Findings & Analysis

Community food enterprises (CFEs) are the economic engines for growing, processing, selling, and serving local food. We encounter them every day as we drive past farms, shop at grocery stores, or eat out at restaurants. Some are wildly successful while others are barely paying their bills. We tend to attribute the performance of each to the abstract skills of the proprietors or even to luck, but we actually know very little about what accounts for their success. Our 24 case studies aim to fill this void.

For many years CFEs dominated local markets. Globalization shattered this old economic order. Industrial scale agriculture displaced smaller farms, food processing moved to centralized manufacturers, and chain supermarkets and restaurants displaced local grocers and diners. In the radically altered world of multinational business, the smaller scale of CFEs appeared to doom them. Among their many disadvantages, compared to bigger national and international players, were larger fixed costs, more inexperienced managers, more limited distribution networks, less potent marketing, and poorer access to talent, capital, and technology.

Yet in recent years CFEs have discovered that they actually have unique advantages over bigger companies. They have a deeper awareness of local tastes and markets, they can obtain consumer feedback more quickly, and they can tweak their business models more swiftly. They can deliver goods and services faster, with shorter distribution links and smaller inventories. They can rely more on word-of¬mouth advertising that costs nothing. The hypothesis of this study is that CFEs are again becoming competitive, and will become increasingly so, but only if CFE managers effectively harness their comparative advantages.

 
Our analysis begins by describing 15 strategies CFEs are deploying to increase their competitiveness. We then articulate 16 obstacles CFEs face, many of which constitute the traditional understanding of the disadvantages of small scale. We also share intriguing and varied ways CFEs are overcoming these obstacles. One of the paradoxical ways several of our case studies have done this, it’s worth highlighting here, is to grow very large and focus on global markets, all while remaining locally owned. We then review the social performance of CFEs, suggesting that they have taken factors which have been long viewed as extra costs— higher labor, environmental and community standards— and transformed them into competitive advantages.

Finally, we reflect on the replicabilty of CFE successes, and conclude that there is little to stand in the way of CFEs proliferating, especially if new mechanisms are created that enable practitioners worldwide to share best practices and collaborate together.