Food Waste Blind Spots

Almost like a celebrity on a red carpet, food waste has begun to receive significant attention within the foodservice industry. This has occurred, in part, as a result of increased interest in foodservice sustainability and early regulatory requirements to remove food waste from landfills in places like Seattle and San Francisco.

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Andrew ShakmanAndrew Shakman, President and CEO LeanPath ConsultingWith the spotlight shining bright, many foodservice operators feel motivated to implement solutions. However, just as any bright light can be temporarily blinding, our industry has developed several food waste blind spots. By focusing in the wrong areas, we miss major financial and environmental opportunities. Fortunately, these blind spots disappear quickly once your eyes adjust to the full range of strategies available to combat food waste.

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A Global Problem of Breathtaking Scope

Just how large of a problem is food waste? There are numerous estimates, but they all suggest between 30 percent and 40 percent of the food we produce becomes waste somewhere in the supply chain from production to consumption. Globally, this represents 2.6 trillion pounds of food waste according to the Food and Agriculture Organization of the United Nations. The respected global management consulting firm McKinsey & Company recently published a report identifying economic opportunities linked to more productive use of natural resources. McKinsey ranked 130 resource inefficiency areas and concluded food waste represents the third largest economic opportunity globally, amounting to $252 billion dollars. Focusing just on the U.S. out-of-home restaurant and foodservice industry, LeanPath estimates between $8 billion and $20 billion of waste occurs at the pre-consumer level — this includes losses before food ever reaches a guest, including overproduction, spoilage, expiration and trimmings.

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The Food Cost Conundrum

Food costs have increased 42 percent during the last ten years according to the U.S. Producer Price Index for finished consumer foods. Much of this increase occurred in recent years, placing intense pressure on foodservice operators. While food costs will always fluctuate, we're likely to continue operating in a high food cost environment for the long-term. The reasons for this are vast, including the increasing global demand for protein-heavy American diets, deceleration of crop yield growth, high cost of petroleum inputs, scarcity in certain livestock populations, population growth and climate change impacts. Foodservice operators will have to find a way to not only survive but thrive in this high-cost environment.

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Many foodservice operators may approach this problem by finding offsetting and painful cost reductions, raising prices despite a sluggish economy, or accepting lower profitability. None of these options are desirable, because they all involve a reduction in value to either the customer or the operator.

Which brings us to the first industry blind spot: food waste kills foodservice operators' bottom lines more than many recognize, and this destruction only increases as food costs rise. LeanPath data shows between 4 percent and 10 percent of the food operators purchase becomes pre-consumer food waste, which is highly preventable in many cases. Just imagine 4 percent to 10 percent of the gas you purchase leaking out onto the road before your car moves an inch. If operators reduce this pre-consumer food waste, they would pull dollars out of the garbage and put them back into their businesses in the form of cost offsets, higher profits, higher quality menu offerings, and promotional efforts to drive revenue. While this may be clear to many, the industry conversation about food cost control during these tough times focuses heavily on menu adjustments, purchasing contracts, portion sizes, and other painful actions.

Food waste represents one of the easiest areas to obtain savings because it provides a leveraged return: when we waste food, we pay three times for each item. First, we pay for the food itself: raw, processed or finished goods. We pay a second time with operating expenses on labor and utilities, all needed to receive, hold, prepare, cook, serve, clean up and pay bills linked to food waste. Finally, we pay a third time for a garbage or compost hauler to take the item away. Food waste is the lowest hanging fruit on the food cost control tree.

Right Problem, Flawed Solutions

Whether for reasons of sustainability, regulatory pressure or cost control, many operators want to do something about food waste. They often focus first on tangible and visible food waste options like composting and on-site processing equipment. Composting is a valuable activity which produces a useful soil amendment and closes the loop from farm to table back to the farm. On-site processing solutions can reduce hauling costs. Both of these activities divert food waste from landfills, but neither packs the most powerful punch. For that, we need to consult the U.S. Environmental Protection Agency's food waste recovery hierarchy. It organizes and prioritizes various food waste strategies and clearly states that source reduction represents the most effective solution to eliminating food waste. Yet source reduction — which is synonymous with prevention, reduction and waste minimization — is neither visible nor tangible, and often overlooked.

Food waste prevention represents the second major industry blind spot. The enthusiasm about diversion activities has drawn attention from the most effective solution. Many operators deserve credit for working on the food waste challenge, but they may define diversion as success, which is a highly flawed solution. As the late environmental scientist Donella Meadows cautioned, "Be especially careful not to confuse effort with result or you will end up with a system that is producing effort, not result."

If we focus solely on diversion, it's a lot like ignoring a broken, gushing pipe in your kitchen while setting to work mopping up the water. We will never make progress with that approach, always dealing with the symptoms of food waste rather than the underlying causes. Worse, we only have room for a limited number of programs, so a diversion program can consume all the resources, leaving nothing for a higher-value prevention effort.

How to Win the Food Waste Battle

For those who see the value of food waste to control costs and for those who prioritize prevention above diversion, there remains a third blind spot to consider: waste prevention. Operators know they can resolve most food waste issues by working to change processes, people, products or equipment. These adjustments should positively influence future behavior. But how do we prevent food waste? What tools and methods exist beyond the chef "keeping a close eye" on the problem? Some operators will conclude there's no systemic answer, and they may consign themselves to a world with too much food waste. Fortunately, hope should not be lost. There are two major ways to prevent food waste.

The first waste prevention strategy involves culture change, since work culture can overwhelm and stymie even the most enlightened new idea. Many foodservice employees believe that food waste signifies poor performance or incompetence. They worry that food waste reflects poorly on them, and as a result the work culture suppresses discussion of waste out of fear. Without open and transparent discussion, it's impossible to reduce pre-consumer food waste. De-stigmatizing food waste represents the first step toward a more realistic and productive work culture. Publicly communicate that food waste is undesirable, but that every operation struggles with it and the best operations do so candidly. Reinforce that management understands that no employee wants to waste food and that anyone talking about food waste (even things they prepared) is part of an important improvement process. Keep it positive, and make sure all managers walk this talk. With this foundation, you can begin to dig deeper into the problem with support from your team.

The second waste prevention strategy involves data. Pre-consumer food waste reduction relies on data. With accurate, detailed information you can diagnose problems, set a baseline, compare your progress and engage your team in the effort. To get this data, you need to implement a daily pre-consumer food waste tracking protocol, using either automated food waste tracking systems or manual paper processes. Done correctly, this will not add labor costs and it will give you the power to manage food waste prevention efforts every day. The Basic Law of Food Waste Tracking is this: You must track sufficient detail to be able to drive behavior change. At a minimum, this usually means tracking 1) what food was discarded, 2) how much was lost, and 3) why it was lost (e.g. overproduction, spoilage, expiration, trim waste).

With that data in hand, you can raise awareness of the problem areas while setting very specific goals for improvement, e.g., we will reduce the number of wasted pizza slices by 75 percent within one week. For example, you may find a consistent gap between your forecasted pizza production and actual production. Perhaps a staff member pads production levels by five pizzas to avoid running out, never realizing the manager already included three extra pizzas in the forecast to be safe. Your ongoing tracking will help identify this issue, focus employee behavior on the correct action, and show how behavior changes as you work to meet the goal.

While many operators will be able to avoid these blind spots altogether, it's helpful to remember they exist and consciously build them into your plans. Target food waste as the first step toward food cost control. Always emphasize prevention above diversion. And confidently pursue prevention through a combination of culture change and data-driven problem solving. With these approaches, you will save significant dollars, help the environment and strengthen your operation.

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