environment. Upon investigating the point-allocating criteria of GRA the researcher identified that food sourced within a 100-mile radius was given a higher score (40 credits) over vegetarian sourced produce. This highlights both their perceived higher-value of ‘local’ and their use of geographical boundaries. If sustainability or ‘local’ is central to your business strategy then SRA (or GRA) membership would not only be concept enhancing but would provide customer assurance and help assimilate yourself to the given target market. The level in which an operator wishes to practise sustainable methods would largely be down to the level of corporate social responsibility (CSR) willing to be adopted.

Baden et al (2009) argues as the ‘power of national government lessons’ due to ‘increasing globalisation’ society expects more from businesses. Corporate social responsibility (CSR) is ‘notoriously ill-defined’ (Green and Peloza 2011. Pg 48) nevertheless Mohr, Webb and Harris
(2001. Pg 47) offer ‘a company’s commitment to minimising or eliminating any harmful effects and maximising its long-run impact on society’. The majority of focus with CSR is in regards to larger companies and corporations (Baden et al 2009). However as 99.8% of European enterprises are small medium enterprises (SMEs) (European commission 2003) a shift in focus is occurring (Baden et al 2009). Consumer pressure is also apparent. A worldwide consumer survey found two thirds of respondents wanted more contributions from businesses to wider societal aims (Isa 2003 cited in Mohr & Webb 2005). In addition to these forces, some large organisations in the supply chain specify CSR criteria as a prerequisite before contractual agreements are established. An investigation found this to be an ‘additional incentive’ though potentially may ‘competitively disadvantage small businesses’ (Baden et al 2009). Many companies view CSR as an additional cost (Green and Peloza 2011;Mohr and Webb 2005) even though correlation between CSR and profitability has been identified (Laroche et al 2001). Restaurants present a significant opportunity for CSR inclusion as by their very nature they consume large quantities of resources (Hsin-hui hu et al 2010. Pg 344; Business and the Environment 2008. Pg 1), notwithstanding the energy used to produce and transport raw goods, whilst all the while consistently producing masses of waste. Research into waste disposed in the UK Hospitality industry identified over 1,000,000 tonnes produced in the restaurant sector alone (WRAP 2011). Restaurants who practise responsible methods, and who can withstand the initial inflated cost, could enable log-term profitability, better working relationships with suppliers and be more in tune with consumers in the future.

An operator contemplating using a ‘local’ ethos, and/or deciding upon the level of use would need to ensure sufficient clientele could be attracted first. According to market intelligence the organic food and drink market saw an estimated 1.1 growth from 2009-2010, reaching £1.99-billion sales contribution to the UK economy (Griffiths 2010. Pg 37). Other research has reported an overall 4% increase in consumers claiming to buy local with 65% of consumer now buying local produce and a further 9% stating their willingness to do so in the future (IGD 2006). These claims are reinforced by the New Economics Foundation who state just over half the consumers polled want their food grown locally and nearly three quarters prefer to shop locally (nef 2003). These statistics represent growing concern towards more sustainable food procurement in the wider society and with this trend set to continue presents a viable concept strategy.

Indeed, many consumers are progressively becoming more aware of the direct impact their purchases may have on the environment. Mohr and Webb (2005) found that consumers were increasingly prone to choose or avoid products and services based upon these issues.
A qualitative study focused on the ‘views and beliefs’ of consumers towards local food identified six key themes; cost, lifestyle, food quality, consumer ethnocentrism, choice and farmers (Chambers et al 2007). Cost is repeatedly identified to be the main barrier in purchasing local foodstuffs (Chambers et al 2007; IGD 2006;) with inconvenience on lifestyle due to time-consumption (relative to supermarket shopping) followed second (Chambers et al 2006; Laroche et al; IGD 2006;). Market research recognized freshness being an ‘overwhelming reason’ to buy local food with support for local producers being a major concern (IGD 2006) – although supporting British was viewed more important than local (Chambers et al 2006). Consumers perceived food to be fresher because it had not travelled as far (IGD 2006;) and overall ‘higher in quality’ and ‘tastier’ (Chambers et al 2007;). Interestingly no significant differences between high and low socio-economic groups views emerged, even ‘with regards to price’ (Chambers et al 2007). This highlights price retention through the board meaning it will not exclude particular markets. Nonetheless, for the restaurant manager cost presents a significant issue. If people associate local with higher prices then potential customers may not frequent the establishment based on preconceptions. Though if we accept a general paradigm towards more ethical consumerism is emerging then the associated environmental benefits, combined with the perceived higher quality and improved taste could compensate. Moreover, studies even suggest a ‘willingness’ to pay higher premiums for same service or product if it is environmentally friendly exists (Laroche et al 2001). Laroche et al (2001) recognise that due to a ‘shift in attitudes’ towards environmental purchasing ‘focus on this segment may provide a source of distinctive competitive advantage’.

A key factor inhibiting restaurants use of locally sourced produce is the availability of, or access to, small scale suppliers as the case study: Collaborative food buying and sustainable distribution for London restaurant; helps identify. The study organised group discussions with chefs, retailers and selected suppliers in a bid to devise a consolidated distribution system. The pilot scheme emerged from financial and environmental concerns raised by both food suppliers and London restaurants and retailers. For the producer additional costs are accrued when attempting to deliver to multiple locations in and around London area. This in turn results in more fuel usage and contribution to pollution. One local producer identified growing demand for his produce but highlighted the difficulties a micro enterprise faces in meeting this demand. The study acknowledged that small scale producer could only acquire a limited number of buyers without undergoing ‘significant changes’ in terms of staffing, equipment and transportation which consequently ‘undoubtedly undermines their profitability’ (Sustain 2009). The many deliveries made by individual companies were said to be ‘inefficient’ as they did not contain full loads nor did they collect on return journeys, all the while contributing to London’s already problematic congestion.

Concerns were raised from chefs and restaurateurs in regards to accessing new suppliers and customer relationship management. They claimed it was time consuming seeking out new producers and then persuading them to deliver proved difficult mainly due to the above issues. We must acknowledge that London presents a unique case due to its size and dense urbanisation. The geographical context of local that some advocate proves difficult as inner city establishments would need to source foodstuffs from afar, most probably outside the M25. Also, one could argue that the inefficient channels of distribution are counterproductive as the environmental benefits associated with local produce are possibly outweighed by the fuel usage and greenhouse gas emissions.

However, upon closer analysis we can begin to see the deeper difficulties businesses face trying to sustain ‘local’. The nature of the local producer (with low profit margins) means small firms potentially with minimal cash flow, or minimal (financial) margin for error cannot expand and benefit from economies of scale. Herein lays a topic for further investigation - to determine the point when a small scale producer expands to a position whereby production activities outgrow sustainability. Furthermore, the extra costs incurred from external variables such as rising fuel tax cannot feasibly be absolved by the small-scale independent producer therefore must be passed on to buyers, and ultimately the end-consumer.

In the current economic climate it will be interesting to see the level in which the government supports and pursues the local food sector. If the government does decide to invest time and money it may need to re-evaluate the level of funds available and devise better distribution channels without smothering a sector that is dependant on a decentralised approach. The inability to classify local food permits subjective interpretations to prevail. This renders the term open to abuse from marketers or restaurantuers and potentially over-used and devalued in the future. The presence of regulatory bodies such as SRA does offer a framework to measure against however this is limited due to its voluntary nature. Restaurants high use of energy and waste production combined with the apparent shift in CSR focus from larger corporations to SMEs suggests it is only a matter of time before CSR pressure is felt by the restaurant sector. Local food presents a viable concept to appease this demand and In the future operators who accept guidance from regulatory bodies and act responsible may well attain a competitive advantage over ones who do not.
The market growth is reflective of consumers growing inclination to make purchases based on ethical and environmental concerns. The willingness for some consumers to pay more driven by these reasons should encourage restaurant operators to source more locally and enable higher sale-cost in return. The case studies helped identify the problems of distribution and availability felt by both producer and procurer whilst unearthing some of the underlying causes slowing espousal, the very nature of small-scale local food systems itself.

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