Chains vs Local...What are the true economics

If I buy from the typical "franchise," the local impact is greater because ownership is probably local, even though 10% or more might flow directly back to corporate. If I buy "local," but am buying a good not PRODUCED locally, a good portion of money still flows outside the local community.

I agree 100%, but still believe buying from a true local restaurant usually has a greater local impact. Greater could mean 1% or 10%, who knows?

$100 meal at Chain/Franchise X vs. $100 Varanese or Mayan Cafe.

Varanese/Mayan is using locally grown meat and produce where X is not. Royalty fees aside, locals tend to use more local products which equal a greater local impact.

This might not always be the case. I sure some locals aren't using as many local products as they could, but I don't know of any chains/franchises that use local meat or produce. It seems they are bound by corporate buying contracts or have no interest in local products.

Local X vs. Chain Y
The royalty aspect now comes into play

Both are buying all their products from Sysco.

Local X - $100 check with $40 profit, so $40 stays local.

Chain Y - $100 check with $40 profit, 8% ($8) royalty off the $100, so $32 stays local

Just my way of thinking. I could be totally wrong, but haven't seen any proof to make me think otherwise.

Again, I choose local for many reasons, economic impact is toward the bottom of the list, but still a factor.

http://www.newrules.org/retail/news/san ... tudy-finds

http://www.newrules.org/retail/news/san-franciscos-economy-reaps-big-benefits-independent-merchants-study-finds

Justin,
That is a useful study and it summarizes a lot of what we've been talking about here. From the article:
"Much of the difference in economic impact is due to two factors. One is that the chains have some of their management, marketing, and other functions carried out at corporate headquarters and therefore employ fewer people locally per unit of sales. In the toy category, for example, for every $1 million in sales, independent stores create 2.22 local jobs, while chains create just 1.31.

The other factor is that the local retailers spend more of their revenue buying goods and services at local businesses such as print shops, accounting firms, web design companies, banks, and so forth. Chains have little need for these local goods and services; many of the dollars that flow into their outlets instead leave the region.

The final part of the study looks at the effect on the city's economy if residents were to shift the balance of their spending between chains and local businesses by just 10 percent.

Civic Economics calculated that if residents were to redirect just 10 percent of their spending from chains to locally owned businesses, it would generate $192 million in additional economic activity for the region and almost 1,300 new jobs.

The additional income created by these new jobs would in turn lead to an increase in local retail and restaurant spending, which would boost sales tax revenue for the city. San Francisco, like other California cities, depends primarily on sales taxes for funding schools and municipal services. "

If I buy from the typical "franchise," the local impact is greater because ownership is probably local, even though 10% or more might flow directly back to corporate. If I buy "local," but am buying a good not PRODUCED locally, a good portion of money still flows outside the local community.

I agree 100%, but still believe buying from a true local restaurant usually has a greater local impact. Greater could mean 1% or 10%, who knows?

$100 meal at Chain/Franchise X vs. $100 Varanese or Mayan Cafe.

Varanese/Mayan is using locally grown meat and produce where X is not. Royalty fees aside, locals tend to use more local products which equal a greater local impact.

This might not always be the case. I sure some locals aren't using as many local products as they could, but I don't know of any chains/franchises that use local meat or produce. It seems they are bound by corporate buying contracts or have no interest in local products.

Local X vs. Chain Y
The royalty aspect now comes into play

Both are buying all their products from Sysco.

Local X - $100 check with $40 profit, so $40 stays local.

Chain Y - $100 check with $40 profit, 8% ($8) royalty off the $100, so $32 stays local

Just my way of thinking. I could be totally wrong, but haven't seen any proof to make me think otherwise.

Again, I choose local for many reasons, economic impact is toward the bottom of the list, but still a factor.

Justin - I agree 100% with all of this. 9 times out of 10, more money stays local when local establishments are involved. The degree to which that's true may vary, and in your example, the difference is only $8.00; however, $8.00 over 100 establishments, day in and day out, does add up. Looking at amount per customer that stays loca, local > franchise > chain. However, it's also possible that the high turnover of chains actually creates MORE money. In your example, Local X may have 100 customers per day, while Chain Y has 200. The amount staying local/customer benefits the local, but the macro picture benefits the chain. I'm really just playing devil's advocate here.

Everybody is local somewhere.

Justin - I agree 100% with all of this. 9 times out of 10, more money stays local when local establishments are involved. The degree to which that's true may vary, and in your example, the difference is only $8.00; however, $8.00 over 100 establishments, day in and day out, does add up. Looking at amount per customer that stays loca, local > franchise > chain. However, it's also possible that the high turnover of chains actually creates MORE money. In your example, Local X may have 100 customers per day, while Chain Y has 200. The amount staying local/customer benefits the local, but the macro picture benefits the chain. I'm really just playing devil's advocate here.

I agree, but we are both discussing hypothetical numbers in table turns. Take into account the local guy selling a NABC beer, Foxhollow Farms Ribeye w/ Sheltowee mushrooms, and local asparagus. That is a much larger chunk of change staying local. Does it make up for the volume? I don't know, but it seems no one else does either. I would also guess the average check at a local is higher vs chain, making the table turn gap smaller.

Anyway, I like knowing more of my money is staying here when I eat local. I can't control the maco aspect of things other than doing my part on the micro end.

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I agree, but we are both discussing hypothetical numbers in table turns. Take into account the local guy selling a NABC beer

When did hoosiers become local?

This is my problem, WTF does local even mean?

Lets just change local to independent. Eat independent, is that better?

[

I agree, but we are both discussing hypothetical numbers in table turns. Take into account the local guy selling a NABC beer

When did hoosiers become local?

I don't understand why New Albany (or Jeffersonville, or Clarksville) would not be considered local? We are a suburb of Louisville, and are closer to downtown Louisville than most of the Kentucky-based suburbs of Louisville. Its one big happy community!

[Robin Garr]

I don't understand why New Albany (or Jeffersonville, or Clarksville) would not be considered local? We are a suburb of Louisville, and are closer to downtown Louisville than most of the Kentucky-based suburbs of Louisville. Its one big happy community!

New Albany and Jeff ARE local, and Middletown is in Louisville. Just because you read something on the Internet doesn't mean it's true.

Where does local change to not-local? There has to be a line somewhere...my OCD traits demand that some geographic point be defined....otherwise I'm living in an unstructured world!

I'm thinking it should be chains vs. independents.

Local and independent seem to be used interchangeable

http://amiba.net/pdf/benefits_doing_biz_locally.pdf

http://keeplouisvilleweird.com/whybuy.htm