Research shows a clear-cut financial case for businesses to take action. By Nick Hughes.
There are many good reasons why food businesses should tackle food waste: to comply with waste regulations, to build stakeholder relationships or simply through a sense of ethical responsibility. The financial case for food waste reduction, however, has always been harder to pin down.
Although it stands to reason that spending less on food and its disposal is an obvious way to cut costs, is the saving large enough to justify the additional expenditure needed to sustain a long-term reduction in food waste?
Research from the Champions 12.3 coalition of governments, businesses, international organisations, research institutions, farmer groups, and civil society, suggests the answer is a definitive yes.
The group aims to help achieve target 12.3 of the UN Sustainable Development Goals: of cutting in half per capita global food waste at the retail and consumer level. It published a report in 2017 that showed food sites, including caterers, retailers and manufacturers, could reasonably expect to save a staggering $14 for every $1 spent on food loss and waste reduction.
The report sparked a wave of interest from businesses which wanted to know whether this industry-wide picture reflected the potential savings for their specific sectors. The authors, WRAP and the World Resources Institute, have obliged and in April published a follow-up to the report focusing exclusively on hotels.
The findings confirm that the financial case for action is similarly compelling. The authors analysed pre-consumer waste from 42 hotel sites in 15 countries. They found that a hotel in the midpoint of the range could expect to save almost $5 for every $1 spent on food waste reduction over a three-year timeframe.
Although lower than for the entire food sector the analysis still provides powerful evidence that reducing food waste makes good financial sense; 95% of the sites analysed had a net positive financial return, with some showing a benefit-cost ratio as high as 29:1.
In practice this means that upfront expenditure on the consultants, equipment and staff training commonly needed to initiate a food waste reduction programme is almost always outweighed by the financial gains from optimising food or raw material purchases, reducing waste collection and management costs, and increasing revenue by selling food that otherwise would have been unsold.
And businesses don’t have to wait long to see a return. Within the first year of implementing a food waste reduction programme, more than 70% of the surveyed sites recouped their investment, rising to 95% within two years. The study also found that the majority of the costs were incurred in the first year and declined thereafter, while the financial savings began in year one and continued each year. Armed with this knowledge, it would require the shortest of short-term outlooks to conclude that this is not a price worth paying.
Hotels face a number of specific challenges on food loss, not least the ubiquity of buffets which are notorious sources of waste, especially of high-value foods such as meats. The report helpfully highlights a number of successful strategies for reducing buffet waste included reorganising the placement of certain food items, displaying messaging about food waste near the buffet, and offering high-value items à la carte.
Other key strategies, such as measuring food waste, engaging staff, reducing overproduction and repurposing excess food, will be familiar to any foodservice business that has formulated its own waste strategy.
Yet the report suggests that strategies alone will not cut food waste without strong execution. As part of their research, the authors carried out a series of interviews with hotel employees that revealed a lack of staff encouragement from management as a common theme among sites with lower benefit-to-cost ratios. In one site, they found that food waste reduction efforts yielded no results at all until management created an action plan, at which point kitchen staff became active and waste was dramatically reduced.
Target, measure and act: these are the three steps towards successful waste reduction that the report urges hotels to follow. It doesn’t seem a stretch to suggest the same advice will feature prominently in forthcoming analyses for other sectors of the food industry.
The moral case for action has pushed food waste on to the international agenda. The financial case should see it inscribed on the boardroom agenda.
