Are you stuck trying to increase your bottom line with no success in sight?
Did you know that reducing food waste can significantly improve your bottom line?
Many people don’t know this, but reducing food waste has a direct effect on your bottom line.
Food waste is a big problem in the country. EPA estimates that more food reaches landfills and incinerators than other materials in everyday trash and constitutes 22% of all discarded municipal wastes.
Restaurants contribute largely to this problem. According to Food Waste Reduction Alliance study, over 84.3% of untouched food coming from American restaurants end up as trash in landfills and incinerators.
In this post, we discuss exactly how reducing food waste can improve your bottom line. Here’s an outline of what we are going to cover:
- What is food waste?
- What causes businesses to purchase or produce more food than they need?
- How Food Waste Affects Your Bottom line
- Top 5 Tips for Reducing Food Waste
- Improving your bottom line by reducing food waste
What Is Food Waste?
Food waste is described as food fit for human consumption but is consciously discarded at the consumption or retail phases. Food wastage is a scourge both nationally and globally.
Other definitions
Food loss – a reduction in food quality and quantity intended for human consumption but not consumed by people. Food loss includes any food spilled, lost, or wasted during the supply chain process from production, harvesting, storage, and processing, and during transportation.
Food waste and loss – describes the loss of food in all the stages from production to consumption. It factors in quality, and quantity regardless of cause.
Therefore, there is no singular way of defining it, which is why we call the whole process food waste.
Think about all the resources invested in producing food – the water, land, money, packaging, and shipping, and then picture all that going to waste. Most food waste originates in developed countries where consumers discard it without touching much of it.
Causes of Food Waste
Food waste has many causes, such as spoilage. Spoilage may happen during the production stage or in the supply chain.
Between the production and retail stage, food waste can occur due to milling, drying, processing, or transportation, which exposes it to insect damage, rodents, molds, birds, and bacteria.
At the retail level, businesses can experience food waste due to equipment malfunction like faulty cold storage, culling or dented produce, and over-ordering.
What Causes Businesses To Purchase Or Produce More Food Than They Need?
If you are in the food industry, you may be aware of how food waste hurts your business’ bottom line. In fact, food waste is likely to cost you thousands of dollars annually, even if you only run a small company.
Unfortunately, wasted food ends up as trash in landfills, which, in turn, produces more greenhouse gases, further leading to environmental degradation.
But, what causes overproduction or makes businesses buy surplus food?
Causes of Overproduction
1. Temporary increase in demand in the market
The food market is tumultuous and can be deceptive. The demand and supply of food keep on changing, making it very unpredictable. Most producers act on data and statistics they get from consumer reports and news outlets.
Also, producers factor in market trends to drive production in a particular season. However, this produces different results. Sometimes, the production meets the market needs and at times, they overproduce, leading to a surplus.
Food surplus creates more food wastes as most food products have expiry dates. If the food stays on the shelves for too long, they become poisonous and must be discarded immediately.
2. Shortage of particular foods
Nothing drives up food waste other than shortages. While food shortage presents an opportunity for businesses to make more money, various stakeholders are already aware of the market glitch.
So what happens?
The industry strives to satisfy the shortage by producing more food. The real problem is that it increases the supply to surpass the demand. When the supply is greater than the demand you end up with more food with nowhere to sell or take it, resulting in wastage.
Perishable products simply start going bad, resulting in unimaginable losses for producers or suppliers. It’s best that shortages are managed well to ensure that the market has exactly what it needs.
Additionally, use statistics to ensure that there is enough supply to meet the food demand at all times to avoid an imbalance.
What causes businesses to purchase more food than they need?
There is a wide range of reasons why businesses can purchase more food than they need. Below are some of the causes:
1. Desire to stock up when there is an impending shortage
Planning ahead is a virtue in every business. However, it sometimes fails and businesses end up dealing with massive losses and food wastes.
As a business, you may have the resources like cold storage to keep perishable products in ideal condition. Nevertheless, inaccurate projections of food shortages can leave you with more than your customers need.
The consequence is that you have excess stock that ends up going bad on your shelves when the demand doesn’t match the supply.
2. Business expansion
While it’s good to expand your business to serve more consumers and cover more territory, it sometimes works against your interests. For instance, you can start up a new restaurant chain but the consumption of your food doesn’t match that of your other outlets.
In the end, you have to discard the food which drains your capital. Therefore, due diligence is essential to ensure you only stock what can move in that area, even as you plan to extend your market share in the industry.
3. Demand increase in the business environment
Businesses like restaurants profit when there are more customers eating their food. However, tensions whether from politics, or unrest can cause people to stay away as they monitor the situation.
The bad thing is that most unrest is spontaneous and you don’t know for sure how it will affect your business. Make a habit of reading current news for any tensions in the area and only cook what can be consumed without causing more food wastes.
4. Contractual obligations
Nowadays, businesses order in when they have corporate events or run deliveries to workplaces. It’s a win-win situation that keeps everyone happy.
However, when there is a problem like a business you supply food to is closed for whatever reason, then you end up with food that no one is going to eat.
Food waste is unintentional and purely due to a lack of orders. These are situations that are difficult to predict, but leave you with massive food wastes and cash losses.
How Food Waste Affects Your Bottom line
“Cutting food waste is a delicious way of saving money, helping to feed the world, and protect the planet.” – Tristram Stuart
Food waste is costly to a business as it affects your bottom line in many ways. According to a 2015 report, businesses in the US lose up to $162 billion every year due to food waste.
Below are some of the ways food waste affects your bottom line:
1. Customer displeasure, thus reducing sales
Running a business in the food industry means you rely on your customers to increase sales. However, when you use bad stock from your cold storage, sooner or later your customers will notice.
Yours is not the only food the customers are eating. Therefore, when there is a discrepancy in taste because you are using greens that have been in cold storage for too long, they will patronize your premises less often or place fewer orders than before.
2. Increase in losses as you try to balance the books
Your spending on supplies increases to meet your customer needs and maintain your food stores. However, the books don’t balance as your food wastes are high. Any business with a steep loss curve will ultimately collapse.
3. Food waste is a hazard to the environment and your business
You may have a good garbage disposal, but if the food wastes are unusually high, then your premises become a health risk, and sooner or later your customers and the authorities will take notice. When the bad news breaks, you lose your customers, and health inspectors will close the business.
4. Demotivates your staff
Everyone wants to work in a comfortable and happy environment, but if they frequently have to deal with waste, it affects their morale. Some employees may even start asking questions.
Your best bet to avoid demoralizing your staff is to call in waste management experts to handle your waste and recycling needs.
Top 5 Tips for Reducing Food Waste
The best way to reduce food waste is to ensure it doesn’t exist in the first place.
Here are a few tips that you can use to reduce food waste and improve your bottom line:
Use a baler or compactor to handle your waste and recycling
The objective is to have fewer waste bins and use up less space. Besides, you pay less for waste collection as you have less food waste. A compactor reduces and recycles your wastes to reusable products.
Partner with other businesses that reuse the products and secure rebates on waste packaging.
Improve product development and enjoy better sales
Develop products that consumers need to prevent overproduction. Also, ensure you have quality packaging and storage options to increase shelf-life and avoid damage.
If there are products nearing expiration but orders are slow, you can consider making donations to hunger-relief organizations, and use them to gain more marketing and customer awareness.
This way, you kill two birds with one stone and make the public love you for caring about the less-privileged.
Recycle to turn waste into animal feed, bioenergy, worm casting, or compost
Improve storage facilities to keep food safe past the sell by date
Having a reliable storage method prevents massive food waste. You only achieve this by embracing technology. For example, cold storage is common in restaurants as it maintains the quality of fresh produce.
You can’t sell food to your customers that have gone bad as it affects your reputation and discourages others from buying from you.
The expiration date is not the only thing that affects food products. If you store food products poorly, your problems remain the same.
Improve the ordering or shipping processes to reduce costs and save time
Shop or order products that have extended expiration dates. Always make it a habit to check the expiration dates of shelf purchases to ensure that you don’t stock something that will expire in a few days.
Also, order enough food to sustain the customer orders to avoid stocking too many perishables that go to waste at the end of the week without being used.
The best way to achieve this is by being meticulous in your accounting, to know how much you need without accepting surplus products that will only result in food waste.
Improve cooking methods and spot the difference
Modify your menu and start cooking more popular food to reduce leftovers.
Tasty food attracts more attention and the positive compliments from customers spread like wildfire. Take note of your customers’ complaints and aspire to improve on them every day.
The key to reducing food waste lies in cooking what your customers eat. Start by internalizing the orders and quantifying them to know how much you need on a particular day.
Improve marketing by empowering your sales team
Market your products effectively and ensure that you produce what the market can consume without much surplus. The key to achieving this is by doing a market study, to gain insight into how much your customers consume or order. Then, you can produce what is needed by approximation.
Final Thoughts On Improving Your Bottom Line By Reducing Food Waste
Manage your food waste effectively through proper disposal to positively impact your business and increase your revenues. However, this requires strategic action to tackle the increasing waste management challenge.
As a business, you have a corporate social responsibility (CSR) to implement positive changes. Include CSR in your business plan to benefit your bottom line and build consumer trust.
Consumers are more positive toward a business that is socially responsible. Besides, it builds trust with your workforce and they become more supportive.
Raise awareness by donating to causes like hunger-relief organizations to encourage social change.
If you are struggling to find ways to reduce food waste, do not hesitate to call in the experts. Waste Control Inc is here to give you a helping hand!
“Respect for food is a respect for life, for who we are and what we do.” – Thomas Keller