Chains vs Local...What are the true economics

You should eat there, have a mojito, and contemplate the law of comparative advantage.

Chains also buy supplies from corporate approved in town suppliers. Only they are buying for the entire chain, not just for the locals. Talk about big big big....

Examples? I would bet there is not a chain in Louisville buying local meat and produce. Sysco all the way.

I think some on here need a lesson in The Law of Comparative Advantage.

Apparently I do, as I don't see how it applies to this topic at all.

why is one perceived to have so much more of an economic impact ?

Back to the original question; locals buy more from other locals and keep more profits in Louisville than chains. Plain and simple.

Examples? I would be there is not a chain in Louisville buying local meat and produce. Sysco all the way.

You have no way of knowing where every restaurant in Louisville orders their product. So, to make such a statement , is a little premature. Although, I did not say it was untrue. Do you boycott Locals using Sysco?

So I saw this little blurb in the CJ and it got me to pondering...

Lenny’s Sub Shop, a chain based in Memphis, Tenn., will open its first Louisville location Thursday at 3942 Taylorsville Road, between Hikes and Breckenridge lanes in Hikes Point.

Franchisee Dustin Childers of Louisville, a commercial and corporate airline pilot, would like to open 3 to 5 additional sub shops in Louisville “over the next several years,” according to a news release.

So, ignoring Lenny's (the restaurant) for a moment...My question is this: From an economic perspective what is the difference between this (local) guy investing in and opening a "chain" restaurant and some "local" with "out of town investors" (which I would speculate that many of the larger/successful ones have) opening a restaurant ? Menus and aesthetics aside, why is one perceived to have so much more of an economic impact ? Not slamming the "locals"...I love 'em...but I'd be really curious to see if this perception of the one providing more economic impact than the other is real or just imagined.

I'm not sure it has a greater economic impact.

I do think those who support local businesses spin the argument to make that claim. And I support them 100%.

Reality means nothing. Perception is everything.

Examples? I would bet there is not a chain in Louisville buying local meat and produce. Sysco all the way.

You have no way of knowing where every restaurant in Louisville orders their product. So, to make such a statement , is a little premature. Although, I did not say it was untrue. Do you boycott Locals using Sysco?

I didn't state it as fact, I also ask for examples to prove otherwise. I would still bet there are no chains buying local meat and produce. I don't boycott anyone, I avoid chains when I can. I still get my cravings for Hooter's wings and buffalo shrimp and I feed that craving. This isn't about eating at chains vs locals, it is about impact on the local economy. I believe the locals the have a greater impact on the local economy than chains, just my opinion.

Examples? I would bet there is not a chain in Louisville buying local meat and produce. Sysco all the way.

You have no way of knowing where every restaurant in Louisville orders their product. So, to make such a statement , is a little premature. Although, I did not say it was untrue. Do you boycott Locals using Sysco?

I didn't state it as fact, I also ask for examples to prove otherwise. I would still bet there are no chains buying local meat and produce. I don't boycott anyone, I avoid chains when I can. I still get my cravings for Hooter's wings and buffalo shrimp and I feed that craving. This isn't about eating at chains vs locals, it is about impact on the local economy. I believe the locals the have a greater impact on the local economy than chains, just my opinion.

Sysco is local somewhere. So, the example may or may not apply to Louisville, but it applies to some locality. Like I said, on average it evens out.

You should eat there, have a mojito, and contemplate the law of comparative advantage.

Am planning on it, either Friday or Saturday night. I will probably have more than 1 mojito. And it wont bother me at all that my money is leaving Middletown.

http://www.buylocalrogue.org/index.php? ... &Itemid=86

A study with some actual figures.

The study analyzed ten locally owned restaurants, retail stores, and service providers and compared them with ten national chains competing in the same categories. The study found that spending $100 at one of the neighborhood's independent businesses created $68 in additional local economic activity, while spending $100 at a chain produced only $43 worth of local impact.

http://www.buylocalrogue.org/index.php?option=com_content&view=category&layout=blog&id=51&Itemid=86

A study with some actual figures.

The study analyzed ten locally owned restaurants, retail stores, and service providers and compared them with ten national chains competing in the same categories. The study found that spending $100 at one of the neighborhood's independent businesses created $68 in additional local economic activity, while spending $100 at a chain produced only $43 worth of local impact.

Not exactly an unbiased source.

http://www.buylocalrogue.org/index.php?option=com_content&view=category&layout=blog&id=51&Itemid=86

A study with some actual figures.

The study analyzed ten locally owned restaurants, retail stores, and service providers and compared them with ten national chains competing in the same categories. The study found that spending $100 at one of the neighborhood's independent businesses created $68 in additional local economic activity, while spending $100 at a chain produced only $43 worth of local impact.

Not exactly an unbiased source.

But all of the studies I've found (and I have looked) show the same results: more money stays in a community if you spend your money in local businesses. The only question is what the exact ratios are.

Do you have any studies claiming the opposite? If not, then why are you attacking the messenger? (lame tactic)

Here are a bunch of studies, and links to a bunch more at the bottom of the page. http://www.livingeconomies.org/netview/ ... /LFstudies

Now go support local.... (please). It really is better for all of us.

http://www.buylocalrogue.org/index.php?option=com_content&view=category&layout=blog&id=51&Itemid=86

A study with some actual figures.

The study analyzed ten locally owned restaurants, retail stores, and service providers and compared them with ten national chains competing in the same categories. The study found that spending $100 at one of the neighborhood's independent businesses created $68 in additional local economic activity, while spending $100 at a chain produced only $43 worth of local impact.

Not exactly an unbiased source.

But all of the studies I've found (and I have looked) show the same results: more money stays in a community if you spend your money in local businesses. The only question is what the exact ratios are.

Do you have any studies claiming the opposite? If not, then why are you attacking the messenger? (lame tactic)

Here are a bunch of studies, and links to a bunch more at the bottom of the page. http://www.livingeconomies.org/netview/ ... /LFstudies

Now go support local.... (please). It really is better for all of us.

Relax....I'm not attacking anyone and no one on this thread has suggested not to support local. I just seriously doubt the proposed economic studies. (Pfizer can show you studies all day long about how much better their drugs are than Eli Lilly....should I just believe that?) I've been a small business owner as well....every business is different, so to make substantial generalizations about "local" business practice is fraught with assumptions that may or may not be true. I have no problem with franchises other that I won't eat their food.

Tell me where geographically local stops? I try not to buy crap made in China, but I'm cool with stuff made in California. Is that local enough? I personally don't like moniker that "local" is morally superior. For me it's about the value I receive for the purchase I make with value taking into account quality and price.

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The on-going royalty and national marketing rates for a Lenny’s Sub Shop are only 8% of net sales. Many other franchises cost up to 11%-13% of net sales.

Not being argumentative but playing "Devils Advocate"...and going back to my original post...I will go out on a limb here and speculate that a large percentage of local establishments to the north of "mom and pop" status send at least that much money out of town via silent investors, banks, etc. So from a totally uninformed perspective, I don't know that I can buy into this somehow being outside the ordinary without more definitive examples.

I have always tried to differentiate franchise operations from company-owned locations.

Bingo.

When it comes to economics (right wrong or indifferent) I tend to look at Applebees', Cracker Barrel, Ponderosa, etc, etc in one light and "franchise" operations in a different light. The problem (obviously) is identifying which is which.

why is one perceived to have so much more of an economic impact ?

Back to the original question; locals buy more from other locals and keep more profits in Louisville than chains. Plain and simple.

Justin,

Respectfully, I'm not convinced this has more than a "drop in the bucket" effect in the big scheme of things. That being said, the points you've made are certainly valid...

Not exactly an unbiased source.

The study was done by http://www.civiceconomics.com/

I just happened to find the results posted on buylocalrogue.com

I have no problem debating an issue, but it would be nice to see some facts from the opposing side.

"I just don't believe" the numerous studies stating, buying local is better, doesn't cut it for me.