Title: Locally produced food in restaurants: Are the customers willing to pay a premium and why?

Authors: Frode Alfnes, Amit Sharma

Addresses: Department of Economics and Resource Management, Norwegian University of Life Sciences, P.O. Box 5003, N-1432 As, Norway. ' School of Hospitality Management, The Pennsylvania State University, 223 Mateer Building, University Park, PA 16802, USA

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.

Keywords: customer choice; field experiments; local food; restaurants; willingness to pay; premiums; profits; universities; higher education; USA; United States; campuses; consumer preferences; catering students; agriculture; Iowa State University; sustainability; sustainable development; set menus; food origins; price signals; food labelling; pricing; expense; revenue management; hospitality management.

DOI: 10.1504/IJRM.2010.035955

International Journal of Revenue Management, 2010 Vol.4 No.3/4, pp.238 - 258

Published online: 11 Oct 2010 *

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