Local News: Local Sourcing for Chain Restaurants

Although it’s a tough task to take on, chain operators who embrace local purchasing are positioned to reap rewards.

By Kate Leahy, Associate Editor -- Restaurants & Institutions, 7/15/2007

Eat’n Park holds management meetings at regional farms to encourage operators to meet the farmers who grow their produce. Burgerville has built a fan base on its seasonal shakes, Walla Walla onion rings and locally raised beef.

In a world of global brands and the World Wide Web, "local" sounds quaintly unambitious. Yet local is anything but provincial.

The National Restaurant Association’s 2007 forecast calls locally grown and organic foods one of this year’s most important foodservice trends. Research finds that consumers react positively to local products’ perceived freshness advantages and to supporting small farms.

But while independent restaurants often tout local foodstuffs on their menus, making local sourcing work for multi-unit networks—especially those with national operations—can be a problematic proposition. For many chains, the promise to consumers is that menus and quality standards are constant no matter which location is visited. And having units supplied by as few purveyors as possible creates a cost-cutting economy of scale.

Chains certainly recognize the local-sourcing trend’s growth. "The local movement is becoming much more mainstream than it was five years ago," says Jamie Moore, director of food and beverage for Pittsburgh-based Eat’n Park Hospitality Group. But can chains join the party?

"Buying local is very smart," says Gerald Johnson, vice president of purchasing and insurance for Taylors, S.C.-based Fatz Cafe. "The more energy becomes a factor in transportation, the more [local sourcing] will cost less."

Amy McGuinness, director of purchasing and culinary development for San Diego-based Pat & Oscar’s, believes that rising gas and transportation costs will make local sourcing "the trend in the next five years."

Pat & Oscar’s units are in Southern California only, and McGuinness says that although there are suppliers on the East Coast that interest her, shipping costs make using them prohibitive. "Shipping companies are tacking on surcharges if you don’t have a full truckload," she says. "And with perishable items, sometimes you can’t have a full truckload."

If that trend continues, national chains could fracture into multiple-region operations, with local buying a more realistic—and more cost-effective—purchasing option. But the move wouldn’t be easy.

"The problem is, are there local companies in the area? Do they have the proper safety procedures in place? Do they make enough quantity?" says Fatz Cafe’s Johnson.

Steps Forward

In part because they have fewer locations, upscale chains—particularly those with chef/partners in each location—can mimic upscale independent restaurants’ purchasing patterns.

Ryan Nelson, executive chef at the Indianapolis location of Minneapolis-based The Oceanaire Seafood Room, works closely with local farmers to bring little-known heirloom varieties into the restaurant. Likewise, 12-unit Piatti Ristorante & Bar, based in Mill Valley, Calif., operates its restaurants like independents.

"All of the chefs have a sourcing mentality," explains Chris Fernandez, Piatti culinary director. "I help with their training. They attend local farmers markets to supplement their menus, and they work with local produce companies that supply them."

A few mid- and low-price regional chains also are winning consumer goodwill with local purchasing initiatives. Vancouver, Wash.-based Burgerville says that other restaurant companies have taken an interest in how the quick-service chain maintains a $7 check average while serving fresh, seasonal berry shakes, small-producer blue cheese and naturally raised beef.

"It happens all the time: A general manager calls us saying that there’s a group at the restaurant who wants to know how we do it," says Burgerville COO Jeff Harvey. "[The curious] tend to be from the industry." Harvey’s advice to chains interested in local buying is to first rethink vendor relationships and create a network of local suppliers.

One of Burgerville’s sourcing victories came in working with a consortium of local ranchers to increase beef supplies. The initial problem was that the ranchers couldn’t provide Burgerville with the quantity it needed. "Rather than say, ‘Sorry, we can’t do this,’ we asked, ‘How can we work with you to get to a scale that we can use?’" Harvey says.

After eight years, Burgerville finally started buying the consortium’s beef. The process took longer than expected, but the response has been more enthusiastic than anticipated.

"We were not clear what the impact would be when we started," Harvey says. "As we’ve talked about natural beef or local berries, our customers really have bought into it."

The Distributors’ Role

A second step in local sourcing is to work with distributors to persuade them take new companies into their system.

For Eat’n Park’s Moore, who is involved with the Pennsylvania Association for Sustainable Agriculture, buying local produce whenever possible is an important part of the chain’s purchasing philosophy. To support this, Moore finds farmers willing to grow produce to the chain’s specifications and then connects the farmer with local produce distributors.

"Our distributors are the glue that holds the program together," Moore explains. "My first meeting with a distributor in a new market is about getting them to understand the mindset of our company. When there are local peppers in the market, I’m asking them not to buy peppers from anywhere else."

Management meetings at Eat’n Park are held at farms to encourage operators to connect with producers. Moore’s goal is to increase local produce purchasing to 20%. He ensures product safety through FarmSource, a program he started to select and monitor local farms with the best practices and Department of Agriculture-approved safe-handling procedures.

"We have chain restaurants that are intertwined with our communities," Moore says. "We have to show support to the community."

With the Grain

The farm-to-table concept is firmly ingrained in fine-dining restaurants. Now a new franchise concept is betting that farm-to-table programs can work on a larger scale with chain restaurants.

Kyle and Travis Nielsen, brothers who own a nearly 15,000-acre farm in northern Montana, wanted to add value to their wheat production. They enlisted the help of veteran Denver-based franchise consultants Tom Wilscam and Gary McGill to develop a restaurant concept that could feature their Montana-grown wheat.

The first Grains of Montana fast-casual restaurant and bakery opened in Billings, Mont., in 2005. Artisan breads and pizza dough are made with wheat from the Nielsens’ farm. Meanwhile, the partners are working with local brewers to craft beer using grain from the farm.

"People identify with something home-grown," explains Wilscam, whose former successes include founding the bagel franchise that became Einstein Bros. Bagels.

With locations opening in Biloxi, Miss., and Tucson, Ariz., the partners hope to grow nationally while supplying franchisees with parbaked breads produced at a commissary in Billings. "As long as I’ve been in the business, I’ve never felt more confident than I do with this concept," Wilscam says.