Monday, June 10, 2013

Going Green in the Restaurant Industry


Green business practices are a growing trend not only in the food industry but other places as well. As the world population rises, food becomes just a touch more scarce, and global warming grips the concerns of citizens some corporations have responded to the pressure by developing more sustainable practices. New practices have hit the market in order to reduce the carbon footprint and support local producers. Research helps show why managers decide to implement or not implement such programs into their business models in alignment with customer interests.

Approximately 84% of Americans show a willingness to switch their brands based upon the desire to support positive societal causes (Bhattacharya & Sen, 2004). This willingness of customers to vote with their dollars creates additional support for the development of sustainable products. With the ability to obtain profits businesses will more likely support green agendas because they have both a social and financial benefit of doing so. 

Customers weren’t only willing to switch to products that were more sustainable but also were willing to put their money where their mouth is (Joyner & Payne, 2002). The amount of premium customers wasn’t mentioned. The willingness of customers to pay extra is a benefit for businesses that would like to recoup on associated costs. 

With the added benefits and market appeal of local and green products one must wonder why more businesses are not signing up. Some of the reasons may be associated with knowledge and overall costs. In highly competitive industries such changes often come slow with a few changes here and there to test the waters. Other business interests often take precedence. 

Data collected from 167 members of a state restaurant association utilized a 44-item questionnaire from three dimensions of the Green Practices framework to assess the psychological attributes of manager’s willingness to charge for green practices. The study was conducted by Guane Choi (2006) to determine manager’s willingness to accept green programs. Demographics of the polled members were 45% were 49-59 years of age, 30 % were 30 to 44 years of age, and 85% of respondents had more than 10 years of experience.

Findings:

-Managers were not willing to pass costs off to customers by raising price.
-Managers were willing to accept Green Programs based upon personal preferences.
-There is some level of fear that customers would not be willing to pay for green programs.
-Managers belief that offering meat alternatives, low-fat entrees, using local food, pro-environmental and recycling activities, donations to charity, communicating with consumers, and increased concern for stakeholders do not justify higher prices. 

Business Analysis: 

The food industry is a highly competitive environment. Food price is often a major concern for restaurant managers at lower end food options. Managers may engage in green programs based upon their personal preferences or the preferences of their customers. They are not willing to raise the price of their products which limits the type of programs they were willing to engage in. Therefore, improvements in green programs should be based in competitively prices alternatives versus raising costs and lowering profit margins.

Guane Choi, P. (2006). Green practices II: measuring restaurant manager’s psychological attributes and their willingness to change for green practices. Journal of Foodservice Business Research, 9 (4). 

Bhattacharya, B. and Sen, S. (2004). Doing Better at Doing Good: When, Why and How Consumers Respond to Corporate Social Initiatives. California Management Review, 47(1), 9.

Joyner, B. and Payne, D. (2002). Evolution and Implementation: A Study of Values, Business Ethics and Corporate Social Responsibility. Journal of Business Ethics, 41, 297-311.

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