MORGAN JONES: I said, good evening.
AUDIENCE: Good evening.
MORGAN JONES: Hello. Good evening and welcome to all alumni, guests, faculty, staff, students, prospective students, and everyone attending on our livestream. My name is Morgan Alexander Jones, and I'm the president of the Johnson Alumni Club of Greater New York.
Thank you. The Johnson Alumni Club of Greater New York represents more than 3,500 alumni network in the world with more than three-- with-- and we're-- heads up to everyone to be here, by the way-- just a little heads up really quick before I move on. Be on the lookout for the Johnson's Big Red Bash that's happening on April 30-- so that will be a really incredible event-- and our annual Women in Business event that's happening this May. And we are extremely happy to work with the Northeast Corridor Office on this particular event.
We're also thrilled to welcome you to this Business of Food event which is, again, in collaboration with the SC Johnson College of Business and the Northeast Corridor Office. And we want to thank our guest moderator and panelists Andrew, Miguel, Alex, Jorrie, and Field. To start our program, it is my honor to introduce our moderator for this evening's event, Professor Andrew Karolyi.
Andrew Karolyi, Andrew, is Professor of Finance and holder of the Harold Bierman Jr. Distinguished Professorship in Management at Cornell University's SC Johnson College of Business. He also holds an appointment as Professor of Economics at Cornell's College of Arts and Sciences. He currently serves as Deputy Dean and Dean of Academic Affairs. He joined Cornell University in 2009 after having taught 19 years at Ohio State University.
You can clap for that, too. It's fine.
Go Bucks. Go Bucks. His research specializes in the area of investment management, with a focus on the study of international financial markets. He has published extensively in journals in finance and economics, including the Journal of Finance, Journal of Financial Economics, and Review of Financial Studies, and has published several books and monographs. His newest book, Cracking the Emerging Markets Enigma, by Oxford University Press, was published in 2015.
He is a past recipient of the Michael Jensen Prize for Corporate Finance and Organizations, the Fama/DFA Prize for Capital Markets and Asset Pricing, and the William F. Sharpe Award for Scholarship in Finance, among many other achievements. In 2017, he was elected as a fellow of the Financial Management Association International.
Andrew served as executive ecutor-- excuse me, editor of the Review of Financial Studies from 2011 to 2018. And also from 2011 to 2018, if he wasn't busy enough, he was a member of the Board of Trustees of the Financial Management Association International. He is currently president of the Western Finance Association.
Andrew received his bachelor of arts honors-- honors in economics from McGill University and worked at the Bank of Canada for several years in their research department. He subsequently studied for his MBA and PhD degrees in finance at the Graduate School of Business at the University of Chicago. Once again, it is my very great honor, on behalf of our Johnson Club of New York City, to welcome our moderator, Professor Andrew Karolyi.
ANDREW KAROLYI: Thank you very much.
MORGAN JONES: Thank you. Thank you.
ANDREW KAROLYI: Hello, Cornell.
How are you this evening? Everybody on livestream, I see the red light is on, so there literally are people watching us. This is very good news. I am so pleased and honored to welcome so many of you alumni and friends of Cornell University, as well as of the College of Business and our schools-- the Dyson School of Applied Economics and Management, the Hotel School-- hotelies?
There's a few. And the Johnson Graduate School of Management.
There's a few in there, too. And Dyson, of course. I'm here, of course, representing Kevin Hallock, our dean of our college. He and I have been traveling around the country to a number of different events meeting with alumni-- West Coast, East Coast. And one of the great things that we get to do is share our excitement about the innovation and growth in the college. We're seeing lots of enthusiasm and optimism for all that is yet to come in the college. And I just want you, through this event, whether you're affiliated with the College of Business or whether you're a friend of the College of Business through Cornell or beyond, to feel that enthusiasm and optimism that we're feeling.
Today, ladies and gentlemen, we are gathering here to showcase something called the Business of Food Initiative. You saw from my bio sketch, Morgan, I know nothing about food.
I'm a finance wonk. But one of the great pleasures of this job as dean of the faculty is getting to know about all the things that are going on in the college. And one of the things that happened in the aftermath of the founding of the college was that we created these radical collaborations. We call them themes.
And we seed funded them with the idea that they were community building events. There turns out to have been scholars among our midst and instructors and teaching programs devoted to food, food systems, food security-- a lot of the issues that we're going to talk about today-- that were hidden in different pockets, where these people didn't know what each other were doing. And through the college's radical collaboration effort, we brought them together.
And the Business of Food is one of the most impressive. It is led by our distinguished Miguel Gomez as one of the co-leaders in the Dyson School, Ravinder Kingra. And also, Alex Susskind is one of the founders of this theme, the Business of Food Initiative. There are almost four dozen faculty members housed among our 237 faculty members in the College of Business that have something to do with the study and teaching about food. Amazing.
In fact, I asked my staff to calculate, just exactly how prolific are we in terms of scholarship, thought leadership with respect to food? In the trailing three-year window, our colleagues produced 243 published peer review articles in a trailing three-year windows. And that represents 48 different faculty members across all three schools. Now, how about them apples?
I think it's absolutely amazing. And I can tell you that none of our peer business schools out there can touch that even close. Today we're going to do something really special, and I'm going to invite my colleagues up to join us on stage. We're actually going to show you, showcase some of the cutting-edge research from two of our thought leaders in this space and also two distinguished alumni who are change agents in the industry itself. And we're going to try and have them talk to each other and share their thoughts and ideas on issues of relevance, and hopefully spark some interest in you. That's our goal for tonight.
Are you guys ready? Are you guys ready to get started? Everybody on livestream? Would you mind joining me? And I'll introduce you guys once you guys come on up stage. Miguel, Jorrie, Field, and Alex. Thank you.
We have ordering for our seating, assigned seating. We're told we must speak into these microphones so-- you guys can hear us quite well in the back? You can hear us? Thank you very much.
Ladies and gentlemen, to my immediate left is Professor Miguel Gomez. He is the Robert G. Tobin Professor of Management-- of Management. He is in the Charles Dyson School of Applied Economics and Management. He is a fellow at the Cornell Atkinson Institute Center devoted to the study of sustainability. And he is, as I mentioned, the co-director of the Business of Food Initiative in the college.
I should mention that Mr. Robert Tobin is sitting right over here, enjoying the celebration of Miguel Gomez, who carries his name at the school.
On Miguel's left is Jorrie Bruffett. She is a hotelie '97. And she is currently VP of Food and Marketing at Pret A Manger. To Jorrie's immediate left is Field Failing, arts and science '05, MBA '12. And he is the founder and CEO of Field's Good Chicken. And he's going to tell us about that.
And to Field's immediate left is Alex Susskind, who is a Professor in the School of Hotel Administration. He is an Associate Dean of Academic Affairs in the school and also the director of that school's Food and Beverage Institute. Ladies and gentlemen, please welcome your panel.
Are you guys ready?
So we actually discussed and planned out the first half of this. We've got some questions that we're going to roll through. I'm going to try and get them to react to each other as much as I can as moderator. And then there will be some remaining time at the end for questions and answers from the audience. And we have Lauren and Sarah who've got microphones. And they're going to be carrying them around. So you'll watch for those.
So the theme, as you probably have seen-- from farm to table. It's really going to be a discussion in three phases where we talk about food and the supply chain. Then we're going to shift to talking about production and packaging and then go all the way to marketing and distribution-- the whole value chain of farm to table. That's how we've constructed it.
And the first one is really going to start with Miguel and showcase some of his research. It focuses on the supply chain and a really big issue which is related to climate, water, and sustainability issues in the supply chain. So Miguel published a couple of art-- studies a couple of years ago that looked at-- one of them looked at, for example, socially responsible products. I think the context was the coffee industry.
And what he had discovered in some experiments that he ran is that consumers were willing to pay about a 52.5% price premium to pay up for products that represent some sort of expression of concern for the well-being of those who are stakeholders in the production process. This happened to be in the context of coffee and coffee sourcing.
There's another study that he published recently looking at localization, locally sourced in the dairy industry. And one of the things that he studied in that is how it relates to the costs, the consequences for local sourcing and what he calls localization for incremental costing in supply chain. That's one of the things that people worry about.
So do you want to open and tell us a little bit about some of that research? And then what I'm going to ask is Jorrie and Field to react and put their industry hats on and think about how this is relevant to them, what they think about as it relates to this. So Miguel.
MIGUEL GOMEZ: Thank, you, Andrew. Briefly, coffee is very close to me because I come from a coffee farming family in Colombia. And the first thing is, we have done many, many studies focusing on how consumers react to what we call credence attributes of food, things that you cannot prove, you have to believe, like organic, local, fair trade, Rainforest Alliance, all these certifications.
And in the case of coffee and in many other commodities-- and I will be short on these, but we have noticed over and over that there is a willingness of consumers to support, especially when it-- when their dollar that they spend supports consumer-- excuse me, producers, more equitable share of value along the supply chain. So, yes, and that's-- we see that over and over.
And one of the caveats here is that even though the consumers are willing to pay more than retail, sometimes we don't see that value distributed in an equal way along the supply chain between retailers, manufacturers, and growers. So that's an issue of concern.
ANDREW KAROLYI: Yeah. Good. Good. Good. Good. That's a good tee up. So Jorrie and Field, this social responsibility stuff can take many forms. We talked about this. It could be environmental responsibility, sustainability, social responsibility. And I guess what we want to know is how you think about some of the pressures, maybe, you feel from consumers or other stakeholders in your business that relates to these different dimensions of social responsibility or environmental responsibility. Jorrie, you want to start?
JORRIE BRUFFETT: Sure. Can you hear me OK? I think it-- for us at Pret, it takes a couple of different forms. So sustainability is obviously one of our big corporate values. It has been for a long time, before it was necessarily popular or important to other people, mostly because we are based, obviously, in the UK and have more of that European influence, which they are-- been on this journey a lot longer than the US has. And so there's a lot we can learn from them.
So when we started back in 1986-- 3? I don't know. Anyway, in the '80s, we made a decision to buy organic coffee. And so a little bit like Miguel was speaking about, we found that, at that time, coffee was a commodity. So it was a way for us to have a differentiation from a marketing perspective. But as, we over the years, started to work directly with farmers in Peru, particularly, and even more recently with coffee cooperatives, it became obvious what-- some of the things that they've seen in the research.
So not to bore you with how coffee's bought, but you pay a certain price. So you set a contract for, basically, a strike price, for those of you who study stocks, for our finance friends. But then you can pay what's called a differential. And so that differential, when you hear about fair trade, is the difference between the market price and the price you actually pay. And the idea is that that differential goes to the farmer. But it's hard to know, does that actually go to the farmer? Because if you're paying somebody in New York or whoever's buying your coffee, there's about five people in between with their hand out, as well.
And so we started working directly with-- it's called Cafe Somfro, but in Peru to try and guarantee that that would come-- we would get that money closer to the farmers. So that's-- I think we took a more hands-on, localized approach. We've also done education where we've tried to-- I guess you're a good example, is that second-generation farmers or third generation said, I'm not going to stick around and do the family business because coffee prices are at an all-time low, historic lows, and continue to go lower. And so it was very difficult to make a living.
And so organic farming provides a way for farmers to actually have a sustainable farming practice. And so we do a year-long program where we try to educate them on the benefits of not only why, but how, and also where their coffee goes. You were talking earlier that sometimes they don't even understand that their coffee goes to America and is sold around-- or around the world. There's places in Africa that have thought that the coffee is going to be made into bullets, and that's not an exaggeration.
So when you think about these supply chains and you're sourcing from impoverished areas, it's-- I think it's hard. So we're not having this major impact on masses amount of people, but we're trying to have a very small impact-- or, a big impact on a very small amount of people.
And then it-- when it comes back to the consumer and are they willing to pay more, I think that one's a little tougher. I think what we're trying to drive is loyalty. So if people know that we're trying to be more sustainable, that we're trying to help the farmers out, are they then more loyal to our brand? And so maybe they don't-- maybe we're not charging more, but maybe they'll come more often to Pret.
ANDREW KAROLYI: Repeat consumers. Great. Great. Field, do you want to jump in here?
FIELD FAILING: Yeah. I think that's a good--
ANDREW KAROLYI: Tell us a little bit about your company that you started. And maybe that will give us some context in which you can share some of the--
FIELD FAILING: Sure. So it Field's Good Chicken is a fast casual restaurant based here in York City that serves healthy grilled and roasted chicken and fresh vegetable sides. So we just opened our sixth location last Thursday. So I'm a little tired.
But, yeah. And so it's all grilled and roasted chicken. We don't fry anything. It is a-- health is a very important piece of the business, but it's an approachable health food, I like to say. Social impact and sustainability are very important pieces of the business. I think sometimes, early on when I was starting and I learned-- I don't remember where I learned this, but that the restaurant industry in the United States is the most wasteful industry on a per square foot basis.
And if you think about it, it makes sense. We're running equipment all day long. We have massive HVAC systems crammed into small little spaces that run all day long. We do a lot of takeout business. That's all on paper. Food waste is massive. So there's such an opportunity for the-- just the restaurant business to become more sustainable and less wasteful.
And I say more sustainable, not sustainable, because I think that's-- there's an important distinction in not saying we're sustainable because we do these things. Restaurants are wasteful. There's no two ways about it. But we try to be less wasteful and we try to find ways to reduce our carbon footprint and our impact.
I think, to piggyback on what Jorrie was just saying, the way that consumers react to that-- for us, we think about it in terms of the emotional connection with the brand. It's hard to measure, is someone going to pay a dollar more for a menu item because this business cares about the environment and social impact? It's hard to say. And Miguel probably could study it and tell us exactly what the amount would be. But I can tell you for sure that people connect more emotionally to it.
A couple things we do-- so we're members of 1% for the Planet, which means we have-- so we've got several menu items where 1% of sales are donated to local sustainable nonprofits. So through 1% for the Planet we donate to Scenic Hudson, which preserves the Hudson River Valley from New York up to Poughkeepsie. And all the restaurants are windpowered. So we pay additional money to make sure that we have renewable energy credits that offset all the electricity used by the restaurants. And then the packaging program is a huge piece of sustainability.
And then we also have a whole sustainable enterprise piece that we're developing where we raise money for New York City Coalition for the Homeless, for something called Camp Homeward Bound every year. So what we see is there is a consumer connection to that but also, I think almost more importantly right now, an internal connection to that with our employees in feeling like you're part of something that is doing more than just selling a product. So I think, actually, like for us, I really focus on the inside out approach and how that builds internal culture, internal belonging, and internal connection to the overall mission.
ANDREW KAROLYI: Fantastic. Thank you, Field. So you mentioned packaging. So it turns out we've got an expert sitting at the far end of the table that studies labels and packaging. And the big push here is all about clean, healthy, diet-friendly packaging. Consumers are focusing on this more than ever before, Alex. They're motivated towards products that are devoid of artificial ingredients, GMOs, pesticides. There are over commitments some of the major corporations have made-- General Mills, Kellogg's, Nestle, Hershey, Campbell's to name a few.
You've got a study, at least one study that I know of you told me about that focuses on information disclosures that relates to this. Do you want to talk about that or any of the others that you work on in terms of labeling and the consequences of labeling for behavior?
ALEX SUSSKIND: Sure. Absolutely. So I call the study that I'll talk about-- it's a soccer field study. I was-- my oldest son and a professor of economics' youngest son play soccer together. And we were on the soccer field watching our children play. And it was right around the time that the Affordable Care Act, some of the parts of the Affordable Care Act were getting rolled out. And you're all familiar with the restaurant labeling law where, basically, you can't go into a restaurant now without seeing the calorie labels.
Well, they hadn't been rolled out yet in full service restaurants. Some of the municipalities had required the labeling in quick service restaurants like McDonald's and things like that. And we wanted to do an experiment to see if providing consumers with calorie information in full service restaurants where you sit down, where that information really wasn't being provided at the time-- and we wanted to see if there was an influence or an impact on that.
So we-- the great thing about the Hotel School is that we have the Statler Hotel. And there's a restaurant in there, Banfi's. How many have you have eaten in Banfi's? Oh, yeah, OK. Right. Exactly. Were any of you research subjects? Did you fill out a survey for me?
FIELD FAILING: No, I didn't. No.
ALEX SUSSKIND: So we had this experiment where we wanted-- and the students also run a restaurant which is called Establishment now. And depending on when you were at the Hotel School, it had many different names. It was Tea Cab at one time. It was Rhapsody. At another time it was the Rathskeller many, many years ago. So we've been running a restaurant for our-- with our students for a long time.
So we set up these experiments where we-- table by table, we either gave consumers information, calorie information, on all of the menus, or we didn't. So when the table sat, they either got all the calorie information or they didn't. And then we were able to track what they ordered, because the way our point of sales systems work is that it's by seat number. So person 1 sitting in seat 1, we knew what they ordered. And we had them complete surveys. And we asked them questions about their perceptions of health and did they like calorie labeling and things like that.
And what we found is that consumers really actually liked the information. They don't necessarily like it a lot, but they--
--but they like it. In other words, they like knowing where that stands. And so what we're able to-- what we were able to do because we surveyed guests in Taverna Banfi and the Establishment restaurant, we had a really large range. We had over 5,000 guests that we surveyed. So this was a two-year study that we did. Over two years, we collected this information.
And what we found was that if we aggregated the sample, it was quite interesting. But we also found some interesting things about the students versus the non-students that might be in Taverna. So I'll tell you about the students first, just as an anecdote. That I'll talk about the aggregated study, which is probably more interested-- more interesting from a policy perspective.
And so students in the restaurant, believe it or-- when they had the calorie labels, they would trade an appetizer-- in other words, they would give up an appetizer in favor of an alcoholic beverage. Is that a big surprise finding for all of you? Right, exactly. Surprise, surprise. Students gave up appetizers for alcohol. Hm. Rocket science at its best. And so that was interesting and kind of funny in the same way.
But the calories for the appetizers tended to be higher. They were 900, 1,000 calories for these appetizers. And the beverages were about 150. The alcoholic beverages were around 150 or 200 calories. And so they were actually making these conscious choices. And we would ask them specifically, did they use the calorie information in making their decision when they had that-- when they had the calorie information? So that was the student thing.
But all in all what we found was, when the guests had information about calories they ordered about roughly between 5% to 7% fewer calories in total. So that may not sound like a lot, but at the end of the day, if you think about one meal one day of the week, if you're having fewer calories, that-- it's definitely going to have an impact. And my co-author of the study, or at least one of the co-authors, is an economist that studies obesity. And so the idea is that we've been able to demonstrate in a pretty controlled environment that this information does help people make better choices. They're not necessarily happy about seeing the information, but they move away from some of these higher calorie items.
And we had two kinds of consumers when we got the surveys back from them. Some of them would say, well, I saw the calorie information and it really annoyed me a little bit, because I was just trying to have a special meal. And I was going to order the steak that had 15,000 calories, but I decided to get the chicken that only had 800 calories. And so thank you for ruining my dinner.
And so the idea is that information matters. And we've actually all been using information in making decisions in the grocery store for a very long time. And how many of you are label readers in the grocery store? So everyone reads labels. So it makes sense for us to do that in restaurants, as well.
And in our study, we also-- we controlled for a lot of things. And we looked at all the nutrients and everything. And there were really no significant effects for, like, vitamin A versus vitamin C versus sodium. But it was it was actually pretty cool to do that for a couple years.
ANDREW KAROLYI: Jorrie's in charge of, presumably, menu development and things like that in all these Pret A Manger stores. I think I walked past one on Fifth Avenue, and I saw--
JORRIE BRUFFETT: One or two.
ANDREW KAROLYI: --no alcohol options.
ALEX SUSSKIND: I had lunch there today.
ANDREW KAROLYI: [INAUDIBLE] But does any of this resonate for you? Do you think about these things? Or how do you think about labeling issues with respect to diet friendly type of calorie counting?
JORRIE BRUFFETT: Yeah, for sure. So a couple of things-- before Pret, I was with Panera for 10 years, right around when all this legislation was happening. Because we were national, there were places like California that moved more quickly. And so we went ahead and decided to test this ourselves in advance of the national law and to see what happened.
And we found very similar things to your study, which is that people start making different choices when they have full transparency of what's in their food. I think a couple of things is, people-- and I don't know if this holds true in my life. I think it holds true in a lot of people, is you kind of are more strict in the morning. And as the day goes on, you lose your restraint.
And so at breakfast, people are really looking really hard at calories. Women, maybe 250 or less for whatever they're eating. And then it gradually slides off during the day. And so that really helped us inform our breakfast development strategy, is we knew we needed to have some really low calorie things in the morning, but they still want them to taste good and all that kind of stuff.
I think the other thing, though, is-- you talk about the effect on the consumer, but there's a dual effect on us, to your point about how do we think about recipe development. So at Panera, we started thinking, oh, god, we really don't want to put this thing on the menu that has over 1,200 calories on it. We're going to look like that's terrible. So we did a lot of work to say, our benchmark was we're not going to put anything on the menu there's over 1,000 calories.
And so we started doing a lot of work to try to figure out, how do you do that? And I think if you think about this industry, not only restaurants but consumer packaged goods, is everybody who's worked in food science have figured out, there's things that make your brain light up. And it's fat and it's sugar. So no big surprise. And then if you don't know what you're eating, you keep buying that. And so it's thinking about, how do you create things that people are going to crave and want to eat that are healthy?
I think with Pret, we're in a unique situation. It's because we make everything in batches throughout the day. It's packaged already. And so we have to, therefore, disclose a lot more information because of the way the law works. So you'll notice that on our tickets, there's-- we put sugar, we put fat, saturated fat, things like that. So we are even beyond where just the Panera would be, which is having to disclose calories.
And we see that has a big difference. Sugar, now, is obviously a big pain point. I think sodium is another one that people bring up. And so we're constantly, when we're looking at recipe development at the same time we're talking about how it tastes, we're saying, well, what are the calories? And honestly we don't want to be the place that people go and, I don't know, load up on calories. We're not the indulgent place, hopefully. And we control through portion size-- is another way to do that.
ANDREW KAROLYI: I want to go to Field. But you want to jump in with a quick point?
ALEX SUSSKIND: Yeah. Jorrie mentioned the fact that the production side of things change when chefs learn a little bit more about what's in the food. And we saw the same thing at the Taverna and in the student-run restaurant, where when we were putting calories on stuff, the chef-- there was a vegetarian dish on the menu that people were ordering because they thought it was healthy. It was actually the second most highest calorie dish on the menu because of the cheese and the oil and all the stuff that was in there. And so when I put the calories there, they were like, you can't put the calories there. I'm like, no, it's my experiment. You can change the recipe if you want.
But if this is the recipe you're using-- we had the nutritional software. You guys probably use MenuCalc. And we analyzed all the recipes. And the chefs were actually-- they were a little bit grumpy when they saw that some of their wonderful creations that they were pawning off as healthy were the worst things on the menu. And so the steak was number one, because it came with French fries. And then the vegetarian dish was number two. So that's just-- you know.
ANDREW KAROLYI: Field, do you want to jump in? You must-- I mean, you-- it's a new restaurant. You must have-- you didn't have the legacy of all this legislative change and forced change. But you must have been thinking about this as you launched.
JORRIE BRUFFETT: [INAUDIBLE]
FIELD FAILING: Yeah, we're-- yeah, we're still exempt from-- yeah, so we don't have-- we don't have calories on the menu. Although we would put them on the menu. We have them on the website in a pretty transparent way. We work with the nutritionist that we have on retainer so that all of our recipes are analyzed. And as things change, it gets updated. It's not on the menu because changing our menus is such a process that we've just been like, we don't have to do it for now. Let's keep things simple.
But it's-- the story you were telling is kind of funny. So we-- I hired a director of culinary who's a super talented fine dining chef a couple years ago. And there was definitely a learning curve in terms of creating menu items where I would taste things and be like, yeah, that's great, but it tastes a little salty. Or, when we get the nutritionals back on this, it's going to be a problem.
And so there was-- I think there was definitely some friction and a learning curve that our chef had to go through in terms of seeing the output and the data compared to how he'd been taught to cook, which is like-- chefs are taught, like, a pinch more salt. Maybe a little more sugar. A pinch more salt. And then maybe a little bit of salt for love.
And you end up with something with, like, 2,500 milligrams of sodium in it, yeah. And then when you look at the numbers, it's like, whoa. So we're seeing it from, I guess, a different place, which is creating recipes based on taste and look, and does this look like something I would want to eat? And then analyzing them and then going, OK, is it something that makes sense from a numerical standpoint? But it definitely factors into our thinking and has, really, from the get-go.
And in terms of calories, we did, I think very early on, set a similar threshold. Like, 900 felt like a lot. This was not academic at all, but we were like, 900 kind of rounds up to 1,000. So let's say no more than 900. But we were thinking that way, which is, how is the consumer going to react?
ANDREW KAROLYI: Thinking about it. Miguel wants to jump in.
MIGUEL GOMEZ: Yeah. Just two comments. Bringing it to the retailing, food retailing supermarket, what we have seen around the world is that what is working very well is the system of colors. They're green for foods that are good for you, yellow in moderation, red, careful. And this is getting track in terms of legislation.
The other aspect that I want to mention, shifting of our topics a little bit, is that when-- we have done a lot of work with the new plant-based meat substitutes. And it's interestingly, with young people, the message that resonates is not the health message, which is definitely very different. It's the environmental message. That's what they care about. So I think that this shows the balance, this interrelationship between nutrition, environment, and people.
ANDREW KAROLYI: We're going to shift to one more topic, and then I'm-- I want you guys to be saving your questions to bring to them as we're trying to stimulate your thinking here. The third topic, and that relates to the actual marketing and distribution of food, is about this new pressure from direct to consumer food e-commerce. There are industries like consumer electronics, appliances, toys, household products are already well, firmly established in the e-commerce space.
But according to eMarketer, in 2019 food and beverage seems to be one of the slowest industries on the uptake with respect to e-commerce. About 15% of global sales, 2019. We see Amazon moving quickly into this space. Mandalay, General Mills, Pepsi have new e-commerce divisions that they're funding well.
So I guess the question I'm going to pose to Miguel and Alex right off the top, here, is, what big trends are you seeing here? Or do you agree with this-- these perceptions here about the fact that this is not taking up? And then maybe we'll shift to you guys and talk about where you're feeling this, as well, this shift.
MIGUEL GOMEZ: This is a very big topic of research even for us. So I will just be very brief. This is reshaping. And I'm talking about food distribution in the supermarket sector, because yes, in the next five years, we are going to take a huge-- we are going to see a huge increase in groceries, even perishable goods available delivered at home.
And I think this is, all the retailers are jumping into what we call omnichannel strategies, really merging the brick and mortar strategy with the online strategy. And that's not simple. There is a lot of research going on-- what is the best-- what are the synergies between online presence and brick and mortar presence?
These-- perhaps the biggest headache is for suppliers, because as a supplier you need to be more responsive, be ready to deliver small-- smaller sizes of, batches of-- for transportation more frequent, with all the uncertainties that we have in the agricultural sector. So this is shaping-- is exciting. Is consumer driven. But it's-- I think it's the most challenging issue for the supermarket sector.
ANDREW KAROLYI: Alex?
ALEX SUSSKIND: Well, and likewise, for the restaurant side of the business, food is perishable. And it's not-- you talk about consumer goods. Well, your little iPod, you can put that in a box and you can leave it or ship it or-- it'll be fine. But broccoli or steaks or whatever else that you're trying to ship, it has a shelf life. And it deteriorates very quickly. So these are things that the suppliers are wrestling with, is finding the best way to get the food to the consumers, particularly through these other channels.
And they're adding-- a lot of restaurants-- a lot of restaurants are adding these. I think they call them dark restaurants. Do you have--
JORRIE BRUFFETT: Dark kitchens?
ALEX SUSSKIND: Yeah, dark kitchens--
FIELD FAILING: [INAUDIBLE]
ALEX SUSSKIND: --where, basically, that there are units that are not open to the consumers except through delivery. And so basically, food is produced-- they find a location that's better for the distribution of the product. And that way, the consumers don't go into that operation. And it can service a larger area more efficiently.
And so we're seeing restaurant-- restaurant companies and food production companies doing that to meet the demand. And delivery is huge. It's just one of the largest growth vehicles for, at least, the prepared restaurant food side of the business. But it comes with challenges, because we have all these third-party operators.
And these guys will get grumpy when I mention third-party operators, because they're taking a slice of the profits in order to basically get the food to the consumers. And so you already have a low margin business. And then take another 10% or 15% away from that, and there's not much left.
ANDREW KAROLYI: Field, what do you really think about third-party operators?
FIELD FAILING: How many hours do we have?
I think a lot of things, not all bad, not all good. I think that they've become a very necessary part of our business. And it is incremental to our bottom line. You have to fight for those dollars a lot harder. But it is becoming, I think, as we understand how to use it, a better tool.
The ghost kitchens that you were just mentioning is, I think, the next wave of how to utilize third-party delivery, which is, as Alex was saying, no storefronts. It's a more efficient operation. It's also a lot less rent if you put in a basement instead of prime real estate in New York City.
What we're seeing from it-- so on the e-commerce topic, though, I think that the restaurant business is going through exactly the same transformation that the retail business went through. It's just 10 years behind. So, but it's going to happen on the same cadence and exactly the same way, which is the in-store experience becomes a lot more experiential. And people that are going into a store are looking for some kind of experience, to interact with a human, to touch and feel a product. And then everything else is online.
So that's-- so delivery and ghost kitchens and everything we're probably about to talk about is the manifestation of that in the restaurant business, which is like, if you want your food like that, you can order it on your phone. If you need to go taste the food, if you need to talk to a human, there is a restaurant there. But there are less of them than there used to be. And they are designed for that experience. So we're-- I mean, as we just opened new restaurants, we're thinking, how do we make this a lot more experiential and then also be able to service, effectively, e-commerce delivery, as well?
ANDREW KAROLYI: So, Jorrie, last I checked Pret A Manger means ready to eat.
JORRIE BRUFFETT: Yes.
ANDREW KAROLYI: So this is the whole reason for being for this company, right? So how do you think about this stuff?
JORRIE BRUFFETT: Well, I think it's interesting, because-- so our point of difference, obviously, was grab-and-go convenience. And we're the analog of, basically, order ahead. So that's-- in the '80s and '90s, you didn't have a phone, you could walk into Pret and get it faster than anybody else. And it's fresh. No, we don't have some place in Brooklyn. They're all made in kitchens in the shops. So-- but as people get delivery and order ahead, it does take that advantage away from us.
So-- but then, on the flip side, if people have an issue with, oh, your food's not made right in front of me, well, nobody's food is made right in front of them anymore. Sweetgreens, your food is sitting out there for I don't even know how long, or whenever they decided to make it. So I think the reality is, there's good and bad, to your point, with all these changes.
I do agree that-- I kind of think, at some point, people want a human interaction, especially at lunch. Places like Manhattan, you're-- like, I physically have to be like, slow down. Like, I'm just walking and-- you know? And so I think there's times where people want to figure out how to slow down. They want to have human interaction. They maybe don't want to-- it's like this alone together thing. So maybe you don't want to have lunch with somebody, but you want to go sit someplace and be surrounded by other people, even if you're on your phone or whatever.
And so I think having those spaces where you can go and enjoy a meal-- that's kind of the most quintessential human thing to do is sit down and share food or break bread with somebody. And I hope that's not going to go away, because that's kind of fundamental to society. So I think there's a place for all these digital things, but I think, at the same time, there's probably a limit. At least, I hope there is.
ANDREW KAROLYI: Fantastic. Well, ladies and gentlemen, we have Sarah Andress in the back, has a microphone. And Laura-- Lauren Fitzpatrick has a microphone. If you have a question, please put up your hand. I guess I'll be the-- I'll be the-- I don't know what I'll be, the director here. Do you want to open? Is that what you want to do?
AUDIENCE: Yes. I've got a question from the livestream audience. We've got almost 100 people listening.
ANDREW KAROLYI: 100 people. Fantastic. Hello, everybody.
AUDIENCE: And this is from Dr. Janet Helms. She's CALS '88 and MBA '07. And it's a two-part question. So the first one is directed towards Cornell faculty, and the second one towards Jorrie and Field. So, "I am interested in food from the soil, crop, and animal production level. How has this business of food involved the College of Ag and Life Sciences, human ecology, and the vet school?" And the second part is, "I would like to hear more about the animal welfare programs at Pret and the chicken restaurant. How have you integrated animal welfare into your business model and how have you supported animal welfare improvements at the farm level?"
ANDREW KAROLYI: OK. OK. There's a couple of punchy questions. Go. On the CALS side-- I like it. I like it.
You need to pick up the one on the soil science and the food science one.
MIGUEL GOMEZ: Yeah. No, this has prompted collaboration between the College of Business and CALS, definitely. And it has been one of the most exciting things for me, as an applied economist. Just to give me a-- give you an example, we are engaged with the SIPS, the School of Integrated Plant Science, on a project supported by NSF looking at hyper-local controlled environment agriculture-- factory farms, vertical farms, many you see here in Manhattan, and looking at the economics, but also the environmental impacts of having hyper-local production of vegetables.
And it has been interesting. We are finding, for example, that we use much less water. But we are still too much expensive, and our emissions are higher when we are so hyper local unless we locate the greenhouse or the factory 100 miles away, or between 50 and 100 miles away, where we can gain more economies of scale.
So that's a combination of-- why do I bring this example? Because a combination of science based, we have at Cornell a very strong group, very, very strong, vibrant group looking at controlled environment and digital agriculture with the business side. So I think, through the business of food, we have [INAUDIBLE]
ANDREW KAROLYI: You've got people coming in. Are they-- there are people in the theme that are spilling over from food science and soil science and joining some of the events?
MIGUEL GOMEZ: In our theme, yes. About, I will say, one third of the faculty involved are from--
ANDREW KAROLYI: Nutrition.
MIGUEL GOMEZ: --from nutrition, from CALS, from food science, and from the School of Integrated Plant Sciences.
ANDREW KAROLYI: Can you repeat the second question?
ALEX SUSSKIND: The hops growers, too.
MIGUEL GOMEZ: Huh?
ALEX SUSSKIND: The hops growers for the beer industry are also--
MIGUEL GOMEZ: Yes.
ALEX SUSSKIND: --really looking at this, as well, too, with us in the Business--
ANDREW KAROLYI: Can we repeat, for Jorrie and Field, the second question?
ANDREW KAROLYI: Yeah.
AUDIENCE: OK. "I would like to hear more about the animal welfare programs at Pret and the chicken restaurant. How have you integrated animal welfare into your business model? And how have you supported animal welfare improvements at the farm level?"
JORRIE BRUFFETT: So I think for us, again, being based in the UK and then bringing the business to the US, again, the practices in the UK and in Europe are far superior to where they are in the US. So we start with that as a base and do our best to try and source them here.
I would say we run into difficulties with actually finding people at the same standard as what our European and UK counterparts have. So we do cage free chicken-- I mean, eggs. And then-- not cage free chicken. Cage free eggs. Chicken we try to buy GAP 2 or humane certified. Our pork is all humane certified through Niman Ranch. So we try to-- we try to-- all our dairy milk is organic. So we try to do all these things where we can.
And it's not usually a commercial decision, because our standard is we try to buy high welfare things. Sometimes it's a question of supply and demand. And this is where it's tough. The bigger you get, the supply chain here is not as well set up for these things. So we're hoping to continue to influence that.
We visit all our farms ourselves to try and ensure that they're doing what they should. But they have a long way to go here. I mean, you could probably talk more about chicken than I can. But even saying something like GAP 2 or humanely raised, it's not what you would think it would be when you go. And not a pleasant thing to talk about, but the kill stuff is not really what it should be. There's things called controlled atmosphere stunning that's a lot more humane than electrocution. But the standards here are just different.
So there's a long way to go. And I think we just do our best by trying to source those things. But we need bigger companies to be doing the same thing to start influencing.
ANDREW KAROLYI: Field's Good Chicken is the name of the restaurant.
JORRIE BRUFFETT: Yeah.
FIELD FAILING: Yeah. So on the-- yes, on the chicken side--
So we've approached animal welfare, I think, very-- in a very straightforward way, which is, this is our standard. And we won't ever compromise. So it's antibiotic free, humanely raised. And humanely raised by-- Jorrie mentioned, by Global Animal Partnership, which is GAP-- GAP level 2. And that specifies the living conditions for the chicken and the entire process that the animal goes through.
So we've just said, for no reason will we ever compromise below that. And we will continue to try to improve it. But I think it's actually a fairly black and white issue for us, and something that we're just-- this is it. It would be very easy to pick up a number of points in our margin by going to a less humanely raised product. But then I wouldn't want to be in that business.
But, yeah, there's-- as Jorrie says, there's a lot of opportunity. I've been out to every chicken-- we've changed chicken suppliers a number of times. I've visited probably every major chicken supplier in this half of America and have been to-- we always visit the farms and the processing facilities and see the entire supply chain. And at the end of the day, my gut check is really just, how do I feel about it? If it meets all of our criteria, do I feel OK serving this product? Everything that I've seen, is this-- does this sit well with me? That's, at the end of the day, where it has to be, where I have to land. So.
ANDREW KAROLYI: Somebody from the audience. Lauren. How about in the back there? Yes.
ANDREW KAROLYI: Tell us your name.
AUDIENCE: Franco Morra, Graduated in MBA 2012. So it's a two-part question. One is, how do you set up a company? So it depends on, were you a startup or more functional company. How do you set up alignment with the equity holders of saying, yeah, I'm going to dump 10, 12, 15, whatever the number is of your margin because we're doing ecological, sustainable things? So that's part one. And then part two is, how do you tie that with potential sales?
JORRIE BRUFFETT: I think for us, globally, we make decisions on things we're going to invest in and what we believe in. And then we just plan that into our annual investments that we make. And so the food-- again, we have our standards. We live by those standards. And that's just the reality of it. And then we decide to make certain investments in things like-- obviously, every restaurant uses a lot of packaging.
And so we're trying to move to 100% recycled content plastic. That's an investment. It's not cheaper, but as a company, we believe it's the right thing to do. So we just make it work. I mean, there's other things you have to go after. So there's things that I think you're willing to compromise on, and there are things that you aren't. And so those are the areas that we won't compromise on.
And I forgot the second part of your question.
AUDIENCE: Well, it's more of--
JORRIE BRUFFETT: How do you do-- oh, the sales side of it. I mean, honestly, I-- every research study, with all respect, I've ever saw that everybody says, oh, I'll definitely pay more for that if you do X, Y, Z-- in practice, I'm not so sure people do or not. So I think you have to do these things because you fundamentally believe they're important to your company and they're part of the fabric of what you want your brand to stand for.
And then, over time, I think you build a reputation. And people, as they become loyal customers, believe in you because you stand for those things. But I think it's very hard to say, oh, we decided to sell GAP level 2 chicken, so now I'm going to charge you 40 cents more on your sandwich and think that people are really going to just jump right into that. So I think you have to be in it for the long term. It can't be a short-term marketing stunt, if you will.
ANDREW KAROLYI: Do you want to add anything?
FIELD FAILING: Yeah. I think from the startup, small business side of things, it's-- I think, in hindsight, it's very important to start with the right investor who is aligned with you on these kinds of things. If they are aligned, it's easy. If they're not aligned, it'll never work. So having someone that understands that the moral fabric of the business is just as important as the profitability and that those two, when done well, merge into great businesses-- and if you're in it for the long haul, that's-- the best brands, best businesses are ones that have been able to marry social responsibility and profitability and a good business model together without spiting one of the other. So that would be my--
ANDREW KAROLYI: To Franco, in preparation for this, we actually-- there was this Forbes article on-- in early February, about three weeks ago, that was actually talking about this. This is the finance guy talking. Institutional investors now, there's shifting winds. So there's this group of institutional investors called FAIRR, F-A-I-R-R-- I encourage anybody to read this-- Farm Animal Investment Risk and Return, that is actually working with corporates that are in the food space to try and compel-- it's instead of worrying about the bottom line. They're actually compelling better practices, or seeking to compel better practice or more discipline with respect to water withdrawals and things like that. So I don't know if you sense the same thing. Maybe their investor sentiments are shifting that way.
Let's go to another question. Can we come to the middle here, Lauren, maybe? This lady in the fourth row, here. Thank you. Introduction, please, first.
AUDIENCE: Hi. I'm Carolina Abel. Nice to meet you. I have a question with respect to, how do you manage to pass on your environmentally friendly or whatever message it is to your employees? I come from a business, a coffee business. So I can relate to one of our panelists. And the difficulty that we often face is that employees tend to be college students or college graduates who stick around for a year, for two years, perhaps three, but that's pushing it. And so how do you manage to help people care about the message you're trying to convey and pass that onto the consumer, which is really the main goal?
ANDREW KAROLYI: Good question. Good question. You actually mentioned this, Field, in our call. You want to comment on this?
FIELD FAILING: Yeah. I think we just-- we talk about it internally a lot, and wherever we can. It starts-- so we do orientation for every new hire. And I-- we're small enough, fortunately, now that I am the one that gives the orientation. Hopefully I'll do that for as long as I can.
But sustainability is an important piece of that. And we-- a whole section of that presentation is on, this is where our packaging comes from. This is how we think about chicken sourcing. This is why we do 1% for the Planet. And start from day one talking about sustainability with them so that they start to buy into that company ethos. And that's part of the fabric of who we are as a company.
And then it just needs to be repeated. So it's-- with us, it's we're bringing it up with managers constantly. It's constantly talked about in our all hands meetings. And we're always looking for ways to be more sustainable. And so it creates this constant drumbeat where I think our employees realize, yeah, we're part of a company that cares about this stuff. But I think it's something that you just have to constantly shout from the rooftops inside your company.
ANDREW KAROLYI: Jorrie, do you have any training programs that talk about these dimensions?
JORRIE BRUFFETT: Same-- from day one, you hear about programs. Pret also has its own foundation. And so we-- one of our missions is around food insecurity. And so we donate a certain percentage of products towards food insecurity in the communities we operate in. All of our food, at the end of the night, goes to-- in New York, it goes to City Harvest. But we have a food donation partner in every city that we're in.
And so I think we talk about it, and then because in our shops they're taking donations, they see that. And then they're giving-- packaging the food at the end of the night. It reinforces what we're talking about. So they're part of that. We do company volunteer days. And so I think it's talking about it and then giving them ways to be involved in it helps to keep perpetuating the culture of it.
ANDREW KAROLYI: Miguel, one of the things you do is you run something called the Food Industry Management Program. You train a lot of executives in this space. Does this-- do you know if this comes up ever, talking about getting inside the head of your employees and how they think about the practices? Does that come up in any of the discussions?
MIGUEL GOMEZ: Yes, definitely on the message and the actual actions of companies towards being more sustainable to creating a culture of sustainability, definitely. It's that important that in our-- this year, in our executive programs, we include one complete session on-- that we call Food Systems for Sustainability. And when you go to those sessions, you can almost not speak because all the executives are sharing experiences, their challenges. So I think it's definitely in the mind of every leader in the industry. And there is not a clear answer.
ANDREW KAROLYI: Alex, thought? Anything?
ALEX SUSSKIND: Well, it's culture. You have to build the culture of your organization. And it's not just words on paper. You have to do the things every day, that if you talk about sustainability and you don't do it, you don't embrace it, then your employees will never do that. So it's really just about doing what you say you're going to do and finding the things that matter.
And you also have to hire the right people. If you don't get the right people to work with you, they'll never be able to achieve the things that you want them to. So that's really what it comes down to.
ANDREW KAROLYI: Where's Lauren? Can we go over to this side of the room, Lauren? Fair is fair, right? Maybe over in the far side over there. Thank you.
AUDIENCE: Hi. My name's Asia Zani. I'm with Danone North America. I have a question about the certifications that I think you guys had all referenced separately earlier on. So I know there's a lot of skepticism in the food industry. There are a lot of third party certifications out there. But many times I think people think that the word organic means the same thing as natural, for example. And one of those is defined by legislation and one of them isn't for most FDA regulated products.
So I'm just curious how you deal with consumer understanding. It's great to have a lot of certifications, but how do you explain what that means, ultimately, to the consumer, in an effective way that's also trustworthy? Because I know there's also a lot of food industry lawsuits that I'm sure the lawyers in the room are aware of, as well.
ANDREW KAROLYI: There are a few, right? Did you want to-- I think that's-- those are directed to you guys. Do you want to take that on?
JORRIE BRUFFETT: Yeah. And-- oh.
FIELD FAILING: No, go ahead.
ANDREW KAROLYI: Certifications, legal, regulatory.
JORRIE BRUFFETT: Yeah.
FIELD FAILING: It's a lot. Honestly, it's difficult to navigate. I think what I-- what we're seeing is, I think, there's a very miseducated consumer out there because of these kinds of things. One of the-- so I think an example that still drives me a little bit crazy is the distinction between what is free range chicken is a door that's, like, this big so that they have access to the outdoors, at least, I think, 12 hours a day or something like that. And then-- so that's it.
And then I go out to these chicken farms and you see all the chicken inside because it's warmer inside. And so all the doors are open, and consumers are paying extra and being sold this-- basically, this marketing message, free range chicken. And the chickens aren't free ranging. And then you go to a--
--a barn that's literally on the same farm that is the--
JORRIE BRUFFETT: Don't make me free range.
FIELD FAILING: --that's non free range-- yeah. Yeah. And you're like, why-- yeah. Why is this? They're like, well, if they go outside, the hawk might eat them. There are very good reasons why they're not free ranging. It's crazy. But it has been packaged very neatly into a marketing message.
So I think in terms of on the lawsuit side, we just try to stay super transparent. And what it is is-- we say what it is. We try not to hang our hat too much on those kinds of things, too. And we try to focus more on just sourcing really good quality ingredients and creating food that we're proud of and less on food that we can list, well, it's this and it's this and it's this and it's this. But I think what you bring up is a major challenge in the industry right now, which is educating the consumer on what their food actually is and stripping away from all the BS.
ANDREW KAROLYI: Should we go up for another question on livestream? Is there another one you've got handy? Just want to make sure they're not forgotten.
AUDIENCE: Yes, of course. So this is from Jonathan Pacman, Hotel School MMH '99. And he says, "hi, Alex."
ALEX SUSSKIND: Hi, Jonathan, wherever you are.
AUDIENCE: And this question is for Miguel.
ALEX SUSSKIND: Ask him where he is right now.
AUDIENCE: Where are you, Jonathan? I'll tell you in a second if he answers. "What is the value"-- so this is for Miguel. "What is the value of local to consumers? And how much are consumers willing to pay a premium for locally-grown food in grocery stores and in restaurants?"
MIGUEL GOMEZ: That's a very good question. So building on what my colleagues just answered, there is so much confusion of what is local. Some people think it's organic. Is it family farm grown? Is it 30 miles, 100 miles in the same country? And so there is a whole range. And you ask have done research asking consumers-- means different things for different people.
Some consumers think that we have local coffee, and the coffee is coming from Africa. But there is a local coffee roster that goes and buys it, and it's a local business. So it's all over the place.
However, what I have to say about local-- it's an important attribute. We care. And I would say all the research that we have done, we have learned that if you are a local product you have an advantage if you are different. Let me give you an example. Apples, New York state apples-- if you produce heirloom varieties, very, very, very traditional varieties, that's a local variety that will always get a premium.
At the consumer side-- and again, this is true. When you ask consumers in hypothetical situations, they tell you they pay between 10 to 20-- 10% to 15% premium. The supermarket is less, but they will prefer the local product than the other products, everything else equal. So there is a little bit of a premium willingness to buy from consumer. But at least in the supermarket sector, we see that there is very little willingness to pay price premium from the buyer to a grower except when you are a natural food store.
And I suspect in the-- in the restaurant industry, there is a little bit more flexibility on the local, because you are selling a product that is much more differentiated to restaurants. So there is more possibility of getting a price premium for the grower in terms of local. We see that being the hyper-local micro greens produced here in New York City, produced very close to here or in Brooklyn.
ANDREW KAROLYI: Anybody want to add anything?
JORRIE BRUFFETT: I just think it's tough. I think consumers want to buy local, but the reality is they also want to eat lettuce year-round. So in the summer, you can get lettuce from the North Fork of Long Island, and it's beautiful and great. But if you want to eat a salad in the winter, it's coming from Yuma, Arizona, or Salinas at a different time of the year. So I think if we want to really be local then we have to look at our own eating habits and go back to canning and pickling. I don't know.
MIGUEL GOMEZ: That's not going to happen.
JORRIE BRUFFETT: No, and that's not going to happen. And I think the other thing is, back to the marketing--
ANDREW KAROLYI: I see you.
JORRIE BRUFFETT: --point somebody made, you have to be careful about when people say marketing, when you look-- or, local, you look into it and they might be a 250, 500 mile radius. So I think it's a pretty abused term.
ANDREW KAROLYI: Please, right here, Lauren. Can we--
AUDIENCE: Jonathan would also like you to know that he's in Berkeley.
ANDREW KAROLYI: He's in Berkeley.
ALEX SUSSKIND: Oh, Berkeley.
AUDIENCE: I'm a nutritionist. And to add to what you both said, New York City has farmer's markets during the mild months in low-income communities as well as high. They are more expensive. People bring their EBT cards and they buy more expensive produce because it is local and fresher. And if it's fresher, it's more nutritious.
My question is about the delivery-- combining brick and mortar and home delivery. And one of the hallmarks-- well, first of all, the shopping determines the cooking, which determines the health of the eating public. And since the 20th century, into the 21st, unreliability is the name of the game in produce in the supermarkets. It can be advertised, but it might not have come in. And it might not come in as pictured, as envisioned. And so there has to be a substitution. How will these ghost kitchens and this delivery address the unreliability of the supply chain?
ANDREW KAROLYI: Very good.
FIELD FAILING: So I think what's happening is, there's a really interesting revolution happening with the food supply chain right now that is really just at the very forefront. But the entire supply chain is getting squished, like this. And so if you start from the very beginning, imagine you have vertical farms where produce is actually grown indoors in cities and harvested by automated equipment.
And it can be grown in a very controlled environment and can be harvested fresh every day. And it's literally in the city in a building. So then it can be sent directly to the farmer's market. Or it can be sent to a restaurant or to a ghost kitchen that's right down the street. And then the food can be prepared there. And ultimately, it can then be delivered by drone, when that comes, which is probably not that far away, to someone's house in the suburbs or here in New York City.
And you can-- you actually take the miles between the product, which is where freshness really evaporates, and you end up bringing the food very close to the consumer. So the whole food supply chain, I think, is going to change pretty dramatically over the next several years. And it will result in fresher food being available to many more people. And then, ultimately, that will also start to drop the price on fresh food and produce, too. We've got a few years before that happens.
AUDIENCE: Will it be adequate to feed 8 and 1/2 million people?
FIELD FAILING: Will it be adequate to feed 8 and 1/2 million people? I hope so. I think the whole food supply chain has a very long ways to go and is very, very, very complicated for a number of reasons-- not just the supply chain itself, but the way the government is involved. So we have a long ways to go. But it will definitely, I think, make-- it will improve food accessibility significantly.
ANDREW KAROLYI: We've got time for maybe a couple more here. Can you come up to the front here?
AUDIENCE: Yeah. I--
ANDREW KAROLYI: Hold on. Wait for the microphone, because we want everybody to-- on livestream to hear you.
AUDIENCE: Hi. I'm a guest. I'm a parent of a Cornell student. Lots of talk about supply chains. But can you give me a rule of thumb-- and I realize it varies a lot. But if you have a basket of blueberries that sells for a buck at the grocery store, how does that dollar get allocated by the different people in the supply chain?
MIGUEL GOMEZ: So I do research on that, so I will take-- so that dollar that you spend--
ANDREW KAROLYI: You wondered why we picked you?
MIGUEL GOMEZ: --approximately $0.15 go to the grower. A supermarket, if it is integrated self-distributing supermarket with a distribution center, about half of the value, $0.50, stays there. Transportation is about $0.13. And intermediaries, other intermediaries, are the balance. So only $0.15 to the grower.
Now that they are being-- so what is growing is the value that you pay for the service of convenience, of bringing the product, of packaging, of everything that is going on. Not that they grow it is getting less money for the pound of blueberries. It's because the other aspects beyond the farm gate is where 85% of the value is being created.
ANDREW KAROLYI: Let's take one more. How about in the back? Thank you all for your questions. I'm sorry we can't take them all. Right in the back, right there. Right there. Yeah. Thank you.
AUDIENCE: Hi. I'm Morgan.
ANDREW KAROLYI: Introduce yourself. Yeah.
AUDIENCE: I'm Morgan. I graduated 2016 from the college of arts and sciences. I'm wondering if you guys can speak a little bit to the trend of alternative proteins and how you see that with respect to building out your menus, and if that's something, if at all, that you're considering with growing animal welfare concerns, sustainability, public health crises, that type of thing. Especially with a company with chicken in the title, I imagine it's probably pretty tough if you're going to move towards a plant-based menu offering or cultivated chicken or that type of thing. But thoughts on that?
JORRIE BRUFFETT: So I think it-- to me, it goes beyond the alternative proteins, which I think are great. But it's just, I think, more about encouraging people to eat more vegetarian and vegan when they can. So we focus a lot on, how do we-- with every menu relaunch, how can we create more vegetarian items, more vegan items? Plant-based milk-- we took the charge away. We don't charge for that. I think we're one of the only people, because we're trying to say, look, it's better. Why are we singling you out?
So I think the whole plant-based meat thing is great, because I think it gets people who wouldn't just eat straight vegetarian, maybe, over the line and into that habit. But from a sustainability standpoint, we should all be trying to eat-- and your own health, eat less meat. It's one of the best things we can do.
So we have a sub-brand in the UK called Veggie Pret. So I'm hopeful that we'll have one here. We're trying to build up our vegetarian base to try and hopefully get there. So I think we're going to all have to think about that. So I think it's great. It gets people in the boat, so to speak.
FIELD FAILING: Yeah, I'm all for it. I'm waiting for a great chicken alternative, which doesn't exist yet. So when Impossible Chicken comes out, we'll be--
--starting R&D very quickly. But we also-- I mean, vegetables are a very important part of our menu. It's something we-- like Jorrie was saying, we have added and added and added, and were always central to the concept.
So we have a great vegetarian plate. I actually think you can eat vegetarian and vegan better at our restaurant than many restaurants in New York City. So we cater to both. And I think I'm in favor of the plant-based meat alternatives for exactly that reason. If they get people over, they open up doors to people. I think that's-- I think that's great. So they will have a place on our menu once it fits chicken.
ANDREW KAROLYI: Well, I learned a ton. I don't know about you guys. We have-- first of all, I'd like to say, and maybe ask all of you to join me in saying a special thank you to my colleagues, Miguel, Alex. We are really proud to have you in the college, leading the charge on this super important topic. Look at all the people you've brought out tonight and online. Thank you.
Jorrie, Field, you make us proud. Continued success. Small token of our appreciation for--
JORRIE BRUFFETT: Thank you.
ANDREW KAROLYI: --coming and participating. And--
FIELD FAILING: Thank you.
ANDREW KAROLYI: [INAUDIBLE].
I'll just jump down here. And I want to say on behalf-- and maybe, if you don't mind joining with me also to thank the people that are behind the scenes, Lauren Fitzpatrick, Sarah Andress, that did all the work to really make this happen.
We are grateful. And to everybody online and all those of you that took your evening to be with us, hopefully Cornell's making you proud. And come back to the next event. Thank you.
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