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Harness the power of sustainability: More customers clamor for socially conscious business practices

EDITOR'S NOTE: This is one of the stories that will appear in next week's special NRN 50 issue, Opportunities Knocking: Open the door to bold thinking and unlock your profit potential. Look for the issue Jan. 26.

It's difficult to put a price tag on the effect of socially responsible business practices, but savvy operators nonetheless are finding such actions can be lucrative in the good will they generate.

Look no further than the largest quick-service chains -- Subway, McDonald's and Dunkin' Donuts, to name a few -- and you'll see many of them are turning their operations green and earning greenbacks as a result. As consumers grow increasingly concerned about the environment and their health, buzzwords like "local," "organic" and "sustainability" are becoming the order of the day.

In the United States alone, consumers who live according to the principles of Lifestyles of Health and Sustainability, or LOHAS, represent more than $228 billion a year in sales, and that number is growing.

"People increasingly are making the connection of personal health and the health of the environment and the effect their purchasing decisions have on all of that," says Alisa Conroy, vice president of strategy for the Soap Group, a socially responsible marketing firm based in Portland, Maine.

"They're concerned with everything from the food they buy to the restaurants they frequent to where the food comes from," she says. "They're concerned about how it impacts them personally, the communities they're involved in and the greater impact it has on the environment."

At 39-unit Burgerville, the Vancouver, Wash.-based quick-service chain known for such sustainable practices as purchasing local ingredients, operating on wind turbine power and converting fryer oil to biodiesel fuel, the No. 1 priority is making sure that socially responsible initiatives make financial sense before they are employed, says Jeff Harvey, the chain's president and chief executive.

"Given the mission of this company, which is to serve with love, this is an option of no choice, but it's not just good of heart," he says. "This is intelligent business intended to generate a return. When I joined five years ago with a charter to grow this mission, I made sure I had a team in place to assess every single initiative and ensure there was a return on investment, that the projections were accurate."

He says the chain appeals to consumers not only because of its commitment to sustainability, but also the brand's quality.

"People who still want to eat out are looking at how it's going to be a unique experience, how it will support their health and well-being," he says. The sustainability factor no doubt "has attracted guests, but we've been able to strike a balance Ñ yes, we have the wind power, but we also have the taste and high quality of the food."

Given the savvy of the LOHAS market, it's increasingly important that operators and marketers of green products and practices be able to substantiate their claims, Conroy says.

"Because of consumer demand, the market for green products is increasing," she says. "But because of that demand, competition is increasing, so companies need to become more transparent. That's the way they can differentiate themselves within that niche."

Chris Dahlender, owner-operator of Snappy Salads, a two-unit fast-casual concept in Dallas that markets itself as planet-friendly, says customers are discerning about whether they will frequent a particular brand or not because of its eco-friendly claims.

"Each brand has an inherent set of characteristics -- quality, value and that X factor -- that the company is actually taking steps to make the world better," he says. "People are looking for real, genuine caring from a business; they know when it's glossy or fake. I think maybe you can cheat a bit with quality and value, but you can't when it comes to making a claim of whether you're environmentally conscious or not."

Burgerville's Harvey agrees, saying social responsibility must be a long-term commitment.

"If we're intentionally subscribing to a portion of the market that really believes in this, if you do something wrong you'll probably lose them for good," he says. "You can't step in one day and out the next or else you'll lose your market share."

At GustOrganics, the first U.S. Department of Agriculture certified organic restaurant in New York City, owner Alberto Gonzalez has developed a customer base that believes in his product and the socially responsible message he is trying to send. He notes that the restaurant, which opened last January, experienced 20-percent growth from the first half of 2008 to the second half despite the economic downturn.

"[Conducting] responsible business and pursuing profits after that grows business," he says. "It's hard to be in New York in this economic context, but it's also a real opportunity to create a more sustainable economy in every sense of the word. People are starting to care more about where they spend their money and why, and there's nothing more basic than to serve a 100-percent organic plate at an affordable price. I believe everyone is going to follow; you're going to see a huge change in business models."

Contact Elissa Elan at [email protected].

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