This is a pretty interesting thread that generates several questions regarding the "local" argument.
First, I don't think it is possible to operate a profitable restaurant using only local sources when using the most narrow definition of "local".
Local sources (at least from my view) would include everything needed to operate the business including :paper products, utensils, pans, furniture, spices, food, etc.
The most interesting problem brought about when considering an "all local" option is the definition of "local".
Is it locally owned, do they produce all their goods locally, are all of their ingredients sourced/produced locally, is a corporate business based in Louisville considered local ? ? ?
Local in the food community seems to imply two things: Freshness & supporting one's community (jobs/economy/small business/independents/etc).
If a business that is not in our geographic region uses the same practices that we value in our local businesses, are they acceptable as providers of ingredients for our local restaurants.
Example -
Can an "all local" Louisville pizza restaurant source their flour from a family owned (local) flour mill in Wisconsin and their cheese from a (local) dairy in Michigan?
A good example of this predicament is raised by all the local breweries. The water is essentially the only "local" ingredient being used in all of our Louisville beer.

(NABC is using some locally produced hops though for a new brew, but I'd wager the grain is grown elsewhere)
Perhaps we should consider a more definable terminology to qualify what it is that we value about "local".
Shawn