Green business
practices are a growing trend not only in the food industry but other places as
well. As the world population rises, food becomes just a touch more scarce, and
global warming grips the concerns of citizens some corporations have responded
to the pressure by developing more sustainable practices. New practices have
hit the market in order to reduce the carbon footprint and support local
producers. Research helps show why managers decide to implement or not
implement such programs into their business models in alignment with customer
interests.
Approximately 84%
of Americans show a willingness to switch their brands based upon the desire to
support positive societal causes (Bhattacharya & Sen, 2004). This
willingness of customers to vote with their dollars creates additional support
for the development of sustainable products. With the ability to obtain profits
businesses will more likely support green agendas because they have both a
social and financial benefit of doing so.
Customers weren’t
only willing to switch to products that were more sustainable but also were
willing to put their money where their mouth is (Joyner & Payne, 2002). The
amount of premium customers wasn’t mentioned. The willingness of customers to
pay extra is a benefit for businesses that would like to recoup on associated
costs.
With the added
benefits and market appeal of local and green products one must wonder why more
businesses are not signing up. Some of the reasons may be associated with
knowledge and overall costs. In highly competitive industries such changes
often come slow with a few changes here and there to test the waters. Other
business interests often take precedence.
Data collected from
167 members of a state restaurant association utilized a 44-item questionnaire from
three dimensions of the Green Practices framework to assess the psychological
attributes of manager’s willingness to charge for green practices. The study
was conducted by Guane Choi (2006) to determine manager’s
willingness to accept green programs. Demographics of the polled members
were 45% were 49-59 years of age, 30 % were 30 to 44 years of age, and 85% of
respondents had more than 10 years of experience.
Findings:
-Managers were not willing to pass costs off to customers by raising
price.
-Managers were willing to accept Green Programs based upon personal
preferences.
-There is some level of fear that customers would not be willing to pay
for green programs.
-Managers belief that offering meat alternatives, low-fat entrees, using
local food, pro-environmental and recycling activities, donations to charity,
communicating with consumers, and increased concern for stakeholders do not
justify higher prices.
Business Analysis:
The food industry is
a highly competitive environment. Food price is often a major concern for
restaurant managers at lower end food options. Managers may engage in green
programs based upon their personal preferences or the preferences of their
customers. They are not willing to raise the price of their products which
limits the type of programs they were willing to engage in. Therefore,
improvements in green programs are often based in competitively prices
alternatives versus raising costs and lowering profit margins.
Guane Choi, P. (2006). Green practices II: measuring restaurant manager’s
psychological attributes and their willingness to change for green practices. Journal of Foodservice Business Research,
9 (4).
Bhattacharya,
B. and Sen, S. (2004). Doing Better at Doing Good: When, Why and How Consumers
Respond to Corporate Social Initiatives. California Management Review, 47(1), 9.
Joyner,
B. and Payne, D. (2002). Evolution and Implementation: A Study of Values, Business
Ethics and Corporate Social Responsibility. Journal of Business Ethics, 41, 297-311.
