Health | March 2010 | By Sam Oches

Local vs. Organic

Local and organic ingredients each present viable “green” opportunities for quick serves. But which is more realistic?

In December, the National Restaurant Association (NRA) released its What’s Hot in 2010 survey in conjunction with the American Culinary Federation (ACF), naming locally grown produce, locally sourced meats and seafood, and sustainability as the top trends to watch for this year.

The report underscored the fact that restaurant consumers are becoming more interested in knowing where their food is coming from.

“If you look at where the consumer is regarding the sourcing of food and the production of food, they have become much more riveted on learning about where their food comes from as well as the different production methods for that food,” says Hudson Riehle, senior vice president of the Research and Knowledge Group for the NRA.

As a response to the growing demand for this sourcing knowledge, two significant trends emerged within the restaurant industry: the use of local ingredients and the use of organic ingredients. Restaurants—and increasingly quick serves—are clamoring to include these ingredients in menu items to satisfy customers.

While chains explore local and organic and develop updated supply chains, questions remain over which is more cost effective, which is more sensible, and which customers prefer.Although both local and organic fall under the now-umbrella term “green,” the two sourcing strategies are different. Organic food is regulated by the United States Department of Agriculture (USDA), and concerns how the food is grown and processed.

The definition of local food for restaurants is a little stickier, considering it is not something that is regulated. Local can mean the food comes from around the corner or across the state.

“Every company that you’re going to run into is going to have a different definition for local,” says Jamie Moore, director of sourcing and sustainability for Eat’n Park, a Pittsburgh-based concept with more than 75 locations in Pennsylvania, Ohio, and West Virginia.

Moore and others agree that the rule of thumb adopted for local ingredients is that they come from within a 150-mile radius. But perception of what local and organic ingredients are is half the battle for quick serves, which cater to customers who might not be educated on the matter and often confuse the green buzzwords.

“Now that ‘locally grown’ is getting so much attention and people are learning about it, I often hear, ‘Oh I thought locally grown was organic,’” says Matt Saline, president and CEO of Mambo Sprouts, a marketing firm focusing on natural and organic products. “There’s a huge perception problem there.”

Saline says farmer’s markets are partially to blame. Local producers often falsely tack on the term “organic” to nonorganic food items because it is a buzzword. With the shaky definition of what constitutes local ingredients, comparing them with organic ingredients can be impossible. But one thing is for sure: Organic ingredients are more expensive than other ingredients.

According to the USDA, the average premium for organic ingredients is as much as 100 percent for vegetables, 200 percent for chicken, and 300 percent for eggs.

“There are some ingredients that I’m paying 100–200 percent more for organic,” says Mary Putman, consulting general manager for Organixx, an upstart deli concept in Denver where 75–80 percent of the menu is organic in the peak season of summer. “Also, because of the limited market price and the limited availability of these products, I don’t even have a lot of competition for them. I may only have one place I can buy it.”

That’s not always the case for local ingredients, which can cost less to transport because of the shorter distances to the stores and because the farmers try to give the restaurants a deal.

Jack Graves, chief cultural officer at Burgerville, a Vancouver, Washington–based quick serve where about 70–75 percent of ingredients are sourced locally, says some food suppliers will bend over backward to give the chain acceptable prices.

“They appreciate consistency and the continuity and the partnership in knowing that they always have an outlet for the products they grow,” he says. “That’s worth something to them, and they appreciate that.”

At Eat’n Park, 20 percent of the menu is sourced locally, including eggs, dairy, bread, and some produce. Moore says the local program is cost effective because he only chooses accessible ingredients that aren’t necessarily going to be used en masse.

According to the USDA, the average premium for organic ingredients is as much as 100 percent for vegetables, 200 percent for chicken, and 300 percent for eggs.

“If we start to change too many variables, then execution becomes very difficult,” he says. “Do we convert all of our ingredients to local? No. Not possible. But we convert the items that are readily available.”

Certainly one of the challenges for sourcing local and organic ingredients is supply. It is especially a problem for local ingredients, considering how difficult it can be to find specific ingredients in some regions and the volume of ingredients that are needed to supply several units.

“One of the challenges when setting up a quick serve was the menu had to be pretty tight and consistent and it had to translate into a multiple-outlet concept,” says Putman, who sources local organic ingredients whenever she can. “When I was designing the menu, I had to take into account that they had to be ingredients that could be purchased locally, sourced locally in a variety of markets.”

Quick serves hoping to source local ingredients can only take what they can get regionally, at the time of year it’s available. At Burgerville, located in the Northwest, that means that favorite menu items like strawberry and blackberry milkshakes can only be seasonal. At Eat’n Park, in the Midwest and Northeast, that means local ingredients are limited and can’t include items like fresh fruit.

Jeff Simmons, president of food technology firm Elanco Animal Health and author of the white paper “Food Economics and Consumer Choice,” says that flexibility is key for any chain looking to offer local or organic ingredients.

“From a practical perspective … to fill a global supply chain like some of the large quick-service restaurants, you’re going to need to make sure that it’s managed appropriately and not something that’s mandated [across all units] because it wouldn’t be something that’s practical,” he says.

Both types of ingredients, however, have a number of benefits for customers and quick serves alike. For organic, the USDA regulations assure that the food is produced according to specific guidelines and is better for the earth. Local ingredients are both good for the environment—the food travels a shorter distance, creating a smaller carbon footprint for the restaurant—and infuse dollars into the local economy.

Burgerville’s Graves says that while the brand has in the past thrived on a local supply chain that boosts the local economy, modern customers are becoming more interested in hot-button issues like the environment.

“People are getting more in tune with their carbon footprint and saying, ‘OK, how far did this have to travel before I bought it here at the restaurant?’” he says.

At Eat’n Park, Moore says that the focus on local ingredients is one aspect of a greater goal of the chain: getting involved with the community. “One of the things we look at is giving back to the community,” he says. “Giving back to the community is utilizing the businesses that are within the community.”

Because of the market that burger concepts like Eat’n Park and Burgerville serve, community involvement is something that resonates more than aspects like the food safety or healthy soil benefits in organic ingredients.

“Organic isn’t something that our customers are demanding,” Moore says. “In our eyes, local is more important to our customers at this point. We hear very little about organic. It might just be our segment of business.”

While Burgerville does use some organic ingredients, like cranberries and spinach, Graves says the company doesn’t bother marketing the organic element because it just is not as strong as the local element.

“It’s just not been a top-of-mind priority for us,” Graves says. “We don’t see the value in that at the moment anyway. But we sure do see the value in local, because that means something to people.”

Numbers alone show that even during the recession, organic still had a solid market. A 2009 report from the Organic Trade Association says that 73 percent of U.S. families buy organic ingredients at least occasionally. Also, a recent report from market research firm Mintel shows that 40 percent of respondents have not changed organic purchasing habits during the recession.

At Organixx, which opened in 2009, Putman says the organic ingredients—many of which are sourced from Colorado—are the overwhelming reason why customers choose to eat there.

“One of the things we asked them was, ‘What appealed to you most when you came here? Is it because we’re trying to do local, or is it because of the organic ingredients?’” she says. “I would say 75 percent of our respondents said that it was the organic element more than anything.”

Indeed, because of the higher cost of organic ingredients—which push the average price for sandwiches and salads at Organixx to about $9—the ingredients become the primary selling point of the concept.

“At this point, because of the cost of organic ingredients, it’s purely a marketing-driven concept, that you’re bringing people in the door because of that,” Putman says.

But Simmons says that organic success like that at Organixx purely reflects a niche market. According to data his firm collected for Food Economics and Consumer Choice, 95 percent of people want food to be affordable and nutritious. Only 5 percent want it to be a luxury choice.

“It probably never will get significantly bigger than the 5 percent,” he says. “Be careful that you don’t react to the loud minority voice. Let’s keep things in context. The majority want affordable and, in quick serves’ case convenient, nutritious foods.”

Local ingredients, most believe, are an agreeable middle ground for consumers, who can still get affordable food with a back-story that makes them feel good. “Consumers want to connect with their food,” says Barbara Haumann, senior science writer and editor for the Organic Trade Association.. “They want to hear the story behind their food.”

According to a 2010 Green Shopping Trends report conducted by Mambo Sprouts, 40 percent of natural and organic food customers said they would choose to buy local/nonorganic food over organic/nonlocal food. Thirty-two percent of respondents said they would choose the latter option, and 28 percent weren’t sure.

“There’s a visceral connection to supporting the community and buying in the communal way that people really like,” says Mambo’s Saline.

Although locally sourced foods, as the NRA What’s Hot in 2010 survey suggests, are the top trend for the restaurant industry, organic food was still a $22.9 billion industry in 2008, according to the Organic Trade Association, and is expected to grow by 19 percent by 2013.

The difference between the success of local and organic ingredients today, it seems, might only be education. While customers generally know what they’re getting into with local, they don’t always know with organic.

“People want information to be really easy and easy to understand, they don’t want to have to work too hard for it. If we can figure out how to do that, [organic will] succeed,” Putman says.

The NRA’s Riehle says that with organic ingredients, it is possible to see them become as popular in the future as locally sourced ingredients are today.

“If you think back 20 years, would anybody have dared to forecast that fresh produce would be available as side or dessert items in national quick-service chains? The answer is probably not,” he says.

“So if you think about 20 years in the future, is it possible that there will be organic items at nation quick-service chains, not only nationally but internationally? I think the answer to that would have to be yes.”