In the region along the river upstream and downstream from Lebanon, New Hampshire, and White River Junction, Vermont, known as “Upper Valley,” hundreds of farms have supplied locally grown and locally produced food products for centuries. The region’s highly educated and affluent population have provided an ardent and enduring demand for such products, which are generally more expensive and less ubiquitous than national brands. One of the main ways that Upper Valley residents enjoyed and experienced local food was through the region’s many independent restaurants. This region, which also extends south to Windsor, Vermont and Cornish, New Hampshire, and north to Bradford, Vermont and Piermont, New Hampshire, experienced challenges to this steadfast commitment to local food when the COVID-19 pandemic brought new consumer behavior patterns and significantly less in-person restaurant traffic, which reduced the amount of local food purchased by local independent restaurants.
According to research compiled by U.V.E.R. in early 2021, the national third-party food delivery services (TPFDS), such as DoorDash, Uber Eats, and GrubHub (the “Big 3” own an approximate 83% TPFDS market share) are costing local communities, such as the Upper Valley region, millions of dollars every day, and contain no provisions or policies to ensure the involvement of local food (defined as food originating from producers located in the same geographic area as the marketplace in which it is being sold) at any level. Commission rates, estimated at between 30% and 40% on average, may jeopardize the existence of independently owned restaurants (Wall Street Journal, May 29-30, 2021). It is estimated that the TPFDS drove $43 billion of gross transaction sales in 2018 and will likely grow to approximately $76 billion by 2022.
Not only do TPFDS charge commissions to restaurants, they are also using customer information from the restaurants to establish “ghost kitchens” and compete with the same independent restaurants they claim they serve (Wall Street Journal, April 2, 2021). The trend toward TPFDS companies expanding into food preparation and exclusive app-only branding not only jeopardizes local restaurants and caterers, but it continues to remove hard-earned income from local communities, further excluding local food and the local, independent restaurants that have historically purchased local food at greater quantities and rates than national/regional/chain restaurants (Lillywhite & Simonsen, 2014).
Prior to the establishment of U.V.E.R. Coop, independent restaurants in the Upper Valley have had no protection from the national TPFDS organizations’ commission rates, market dominance, nor the insider leverage they are beginning to use to alter the means through which food can be ordered, sourced, and prepared. Incidentally, in marketplaces without alternatives to mainstream TPFDS organizations, independent restaurants have severely limited ability to negotiate fair rates, protect their customer data or ensure quality customer service. This all culminates in the endangerment of local, independent restaurants and their ability to purchase, prepare, and promote local food from local farms and ranches.
Within the mainstream TPFDS systems, independent restaurants pay extremely high commission costs, which subsidize the discounted commission rates national chains negotiate. Additionally, they are deprived of access to their customer data which the TPFDS use to develop and market their own competitive products. Finally, since independent restaurants comprise the vast majority of the sector that utilizes locally sourced products, it is therefore important to protect these businesses in order to preserve the market for local farmers.
While the Upper Valley chamber of commerce did anecdotally report the permanent closing of seven (7) restaurants during the first six months of the COVID-19 pandemic, comprehensive studies of the wide-scale dual impact of (1) consumer-level self-restricted indoor dining behavior and municipally imposed indoor dining restrictions, and (2) the prevalence of big-three TPFDS in the Upper Valley region and how the bias toward national chains that is inherent in these platforms may have shifted consumer spending away from local restaurants and toward national chain restaurants.
One factor that may have hindered the undertaking of such a study would have been the obscurity of a comprehensive catalogue or database of local food and agriculture businesses for the region. While consumer-focused printed restaurant guides and farmers market websites contain partial information, no single source exists for this unique region and its vibrant heritage of small independent farms and local restaurants featuring local food. Lists that do exist are either outdated or incomplete.
U.V.E.R. Coop has raised capital, established a board of directors, established its status as a consumer cooperative organization, and is currently building membership and gathering commitments from Upper Valley area vendors: farms as well as restaurants.
While other TPFDS companies have served primarily restaurants, U.V.E.R. is seeking to serve both farms and restaurants,providing small, independent farmers with both a new way to sell to consumers and also a healthy restaurant scene into which their products can be sold. Not only is U.V.E.R. Coop supporting restaurants and helping them source local farm food, it is also giving those same farmers the ability to go direct to their consumers (skipping “middle men,” avoiding unnecessary transportation, and eliminating waste at aggregation sites). U.V.E.R. Coop is creating an efficiency that benefits local farms and producers, local restaurants and other retailers, and individual consumers who wish to maximize their consumption of locally grown food.
U.V.E.R. Coop was co-founded by Jarett Berke, owner of Lou’s Restaurant and Bakery; John Pepper, owner of Boloco, a chain of Mexican restaurants in New England; Nigel Leming, Owner of Murphy’s Restaurant and Impasto Restaurant; Tracy Hutchins, Executive Director of the Upper Valley Business Alliance; Nancy LaRowe, Vital Communities Local First and Food & Farm Coordinator; Candy Swift, Founder of Happy Wheels and Sales Representative for Performance Food Group; and Michael Wooten, Associate Dean of Residential Life & Director of Residential Education.
“As a lifelong Upper Valley resident, I take great pride in helping U.V.E.R. Coop come to life. Anyone who has spent any time in this area knows how very special and unique it is. If I get an opportunity to help preserve that and make it a better place to live- I’m in.” – Chris Acker, Executive Director, U.V.E.R. coop.
Addressing The Issue
U.V.E.R. Coop is a co-operative-style organization to increase access to and availability of locally and regionally produced agricultural products in the rapidly expanding food consumption channel of digital app-based TPFDS.
The success and growth of the business so far provide the “proof of concept” to indicate continued success for the expansion of U.V.E.R. Coop
Cooperative organizational structure can reduce the effective commission rates from 30-40% to approximately 10%, provide superior customer service, protect customer data, and preserve the market for farmers and ranchers seeking to sell their products to the segment of the restaurant sector that uses them.
On the same note, U.V.E.R. Coop is enabling local last mile distribution for farmers. This reduces emissions, opens up sales channels, and can help a micro-entrepreneur make the jump to much more sales with very little investment.
U.V.E.R. Coop is legally registered as a consumer cooperative (its legal name is Upper Valley Eateries and Retail Consumer Cooperative Society, Inc.), and as a result it is required to follow the official International Cooperative Alliance principles (https://www.ica.coop/en/cooperatives/cooperative-identity), which are:
- Voluntary and Open Membership
- Democratic Member Control
- Member Economic Participation
- Autonomy and Independence
- Education, Training, and Information
- Cooperation among Cooperatives
- Concern for Community
Text partially written by Kevin Mahler, Owner & President, Contributed Line, LLC
“Consumer preference for locally produced food ingredient sourcing in restaurants.” (Lillywhite & Simonsen, 2014)
“Pay more for McLocal?” (Frash, DiPietro & Smith, 2014)
“Restaurant’s decision to purchase local foods” (Sharma, Moon & Strohbehn, 2014)
“Direct marketing local foods to chefs.” (Curtis & Cowee, 2009)