ENGLISH RATLIFF, PHD CANDIDATE PHD Selling To RESTAURANTS
R. DAVID LAMIE,PHDENGLISH RATLIFF,PHD CANDIDATEMICHAEL VASSALOS,Selling toRESTAURANTSin South CarolinaPHD
ABOUT THE AUTHORSDAVE LAMIEENGLISH RATLIFFMICHAEL VASSALOSis Professor of Agriculturalis a PhD Candidate in theis Associate Professorand Rural Development inPlant and Environmentalof Agribusiness in thethe Agricultural SciencesSciences Department.Agricultural SciencesDepartment.Department.All are in the College of Agriculture, Forestry, and Life Sciences at Clemson University.This publication was supported by the Cooperative Agreement Number DP005490-01,funded by the Centers for Disease Control and Prevention. Its contents are solely theresponsibility of the authors and do not necessarily represent the official views of the Centersfor Disease Control and Prevention or the U.S. Department of Health and Human Services.
Contents2Introduction3Relationships & Communication5Product Branding6Packaging & Labeling7Pricing8Product Presentation & Delivery9Insurance & Risk Management10Certification Requirements11Conclusion12Selected Resources1
SELLING TO RESTAURANTS IN SOUTH CAROLINAIntroductionLocal products continue to be popularchoices for restaurants and foodserviceproviders, with locally sourced meats,seafood and locally grown produce toppingthe National Restaurant Association’sTop 20 Food Trends of 2013 (NationalRestaurant Association, 2013; Sharma etal., 2014). In a 2016 National RestaurantAssociation (NRA) survey, chefs rankedlocal produce as one of the hottest culinaryidentified restaurants as their primarytrends. Though the jury may still be outmarket (Harrison et al., 2013)on just how enduring the “local” trendwill be, it seems to have more stayingThese trends show continuing appeal, topower than many early skeptics thoughtboth restaurants and their patrons, for foodpossible and increasingly savvy consumersproduced nearby. Moreover, consumersseem to be requiring more proof ofare willing to pay a premium for menuauthenticity. Many other top restaurantproducts that include local ingredientstrends identified in that survey of 1,800(e.g. Fash, Dipietro and Smity, 2015)chefs reflect market opportunities for localRestaurants can take product volumeproducts at restaurants – from farm estateover an entire year, creating potentialbranded products to heirloom apples andfor more farm profitability. Producersartisan ice cream. For example, a surveyinterested in pursuing restaurant marketsin Alabama documented that more thanfor the first time – or in tuning up their50% of the restaurants included in thecurrent marketing strategies – need tosample purchased local foods (Reynoldsconsider several good business practices- Allie and Fields, 2012). In South Carolinain order to be successful. This fact sheetapproximately 300 restaurants participateprovides an overview of several importantin the “Fresh on the Menu” program, whereconsiderations for local food producersparticipating restaurants focus their menusselling products directly to restaurants inaround Certified South Carolina Grown,South Carolina, including:seasonal products (freshonthemenu.com/ Relationships and Communicationrestaurants). Furthermore, restaurants Product Brandingare among the primary markets for local, Packaging & Labelingespecially small and medium scale, farmers. PricingTo illustrate, in a 2013 survey across three Product Presentation and Deliverysouthern states (Georgia, Virginia, South Insurance and Risk ManagementCarolina), more than 20% of the farmers Certification Requirements2
Relationships & CommunicationGood business relationships with chefs,unaddressed, it may translate into costs tokitchen managers and restaurantthe restaurant’s bottom line – potentiallybusiness staff are vital for successful,reducing premiums the restaurant is willingprofitable farm sales to restaurants.and able to pay for local products.Communication is essential for buildingthose good relationships. Clear and timelyFarm producers should realize relationshipscommunication – especially concerningwith restaurants and other foodserviceproduct availability and delivery timescustomers will usually need to be initiated– helps foster a strong farm-restaurantby the farm. Chefs and restaurateursrelationship.are busy running their kitchens andestablishments, so they usually depend onFor example, most chefs interviewed aboutbeing approached by potential suppliers.buying local produce will tell you thatIn fact, the lack of available informationprompt and professional communicationabout local food vendors is consistentlyabout product availability as a verycited by chefs and foodservice vendors asimportant part of the farm-restauranta barrier to “buying local.” (Shangwook,relationship. When selling to a restaurant,2012). Producers should take the initiativefarmers should recognize that they areto present information about their farmsdealing with chefs who are accustomedand products in a professional manner toto purchasing products from professionalpotential restaurant clients.vendors. Chefs are certainly interested inlocal products – and may even tolerate aOne of the best ways to foster a goodcertain amount of inefficiency in obtainingrelationship with a chef is to regularlylocal foods. If that inefficiency remainsdeliver high-quality product. In a 2011survey, Alabama chefs rated consistentsupply, consistent quality, food safety andproduct freshness as the most importantfactors for purchasing local produce(Raynolds-Allie and Fields, 2011). Chefsalready accustomed to receiving regular,reliable deliveries from food wholesalersmay wish to support local producers whileobtaining desirable product, but poorlytimed deliveries and bad communicationwill deter future purchases. Restaurantsmay also be unaware of locally-grownoptions, particularly for products such asmeat, grains and other non-produce items.3
SELLING TO RESTAURANTS IN SOUTH CAROLINAMany farms delivering to restaurants quicklyproducts and healthy communicationadopt the practice of sending weeklyfrequently open the door to expandedpricing/availability sheets to chefs viaproduct purchases and other synergiesemail. Online ordering has also picked upin the local farm-restaurant businesspopularity as social media and Web-basedrelationship. Additionally, a farm’s socialsystems have become easier to navigate.media participation, highlighting productsStill, many chefs simply prefer a quickand practices, can help build credibility andweekly phone call to place their farm order;acceptance among chefs and restaurateurs.never underestimate the power of thepersonal order.Contractual agreements may also bebeneficial for restaurant owners andFarm producers should establish both aproducers alike (nationalaglawcenter.consistent, high-quality product edule and maintain a regular channel ofSCdirectfarm.pdf). Two commonly utilizedcommunication with the person responsiblecontractual types include requirement andfor purchase at the restaurant. Qualityoutput contracts.COMMUNICATION CASE STUDYAn open, two-way conversation between producers and chefs is absolutely criticalto growing a farm’s restaurant market. And a farm’s response to that two-waycommunication is coveted by chefs. Phone calls or voice mail, text messages, andemail orders were cited by chefs around the country as being easiest to access.Still, nothing beats the personal touch. “I trust the local farmer whose face I know,”said an executive chef at an Illinois country club who bought pork from a local farmer.For that chef, it was essential for the farmer to keep in touch. “Some initiative (from thegrower) is certainly helpful to me because it makes things easier,” said the chef. “It’sgreat when someone can call me up and say, ‘This is what I’ve got, what do you want?’”Growers also find that offering some degree of flexibility is helpful to developing thebusiness relationship with the chefs. “I’m willing to work with him if he wants to trysomething different,” said the farmer supplying the country club. “I’m just a mile-anda-half down the road.”That relationship helped the Illinois chef and producer work together, movingfrom the chef’s purchase of chops and other higher-priced cuts to planning eventsfeaturing half- and whole-hogs. This is an example of how producers find workingclosely with chefs can increase a restaurant’s purchase of lower-priced items; somerestaurants may even purchase fresh produce for preserving for later use.4
Product BrandingA product brand “is the combination ofname, words, symbols or design thatidentifies the product and its company anddifferentiates it from competition.”1 Productbranding has often been emphasized forvalue-added farm products and agritourismmarketing. More recently, restaurants haveincreased the practice of listing farm namesand brands on their menus, thus, enhancingthe opportunity for product differentiationand brand development for producers(Schmit and Hadcock, 2010). Restaurantsmay also feature local products using astate or regional designation, like CertifiedSC Grown (certifiedscgrown.com). SouthCarolina also has the “Fresh on the Menu”program for restaurants offering CertifiedSC Grown foods. More information and a listof restaurants participating in the programmay be found at freshonthemenu.com.2) the consumer buying the food at theBranding that features more than onerestaurant. When purchasing from a localbrand designation on a product is calledfood producer, chefs are likely to evaluate“co-branding.” A product including a farmthe product based on whether they arebrand, along with a designation like Certifiedreceiving a consistent, reliable qualitySC Grown, would be co-branded. Someproduct from a producer they have someeffective co-branding also features uniquerelationship with. Research in Missourigeographic or regional designations, such asindicates local vegetable farmers canwines produced in Napa Valley, California.differentiate themselves to chefs by offeringproducts with regularity, quality andWhen considering branding products,freshness (Arbindra and Onyango, 2011).local food producers should realize sellingto restaurants involves two categories ofThat relationship with the farm can thencustomers: 1) the chef or establishmentresult in promotion of the farm’s brandpurchasing the food for preparation; andat the restaurant level. Excellent productGiddens, Nancy. “Building Your Brand.” Ag Decision Maker, Iowa State University. ml15
SELLING TO RESTAURANTS IN SOUTH CAROLINAquality can make a restaurant more willingconsumers, it is usually advised to useto advertise certain products from localsimilar branding materials across all marketfarms on the menu. Restaurants that changechannels, aiming for consistency in the waymenus daily or weekly may print the farmin which a farm brand is presented acrossname beside products offered on the menulocal restaurants, farmers markets, groceryor include the farm name listed in a menustores and other retailers.item description (e.g. “Local Meat’s heritagebreed pork chops glazed with Local BeeMore information about successfullyFarm honey and served with new babydeveloping farm product brands can bepotatoes from Local Produce Farm”)accessed in a publication from Iowa StateUniversity Extension, “Building Your Brand,”Offering farm-branded products atlocated at extension.iastate.edu/agdm/restaurants has helped some farms build awholefarm/html/c5-50.htmlmore robust local brand. To avoid confusingPackaging & LabelingRestaurants, especially standaloneproduct in a way that makes handlingestablishments or small chains, may beconvenient for the producer and hassle-largely indifferent to how fresh productsfree for the chef or kitchen staff. Reusableare packaged and labeled – as long ascontainers that are clearly marked withthe packaging fits into the restaurant’sthe producer’s name are often helpful.receiving and storage systems. However,Avoid packaging that is difficult to stackfarmers should consider clearly labeling andin coolers, like plastic bags. Considerationpackaging their products to differentiateshould be given to how well the packagingtheir deliveries from those of other suppliers.and labeling integrity will hold up under theconditions of a working restaurant.The size of a restaurant’s food preparationarea and available cooler space will likelyMeat and poultry products should bedictate how, when, and in what amountslabeled in accordance with state guidelines.the product is delivered. Producers shouldSouth Carolina guidelines are available at:understand each chef’s needs and deliverclemson.edu/public/lph/scmpid/6
PricingChefs have often connected with local Expanding a farm’s offerings to a localfarms by first purchasing items at a farmersrestaurant can help increase net farmmarket stand. The chef may then ask theincome when the restaurant is willing toproducer whether she or he can supplypay a price above the costs of producingbulk quantities on a regular basis. Duringand marketing the farm’s products.that conversation, chefs may request a Producers should understand chef andprice break for quantity purchases. Beforerestaurant needs before engaging inhesitating at offering farm products to chefsdirect sales to restaurants (Reynolds-Allieat a lower-than-retail price, farmers shouldand Fields, 2012).consider the following: Most chefs are accustomed to buying Even if chefs offer a lower price,producers’ income may still increasefresh produce, meat and value-addedsince they will have the opportunity of aingredients from food brokers orreliable market and eliminate the cost ofwholesalers at wholesale prices.middlemen (Reynolds-Allie and Fields, Many chefs indicate they are willing to paymore for local products that are superior2012). Local restaurants may be more willing toin freshness and quality, but that thepay a higher percentage price premiumhigher price must include clear benefits.over wholesale prices paid for fruits and“As local producers will likely chargevegetables than for less-perishable items,higher prices than large distributors, itlike meat and value-added products.2is imperative that the producer providethe chef with additional value throughProviding larger quantities to restaurantssuch activities as on-time deliveries of theat prices below local retail prices canquantity agreed upon (Curtis and Cowee,result in higher economic returns to2009).”the producer. Small farms frequently2A 2010 survey of Illinois independent restaurants indicated much greater willingness to pay up to a 10 percent pricepremium for local meat products than price premiums over 10 percent. Foday et al., 2010) Surveys of restaurants inMissouri and Kentucky have indicated a majority of chefs in some areas are willing to pay premiums as much as 30percent for produce, especially when fresher produce results in less shrink (product loss) at the restaurant.7
SELLING TO RESTAURANTS IN SOUTH CAROLINAunderestimate or neglect to account forFinally, and in relatively few instances, somethe value of the producer’s time spentfine dining restaurants may be willing toin marketing or selling. Farm businessesregularly pay retail or above-retail prices forthat desire to “scale-up” production oftenhard-to-find or superior products. Thoughfind they either need 1) to participate innot the norm, these restaurants may beeven more time-intensive direct marketingaccessible to some farms and local foodvenues; or 2) sell larger quantities to lessproducers.time-intensive markets. Producers shouldalways have a solid understanding of theirA comprehensive guide to pricing farmactual costs of production (including theproducts at both wholesale and retailcost of their time) when entering into alevels is available from the University ofdiscussion of pricing with any customer.Tennessee at B1803.pdf(Bruch and Erntst, 2011).Product Presentation & DeliveryConsistent product presentation and regularbefore it is available so I can get it onto thedelivery times are important for attracting andmenu. Most farmers are not used to thisretaining restaurant and foodservice customers.timeline.”Producers should discuss product specificationswith the chef or kitchen staff before beginningIf a producer has a contractual agreement withdelivery and periodically “check in” concerninga restaurant and he/she is unable to fulfill theproduct quality and cleanliness.agreed obligations then a possible alternativeis for the producer to purchase the productionProducers should notify the restaurant asthat cannot be delivered from anothersoon as possible if fresh product deliveriesfarmer and satisfy the contractual agreementwill be delayed by weather or other �m depending on my suppliers to he product when they say they’re goingto,” said a chef interviewed in a University ofAn invoice should accompany farm productsKentucky focus group. “If they don’t showupon delivery to restaurants. Producers mustup on time, I may have to change my dinnerwork with the restaurant to ensure that themenu—and if they’re always late, I’m not goinginvoice reaches the proper person. Local foodto want to keep doing business with them.”producers should also realize that restaurantsoften pay vendors in a timeframe that canGood communication is vital in the longer term,range from 7 to 45 days after product delivery;chefs need advance time to get local productsproducers should be prepared for suchon the menu. A North Carolina chef said, “I needpayment terms.to know when a crop is coming in 4 weeks8
Insurance & Risk ManagementLike other customer segments, chefscustomers, like schools and hospitals,may exhibit a high degree of trust inusually require producer-suppliers tolocal producers and may perceive thatcarry a specific level of product liabilitylocally produced products are “safer”insurance. Others may insist on third-partythan products purchased wholesale. Somecertifications indicating certain practiceschefs even request personally inspectingbeing followed on a farm.farms or processing facilities to verifythat production or processing meets theirAs for sales to any market, producers sellingpersonal standards.to restaurants should evaluate the potential3liability risks and discuss appropriate riskHowever, restaurants also operate undermanagement tools with a knowledgeablestandard food safety guidelines andprofessional.practices. Larger chains and institutionalSee e.g. Shoshanah Inwood et al. “Building Capacity for Local and Organic Ohio Proud Foods for Retail andRestaurant Distribution in Ohio.” September 2003. OARDC.39
SELLING TO RESTAURANTS IN SOUTH CAROLINACertification RequirementsIn addition to product liability insurance,Products containing 7% or more alcoholrestaurants purchasing directly from aare regulated by the Alcohol, Tobacco,farm or producer may require GAP (GoodFirearms Tax and Trade Bureau. For moreAgriculture Practices) Certification,information about these regulations, go tothird-party food safety audits or otherttb.gov.certifications. GAP Certification and thirdparty programs, like PRO*ACT, that verifyAll other food items sold wholesale,fresh produce safety are becoming foodincluding value-added food products,industry standards. Meats and value-addedare regulated under the South Carolinaproducts must be prepared in properlyDepartment of Agriculture. For moreinspected facilities and follow specificinformation about these regulations, go toregulations, which may vary by ion/food-safety-compliance/.In South Carolina, meat and poultryproducts (including value-added productsMany farmers are beginning to turn theircontaining more than 3% raw or 2% cookedharvests into value-added food products,beef, pork, chicken or lamb) are regulatedand chefs ofte
potential restaurant clients. One of the best ways to foster a good relationship with a chef is to regularly deliver high-quality product. In a 2011 survey, Alabama chefs rated consistent supply, consistent quality, food safety and product freshness as the most important factors for purchasing local produce (Raynolds-Allie and Fields, 2011). Chefs
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