Ingredients & Dayparts | May 2013 | By Mary Avant

Can Quick Serves Save the World?

In the second of a two-part series on local sourcing, QSR examines how this process can change the face of limited service—and the food system as a whole.

Food production systems like hydroponics help restaurants use more local goods.
Colorado-based Mad Greens has experimented with hydroponics to source hyper-local produce for its stores. VertiFresh
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No longer is local sourcing just a utopian ideal. It’s a practice coming to life and continually gaining momentum in foodservice, with the number of local ingredients on menus growing by 73 percent over the last four years, according to market research firm Mintel.

But, at its most basic level, it’s a tale of two industries.

On one side are foodservice brands, most of which have become accustomed to the 21st century food system where, in a few simple steps, they can secure any and every product they need in a matter of days. On the other side sit the small- and mid-sized farmers of the world—farmers who, up until now (and even still), have been hesitant to do business with restaurants, especially powerful, multiunit brands.

But with consumers increasingly demanding knowledge of what they’re eating and where it comes from, the foodservice and agriculture industries are discovering that they must unite to make local sourcing efficient, profitable, and possible.

After all, once the kinks are worked out, the transition to local sourcing on a grand scale could change the future of both industries—largely for the better, many argue. But making this local

dream a reality requires a good deal of time, a stronger local infrastructure, and, yes, money.

A waiting game

For many brands, especially those with a large system of units, the shift to local comes down to a matter of supply and demand: Will smaller, local farmers be able to provide the volume of product they need on a consistent basis? And today, the answer isn’t always “yes.”

“Maybe this year there isn’t enough of what [restaurants] need grown available to put on their menu,” says Lindsey Lusher Shute, executive director of the National Young Farmers’ Coalition, a network of young and sustainable farmers. But if brands tell local farmers what product they want, how much of it they require, and when they need it, “that’s the guarantee that a farmer needs to then be able to make the investment necessary to have that consistent supply,” Lusher Shute says.

More large brands will need to shift to local sourcing before it can become easier for every party involved, says Eloise Karlatiras, president and CEO of the Green Chicago Restaurant Coalition, an organization dedicated to helping Chicago-area restaurants reduce their collective environmental footprint.

She adds that local sourcing becomes simpler, more profitable, and more efficient when systems are in place in which farmers have a large range of products they’re selling on a regular basis, and as efficiencies for pricing and distribution become more refined.

Karlatiras says farmers are itching to scale up production to serve the limited-service sector in the future, “and local purchasing from large brands is poised to help the agriculture industry in this country really grow and flourish again.”

If they build it

Before local sourcing can become anything more than a flash in the limited-service pan, operators and local growers must work together to build—and often rebuild—the proper infrastructure necessary to support this system.

“The supply chains, the relationships, this whole economy of local food is in many ways quite broken, and many of the farms that were once large producers of fruits and vegetables and local protein are no longer in business,” Lusher Shute says. “It’s going to take time [to catch on], but I believe if the commitment’s there from the consumer, from the buyer, from the restaurants, that eventually the farms will catch up to meet that demand.”

Karlatiras says farmers and quick-serve brands must have patience with the evolving efficiency of local food systems, even if it takes many years to develop to the point at which it’s as streamlined and effective as the national food system.

Operators must also learn to swallow the sometimes-bitter pill of obtaining products from a longer list of suppliers. And because fresh, local product has a somewhat shorter shelf life, local-food delivery will have to be made more regularly, says Bo Stone, a farmer from Rowland, North Carolina, whose P&S Farms provides produce like strawberries and sweet corn to local restaurants.

“Instead of you getting strawberries from your wholesaler once a week,” he says, “maybe two to three times a week will [be necessary] to provide that fresher, more farm-ripe product.”

But some of the most challenging changes—creating a smarter, more efficient distribution system, for one—must be made on the producers’ side. One distribution solution in particular has been cropping up around the nation: centralized refrigerated facilities that simplify and streamline distribution.

These food hubs allow farmers to not only combine small amounts of product with one another, but also to set up more efficient transportation and delivery routes, thanks to the expertise of distribution companies with the proper logistics and efficiencies down pat.

Food hubs and other farmer co-ops are working to fight another sustainability argument that has poked holes in the idea that local food has a smaller carbon footprint.

According to research conducted in 2008 by two Carnegie Mellon University professors, 83 percent of greenhouse-gas emissions associated with food production comes from the production phase—including planting, growing, harvesting, and processing food—while transportation accounts for 11 percent and final delivery to retail accounts for just 4 percent.

The research shows that large farms—those often associated with growing and distributing “conventional” products—are more efficient than the small- and mid-sized farms that provide the majority of local products. The argument goes that a small farmer traveling 100 miles to deliver 50 pounds of produce may actually have a greater carbon footprint than the giant producer who travels thousands of miles to deliver 1,000 pounds of the same product.

“If, for example, a small farm is not part of a network and they’re supplying to a given restaurant, they might be supplying a small load of food and then transportation costs [and the carbon footprint] can go up,” says Nancy Himmelfarb, a principal at NJH Sustainability Consulting in Chicago.

But if farmers ensure truckloads are full and no unnecessary trips to buyers or farmers’ markets are taken, negative environmental effects will be minimal, she says.

Making local lucrative

Aside from the need to streamline distribution, the local process must also become more profitable in order to find widespread success in both the limited-service industry and beyond. As it stands, however, there’s no denying that sourcing locally is a more expensive alternative for the time being.

Jeremy Barlow is the author of Chefs Can Save the World and founder of Nashville, Tennessee–based quick serve Sloco, where sandwiches are made using local ingredients. He says he pays almost three times as much for Sloco’s locally sourced proteins.

“You’re going to eat a higher food cost to start out,” he says. “The fact is, your chicken is not going to be 99 cents a pound and any cut that you want. But can you look at your operation and say, ‘Alright, I’m going to eat this cost here, but can I save it over here?’”

There are also aspects of the process that are cheaper, or at least more cost-effective. For example, cutting out the middleman present in the traditional food system should result in cost savings, Himmelfarb says, “and there aren’t the same [amounts] of shrinkage from going such a long distance.”

In addition, when a brand finds local, in-season products, the cost of goods can be equivalent to conventionally sourced items, she says. “A restaurant should first challenge the view. It might not cost more; it might actually be a profit-driver.”

For operators to think of local sourcing as a sustainable business model, they must also realize it’s an investment in the future of the brand, Karlatiras says. “You’re making a mid-term investment in a practice that eventually will have the price driven down on it,” Karlatiras says. “And a lot of times, you’re not actually looking at more expensive [products] if you’re talking about quality and yield. So the question becomes, Are you a business that values the bottom line only, or are you a business that values everything that comes along with serving food to customers?”

Local sourcing can also mean investing in technologies that allow products to be grown year-round in a local setting, even right outside your door, she says.

Mad Greens, a Denver-based salad chain, has experimented with this type of technology in its partnership with VertiFresh, a company that repurposes shipping containers to hydroponically grow produce, using just one-tenth of the water traditional farming does. Last year, Mad Greens created an LTO using some of VertiFresh’s greens, which owner Marley Hodgson says was a hit with consumers.

Incorporating local products into a menu doesn’t just pay off in the local community, Stone says. It pays off in the restaurant, too. “If you’re sourcing local, the local people are the ones that are coming to your establishment,” he says. “It’s a relationship that’s sustainable: You’re buying from me, and I’m coming into your restaurant and I’m spending money back with you.”

One step at a time

Even with more limited-service brands dipping their toes into local production, making the method work on a broader scale may be a slow process, and it’s easiest to incorporate local products when using a step-by-step approach, says Chipotle’s communications director Chris Arnold.

“What bigger operators need to realize is you can’t necessarily go from zero to 100 percent on [local sourcing] overnight,” he says. “While you can’t do it all, small steps in this direction still have a significant positive impact.”

Lusher Shute suggests brands begin with sourcing one or two local products at a time, like lettuce or tomatoes, to test out whether the process will work for their brand. “One change is better than no change,” she says.

Ramping up the volume of local products in the supply chain and on individual menus can also be done incrementally, Barlow says. For example, a brand can set a goal of spending 1 percent of its yearly produce budget on local items; if the test is successful, it can then grow to 5 percent the next year, 10 percent the next, and so on.

“It exponentially increases, and farmers—who, when you get down to it, are businesspeople—are going to see the market and say … ‘This local market just keeps growing. I’m going to take 10 acres and go local with it.’”

The future of limited service?

Though the challenges may seem daunting, many experts interviewed for this story say local sourcing can become the quick-serve practice of tomorrow, but only with dedication and effort on both sides of the industry.

And according to a May 2010 report from the USDA Economic Research Service (ers), the widespread practice of local sourcing in the U.S. is likely to have positive and far-reaching effects.

To start, the process can infuse local economies with both jobs and money. Barlow says that in 2012 alone, Sloco sourced $130,000 worth of local products. “If I have three, four, five [units] in the city, that’s a huge influx of dollars into local food, and now you’re talking about potential land preservation and being able to be a farm incubator for young farmers,” he says.

There’s also potential for the practice to help fight the obesity epidemic, as fresher and more nutrient-rich products become more widely available in all markets. In addition, the ERS suggests that food security—in which every individual has enough food to lead a healthy and active life—will improve, as areas that traditionally lack fresh food will gain access to it.

Unfortunately, none of this can happen unless influential players in the limited-service sector do more to make local sourcing a common practice, Chipotle’s Arnold says.

“The more big guys want better food from better sources, the more opportunity it creates for those sources and the more of them will move to fill the demand,” he says. “Our mission as a company is to change the way people think about and eat fast food, and we’re not going to be able to do that by ourselves.”