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Originally published October 26 2010

Restaurant customers willing to pay more for local food

by Ethan A. Huff, staff writer

(NaturalNews) Local food continues to gain in popularity as increasing numbers of people recognize and appreciate the value of clean food from local farms. And a new study published in the International Journal of Revenue Management has found that besides being willing to pay more for local food, restaurant customers are actually more likely to order it when it is priced a little bit higher than non-local alternatives.

Perhaps it is because people subconsciously associate a higher price with better quality, but researchers noted that when the same local sandwich was priced a dollar higher than an otherwise identical non-local one, more customers purchased it. But when both the local and non-local sandwiches were priced exactly the same, customers showed no real preference for one over the other.

"This is partly good news for restaurants," explained Amit Sharma, assistant professor in the School of Hospitality Management at Penn State University. "It shows that customers were willing to pay slightly more for a local dish, with the emphasis on 'slightly'."

As part of the same sandwich experiment, researchers decided to up the price of the non-local sandwich even further to $7.50 from $6.50, and keep the non-local sandwich at $5.50. This time, more customers ended up buying the non-local sandwich because they apparently perceived a two-dollar increase to be too much.

"The higher price of the local dish was an indicator of higher value," added Sharma. "So customers were comfortable with a slightly higher price for the local food."

Interestingly, customers generally indicated that they had no real preference between restaurants that serve local food and restaurants that do not, but once in a restaurant, they are more willing to buy local food if it is priced at just the right amount above non-local options.

"The study helps restaurants make decisions on whether it makes sense to offer local foods," said Sharma. "If local foods are a natural fit for some of these restaurants, then it would definitely be a good strategy to price the food higher because there is an indication of value with fresh food."

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