Marketing to Conserving Customers: A Guide to Operating Green with a Triple Bottom Line

Marketing to Conserving Customers A Guide to Operating Green with a Triple Bottom Line NRA Restaurant Show May 19, 2008 Lisa Kivirist & John Ivanko co-authors of ECOpreneuring and Rural Renaissance Inn Serendipity Bed & Breakfast

MENU FOR PROSPERITY In An Emerging “Green Economy” Climate for Change - Changing perspective - Definitions - Trends Green Guide to Operating Sustainably - Ingredients for restaurant sustainability - Ecopreneurial restaurant profiles Action Plan - Selected resources

PERSPECTIVE Peak Oil Global production of crude oil peaking • Raw material for gas, diesel fuel, plastics, pesticides in agriculture • End of abundant, easy to reach, cheap oil Source: peakoil.org, energybulletin.net, richardheinberg.com

PERSPECTIVE Rising Cost of Energy Wealth = Energy Energy impacts all aspects of restaurant industry – Operations & customers • 600%-plus increase in oil over 10 years – $12/barrel in 1998 – $86/barrel in 2008 Upward spiral of natural gas & electricity costs – Electricity rates going up 6 - 8% in many parts of country

PERSPECTIVE Inflationary Times Wholesale restaurant food prices rose 7.4% – Largest increase in 3 decades – Source: National Restaurant Assn. Present conventional food system unsustainable – For every calorie of vegetables, more than 10 calories of hydrocarbons (oil) are needed – For every calorie of beef, more than 50 calories of energy needed – 29 calories of transport energy for 1 calorie of Chilean asparagus – Source: Omnivore’s Dilemma, Confronting Consumption World appetite for oil & grain resulting in higher food prices (and energy)

PERSPECTIVE Ecological Decline Every ecological system is in decline – Habitat destruction & poor land use decisions – Air & water pollution – Over fishing or harvesting Rapid loss of biodiversity – 90% of food supply from 15 food crops & 8 species of livestock Source: The Ecology of Commerce, State of the World Earth’s life support systems failing

PERSPECTIVE Climate Change Buildup of carbon dioxide in atmosphere Source: Intergovernmental Panel on Climate Change, ipcc.ch Extreme weather events – Increasing variability and unpredictability Likely cap-and-trade schemes legislated to mitigate climate change – Even higher cost for energy (coal, oil-based energy)

PERSPECTIVE Precious Water Water likely to become the next oil Source: EPA, Food & Water Watch Water pumped from aquafers faster than replenished Bottled water waste – 60 million water bottles disposed every day in US – Only 12% recycled – Producing bottles requires 1.5 million barrels of oil – Transport adds to carbon dioxide emissions

PERSPECTIVE Restorative Opportunities From Scarcity… - Running out - More is better - Externalizing costs - Work harder = more customers Source: ECOpreneuring, ecopreneuring.biz … To Abundance - Quality, not quantity - Filling “ecological” niches - Adaptable, resilient - Internalizing costs - Greater self-sufficiency - Re-localization

DEFINITIONS Sustainability The practice of sustainability is about creating new ways to live and prosper while ensuring an equitable, healthy future for all people and the planet. Source: The Natural Step, naturalstep.org

DEFINITIONS Sustainability Transformation of economy … from life-depleting to life-restoring Source: The Natural Step, naturalstep.org

DEFINITIONS Triple Bottom Line Multiple bottom lines: Planet (environment) – Enhancing, restoring and conserving nature People (social) – Customers, workers, vendors, investors Profit (economy) – Reinvesting for the future? Source: Angry Trout, ECOpreneuring, ecopreneuring.biz

TRENDS Food Related: Organic Organic food industry growing at 10%-20% per year - Source: Organic Trade Association • 7 in 10 Americans express some concern about pesticides, hormones, antibiotics and other chemicals in food - Source: Roper Public Affairs • Households with incomes LESS than $50,000 spend more money, per capita, on organic food than higher income households Source: Hartman Group and Nielsen Homescan

TRENDS Food Related: Local The avg. meal travels 1,500 miles - In local food system, food travels avg. 45 miles - Source: Environmental Commons Between 1994 and 2004, the number of farmers’ markets in the U.S. more than doubled, adding almost 2,000 markets - Source: USDA Agricultural Marketing Service Local food linked to health benefits, environmental preservation, exceptional flavor, local economy benefits - Source: Midwest Organic & Sustainable Education Service

TRENDS Food Related: Fair Trade Fair trade is exchange that seeks to create greater equity and partnership through paying fair wages, supporting participatory workplaces, ensuring environmental responsibility, respecting cultural identity, building direct and long-term relationships, educating customers - Source: Fair Trade Federation, fairtradefederation.org Small but rapidly growing market segment - In 2006, global fair trade cocoa grew 93%, coffee 53%, tea 41% bananas 31% Source: Fair Trade Federation, transfairusa.org (listing)

TRENDS Food Related: Restaurants More restaurant customers prefer “sustainable” businesses - 62% of patrons chose restaurants based on commitment to environment - Source: National Restaurant Association, 2008 5 of the top 10 “hot trends” according to national chefs - Local produce, organic produce, artisan/microbrew beer, sustainable seafood, grass-fed items - Source: National Restaurant Association, American Culinary Federation, 2008

TRENDS Food Related: Travel Tourism is big business for tableservice restaurants About 40% of revenues at fine-dining restaurants National Restaurant Assn., 2008 Ecotourism increasing at annual rate of 10-20%, versus overall tourism 4% annual rate Source: World Resources Institute Geotourism - Travel that enhances “sense of place” & features cuisine - National Geographic/Travel Industry Assoc. of America

TRENDS Food Related: General Thrive in “Experience Economy” Seek emotional experiences, even transformational ones But not transactions Joseph Pine/James Gilmore, Experience Economy Emergence of the “Creative Class” “ Place is becoming the central organizing unit of our economy and society.” Richard Florida, Rise of the Creative Class

GREEN GUIDE Ingredients for Restaurant Sustainability Diversity of ingredients • Plenty of room for creativity, innovation • Start in the back of the house… Replace energy inefficient appliances Immediate return on investment • Then move to front of the house • Boldly state your values

GREEN GUIDE Ingredients for Restaurant Sustainability 1. Energy Efficiency & Conservation – Nearly 1 million restaurants consume more electricity than any other retail outlet (National Rest. Assn.) – Compact fluorescent, linear fluorescent, or LED? – Energy Star-certified appliances 2. Water Efficiency & Conservation – Avg. restaurant uses 300,000 gallons of water/year (Green Restaurant Assn.) – Low flow toilets, waterless urinals – Eliminate bottled waters – Provide tap/filtered water upon request

GREEN GUIDE Ingredients for Restaurant Sustainability 3. Recycling & Composting – Avg. restaurant generates 50,000 pounds of garbage/year (Green Restaurant Assn.) – Seek to eliminate the concept of waste – Select disposable cups, plates, cutlery that can be composted – Re-useable carry out containers (even with deposit) – Turn waste fryer oil into biodiesel 4. Sustainable Food – Local – Organic – Grass fed, Pastured – Seasonal menus – Do you feature your farmers or producers? – Signature items that showcase community

GREEN GUIDE Ingredients for Restaurant Sustainability 5. Pollution Prevention Eliminating polystyrene foam (Styrofoam) Purchasing carbon “off-sets” for operations Chlorine-free paper products 6. Recycled, Tree-Free, Biodegradable & Organic Products – Natural soaps in bathrooms – Cloth napkins from organic cotton – 100% recycled, post-consumer waste paper for menus – Sustainable furnishings

GREEN GUIDE Ingredients for Restaurant Sustainability 7. Non-Toxic Cleaning & Chemical Products – Buy from companies you trust (and disclose ingredients) – Terms like biodegradable, non-toxic, organic are unregulated 8. Renewable Energy – Participate in “green energy” programs offered by large utilities – Generate your own with photovoltaics or if site permits, wind turbine – Use the sun to heat water with solar thermal system – Heat with renewable wood, corn or geothermal system

GREEN GUIDE Ingredients for Restaurant Sustainability 9. Green Building & Construction – No Volatile Organic Compounds (VOC) in caulks, paints – Forest Stewardship Council (FSC) certified wood – Natural buildling materials: cork, bamboo – Daylighting, passive solar design – Use of reclaimed building materials, recycled materials – Secure Leadership in Energy and Environmetal Design (LEED) certification offered by U.S. Green Building Council (usgbc.org) 10. Stakeholders – Employees paid “living wage” – Training address environmental issues – How can your customers pitch in? – Giving back to community

GREEN GUIDE Certification in the USA Green Restaurant Association dinegreen.org Certification based on recycling, elimination of Styrofoam, 4 steps/yr. for environment Co-op America Business Network coopamerica.org members based on social & environmental criteria (restaurants as well as other business sectors) Travel Green Wisconsin travelgreenwisconsin.com state sponsored, voluntary certification program that includes restaurants Certification based on extensive list addressing all aspects of operations

GREEN GUIDE Voluntary Review: Green Routes Source: Green Routes, greenroutes.org Find one-of-a-kind places to eat, play, shop, sleep and learn Web-delivered content Innovative networking of restaurants and other rural enterprises

GREEN GUIDE Voluntary Review: Green Routes Key elements in review: Ecological responsibility Contribution to local economic vitality Cultural sensitivity Experiential richness This is a program by Renewing the Countryside in Minnesota, greenroutes.org

MARKETING TO CONSERVING CUSTOMERS Serving conserving customers, not “consumers” Source: ECOpreneuring , ecopreneuring.biz Awareness building about human impacts on the planet Changing how we live, work, eat and play Change in consciousness that influences our lifestyle and spending habits

MARKETING TO CONSERVING CUSTOMERS 50 million Americans – About 1/4 of US population Strongly aware/deeply concerned about issues facing planet Taking action to address them Focus on health, well-being Wiser consumption Source: Cultural Creatives , by Paul Ray/Sherry Anderson, culturalcreatives.org Cultural Creatives, creating a new culture, worldview

MARKETING TO CONSERVING CUSTOMERS Lifestyles of Health and Sustainability (LOHAS) Source: LOHAS, lohas.com Integrate social, political and economic values with their actions in the marketplace Roughly 1 in every 3 people in U.S. – 58 million adults • Authenticity and transparency key – Avoid “greenwashing” – Walk the talk

MARKETING TO CONSERVING CUSTOMERS 5 key LOHAS market segments Source: LOHAS, lohas.com (1) Healthy lifestyles: organic & natural foods (2) Ecological lifestyles: ecotourism, eco-products & natural building/green design (3) Sustainable economy: self-sufficient, eco-friendly Alternative healthcare (5) Personal development: yoga & spas

MARKETING TO CONSERVING CUSTOMERS Communicate responsibility & legacy story Avoid focus on “environment” Offer authentic EXPERIENCES Selective approach to media Public radio, partner with non-profits, menu tastings & tours Celebrate the local community Focus on unique sense of place Network with like-minded lodging, attractions, events (packaged tours)

MARKETING TO CONSERVING CUSTOMERS “ 7 Ps” of marketing, not 4 Product How do you treat nature, vendors, employees? - Eliminate waste Price The premium goes to nature, employees, or community Based on values, not simply a “good value” Source: ECOpreneuring , ecopreneuring.biz

MARKETING TO CONSERVING CUSTOMERS “ 7 Ps” of marketing (3) Place (distribution) - How can you showcase your community? (4) Promotion (PR and advertising) - Tell YOUR unique story - Let your customers be your ad/PR agency People Go beyond “transactions” Create experiences Follow the “80-20 rule” Source: ECOpreneuring , ecopreneuring.biz

MARKETING TO CONSERVING CUSTOMERS “ 7 Ps” of marketing (6) Partnerships Networking (non-profits) Cause-related marketing (7) Purpose Celebrate your passion and purpose - Sell steak, not sizzle Source: ECOpreneuring , ecopreneuring.biz

Ecopreneurial Profile Angry Trout Cafe Sustainable, local ingredients Customers care about the fishermen, farmers & brewers, want to hear their stories – Local maple syrup, produce, microbrews “ Place-based” cuisine Featuring local varieties of wild rice Feature only fish from the region in season

Ecopreneurial Profile Angry Trout Cafe Reduce waste with reusable items Reusable take-out food trays Refillable pens Organic cotton little napkins 6-inch x 11-inch half material half the water, energy, detergent to clean them

Ecopreneurial Profile Angry Trout Cafe Living wage Lowest $8.50/hr. and kitchen staff, $12.50/hr. Share the wealth Community connections Buying from neighbors; selling to neighbors Furniture, dishware, décor, tilework, metalwork Supporting the local economy

Ecopreneurial Profile Hook, Washington DC Sustainable seafood leader Highest quality product Direct interactions with suppliers On site visits to Caribbean/West Africa by chef/owner, Barton Seaver & staff Menu reflects seasonal focus Exclusively sourced local produce Humane meat & dairy products Linking food & environment – Partnership with EarthEcho

Ecopreneurial Profile Habana Outpost, New York First solar powered restaurant in New York Patrons can recharge cell phones & computers “ Bike blender” pedaled by patrons to make fruit drinks Local organic ingredients Dishes, flatware, cups made from corn/sugar cane fiber

Ecopreneurial Profile Habana Outpost, New York #1 Photovoltaic system #2 Reused truck is kitchen #3 Kids corner (garden) #5 Rain water collection (for toilets, irrigation) #8 Recycled aluminum table #12 Reclaimed doors

Ecopreneurial Profile Chipotle Mexican Grill “ Food with integrity” - Foods, design of restaurants, treatment of employees Featured pasture-raised pork from Polyface Farm (Virginia only) Vegetarian and vegan options Return on Investment & Return on Environment Publicly traded stock up 100% since May, 06

Ecopreneurial Profile Kavarna Vegetarian Coffeehouse, Green Bay, WI Purchase “green energy” from local utility Offer free beverage to customers who also participate in green energy program Vegetarian cuisine Reducing ecological footprint Tapping growing trend Innovative use of Internet Blog website format Social networking

Ecopreneurial Profile American Flatbread Bakery & Restaurant, Los Alamos, CA Artisan, handmade pizzas Made in woodfired oven All locally grown ingredients Pizza with a “sense of place” All within 300 miles Feature farmers by name “ Windrose Farm Baby Lettuce Salad…” “ Strauss Family Organic Vanilla Bean Ice Cream”

Ecopreneurial Profile American Flatbread Bakery & Restaurant, Los Alamos, CA Support fair trade movement Locally-roasted, certified Fair Trade, organic coffees Seasonal & fresh menus Reducing ecological footprint Bar appetizer: fresh pea pods Frozen certified organic pizza Restaurant open on weekends only

Ecopreneurial Profile Inn Serendipity Bed & Breakfast, Browntown, WI Two room B&B, near Monroe, Wisconsin - Niche lodging-place food service Organic and vegetarian Fresh, from garden to plate Seasonal cuisine Offers variety for returning guests Fair Trade, Organic coffee/tea Only earth-friendly vendors

Ecopreneurial Profile Inn Serendipity Bed & Breakfast Renewable Energy Systems • Net Producer of Electricity on Annual Basis • Reduce Ecological Footprint

Ecopreneurial Profile Inn Serendipity Bed & Breakfast Solar Thermal System for Hot Water 3 collectors Capture heat from sunlight to heat water for domestic use Estimated payback of less than 5 years

Ecopreneurial Profile Inn Serendipity Bed & Breakfast Off-Grid Photovoltaic System & all-electric Car .5 kW PV system for charging: – All-electric CitiCar – Back-up electricity for greenhouse – Recharging electric mower

SELECTED RESOURCES Sources for Sustainable Ingredients Local Harvest - Locate sustainably-raised foods in your area; localharvest.org Community Supported Agriculture (CSA) - Purchase “shares” of farm’s products; www.wilson.edu/csasearch/search.asp Eat Well Guide eatwellguide.org HappyCow vegetarian restaurants - happycow.net

SELECTED RESOURCES Sources for Sustainable Ingredients Chefs Collaborative Farmer-Chef Connection provides a good source for farmer and restaurant collaboration Guide to Good Eating to help diners locate Chefs in their network chefscollaborative.org Pastured Products Directory eatwild.com Slow Food USA slowfoodusa.org

SELECTED RESOURCES Sources for Sustainable Ingredients

SELECTED RESOURCES Sources for Sustainable Seafood Marine Stewardship Council Certification of seafood msc.org Monterey Bay Aquarium Seafood Watch Card montereybayaquarium.org Blue Oceans Institute Cell-phone text messaging service blueocean.org

SELECTED RESOURCES Organizations Database of State Incentives for Renewable Energy Funding for energy conservation and renewable energy www.dsireusa.org Midwest Renewable Energy Association Educational resources and connections to professional installers www.the-mrea.org

SELECTED RESOURCES Organizations GreenOptions From their Eat.Drink.Better. portal to their Ecopreneurist and Sustainablog, this dynamic and upbeat blog site receives over 300,000 unique visitors per month and serves as a bridge to operating greener www.greenoptions.com Consortium for Energy Efficiency (education) Promotes energy efficient products, technologies and services www.cee1.org

SELECTED RESOURCES Organizations Energy Star (EPA) Listing of Energy Star certified appliances & equipment that will save your business money, reduce impacts on environment Resources, management tools & numerous examples www.energystar.gov National Restaurant Association’s “Conserve” To be launched on Earth Day, 2008

SELECTED RESOURCES Angry Trout Café Notebook by George Wilkes The Ecology of Commerce by Paul Hawken Omnivore’s Dilemma - by Michael Pollan

www.ecopreneuring.biz www.ruralrenaissance.org Books by Lisa Kivirist & John Ivanko • ECOpreneuring Pragmatic how-to guide to launching or greening your enterprise. • Rural Renaissance Practical guide to greening operations. • Edible Earth Simple vegetarian cookbook. SELECTED RESOURCES

Marketing to Conserving Customers: A Guide to Operating Green with a Triple Bottom Line

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Marketing to Conserving Customers: A Guide to Operating Green with a Triple Bottom Line