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Locally produced food in restaurants: Are the customers willing to pay a premium and why?
by Frode Alfnes, Amit Sharma
International Journal of Revenue Management (IJRM), Vol. 4, No. 3/4, 2010
Abstract: Restaurant owners are always looking for new ways to increase profits. In this paper, we investigate the attitudes and perceptions of restaurant customers to locally produced food and their willingness to pay a premium. This study employs a field experiment conducted in a restaurant located on a Midwest US university campus. When ordinary customers entered the restaurant, we gave them the choice of two set menus that we had systematically varied with respect to price and origin. Then, while waiting for their order, we asked them to complete a short questionnaire about attitudes and perceptions. We find that a price signal must support local food labelling to obtain an increased interest from customers. When local food was marginally more expensive than other food, more customers chose local food than if it was sold at the same price.
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