Date of Award
Master of Science
Apparel, Events and Hospitality Management
While some studies have indicated consumers' intentions and willingness to pay a premium for local foods, little research has studied what pricing premiums customers will actually pay in restaurant settings. The purpose of this study was to identify perceptions of customers in one educational dining facility about what influenced their willingness to pay a premium price for a promoted, locally sourced menu option, and assess their commitment to pay such a premium. A short questionnaire was used to gather information from patrons dining at an educational restaurant facility during six target days on which three local food items were featured.
Adult customers attending this educational dining facility for lunch during the six target days when a menu item was locally sourced were asked to voluntarily participate in the study (N = 279). Of the 279 attendees, 202 participants (72%) completed the questionnaire during the six target days. Of the 279 attendees, 124 guests selected the local option on one or more of the six trial days for a participation rate of 44 percent. The majority of participants were female (n = 161, 80%) and the age categories in which most of the respondents classified themselves were: between 18 and 25 years (n = 52, 26%), between 46 and 55 years (n = 39, 19%), and over 55 years (n = 80, 40%). The majority of respondents identified themselves as either "student" (n = 58, 29%) or "staff" (n = 75, 37%), although a considerable percent of patrons participating in the trials identified themselves in the "faculty" (n = 33, 16%) or "other" category (n = 36, 18%).
Of the 124 guests who selected the local option, 119 respondents completed the questionnaire items rating their reasons for choosing this menu. Reasons these customers reported as considerations when purchasing local menu options were: support local economy, better product quality, and environmental concerns. All of these reasons had a mean rating above 3.40 on a 5-point scale (1 = strongly disagree and 5 = strongly agree). The highest means were for "support of local economy" and "better product quality" (M = 4.68, SD = 0.83 and M = 3.67, SD = 1.12, respectively). Results from ANOVA analysis showed no significant differences between gender, age, or patron classification and reported reasons for choosing the menu featuring local food items.
Findings from this research indicated that restaurant patrons were willing and did indeed pay premiums for menus featuring local products. All respondents (n = 202) were asked to identify the highest price they would be willing to pay for a lunch in this facility featuring a menu with at least one local food ingredient from various categories: "fruits," "vegetables," "meat," "dairy," and "other." Of the 122 respondents to the category "meat," 49 respondents (40%) reported they would be willing to pay a price between $7.25 (16% premium) and $8.00 (28% over the regular price of $6.25). The highest contribution margin was obtained by local menu items featuring meat. This restaurant gained a competitive advantage of $0.60 for each entrye sold (at a premium price of $7.25) after additional inputs of premium food cost and extra labor time were considered.
Findings of this study suggested that the two activities in the flow of food that presented differences in perceived time inputs between local and non-local ingredients were purchasing and receiving/storing. Foodservices operations interested in working with local suppliers should consider ways to minimize these differences and establish more efficient communication, payment, distribution, and service procedures.
Ortiz, Allan, "Customers' Willingness to Pay Premium for Locally Sourced Menu Items" (2010). Graduate Theses and Dissertations. 11314.