Have Your Cake And Eat It Too: Reducing Food Waste In Hospitality

By: Madiha Javaid, Andrea Lam, John DeNavi

“Don’t waste food. There are starving children in Africa!”

For many of us who grew up in the developed world, this cliché line brings back memories of childhood, family dinners and being guilt-tripped into eating brussel sprouts. While this line may be trivialised at the dinner table, the sad reality it represents is by no means a trivial matter. Every year, consumers in developed countries waste almost as much food as the entire quantity of net food production in sub-Saharan Africa [1].

This example of food wastage highlights the disproportionate access to adequate food and nutrition across the world. Indeed, roughly one third of the food produced for human consumption annually (approximately 1.3 billion tonnes) is wasted [2], despite the fact that a staggering one in nine people on our planet do not have enough to eat [3].

The moral dilemma of the rich wasting food while the poor remain malnourished encapsulates only the tip of the iceberg in terms of the problems associated with food wastage. From the cradle to the grave, food wastage has significant environmental implications. Natural resource depletion arises from the energy used to produce wasted food, while the decomposition of food in landfill produces methane, which has over 20 times the global warming potential as carbon dioxide [4]. Further, food wastage comes as a steep economic cost. In Europe, the 88 million tonnes of wasted food per year equates to a cost of 143 billion Euros [5].

Of all food that is wasted in Europe, 12% of this wastage occurs in the hospitality industry [6]. Food discarded during preparation (e.g. peelings, trimmings and inedible components), gluttonous customers and spoilage are the main contributors to food waste, comprising 45%, 34% and 21% respectively of the total quantity of wasted food from the industry [7].

Current and Proposed Industry Sustainability Goals

There are undoubtedly strong social, environmental and economic reasons for minimising food waste in the hospitality industry. Hotels and restaurants can be incentivised to minimise food waste by harnessing the social and environmental implications of food wastage for marketing purposes, or by gaining access to tax deductions and other fiscal programs from food donations.

Presently, the industry is aligned in minimising food waste and improving the sustainability of its operations through three key objectives: providing lower impact products, providing products more efficiently, and making the best use of excess food and waste [8]. These goals aim to curb the impact of food wastage at all stages of hospitality food production, from produce selection to meal preparation to disposal.

However, these goals have several shortcomings. Firstly, the broad scope of the goals may compromise their pertinence to business owners and make it difficult for them to identify where and how to apply the goals to their operations.Secondly, the goals fail to recognise that consumer behaviour is also a strong contributor to food wastage. A more comprehensive list of goals should address consumer-specific behaviours that lead to food wastage, and include the role the hospitality industry plays in influencing this behaviour. Thirdly, the currentgoals do not represent the most efficient and potent way of tackling the issue of food wastage as it doesnot take into account the food waste hierarchy.

The food waste hierarchy indicates that the most effective and preferred method of reducing the impact of food wastage is by preventing food waste altogether [9]. Therefore, to create more pertinent and effective goals, the goals should be centred on strategies for prevention, rather than the lower elements of the hierarchy, such as redirection and recovery.

Food service providers can prevent food wastage by taking action on both ends of their value chain, namely by optimising their own operations and by influencing the consumption behaviours of their customers. Based on this approach, the sustainability goals that we propose for the hospitality food service industry are as follows:

• Improve the match of supply with demand, which can be achieved by gaining better demand estimates or shaping demand through tailoring menus to optimise available supply
• Adopt better practices for food storage to increase longevity of produce and reduce spoilage
• Adopt better practices for food preparation to eliminate potential for avoidable errors
• Engage consumers in the prevention of food wastage by shifting their dining behaviour towards more sustainable consumption

A number of initiatives across Europe are currently being undertaken that address the current and proposed sustainability goals. For example, the Courtauld 2025 agreement is a voluntary coalition of organisations across the food system, from producer to consumer, with the aim of making food and drink production and consumption more sustainable. Courtauld 2025, which began in 2015, entails a 10-year commitment to achieve targeted sustainability outcomes, such as a 20% reduction in food and drink waste arising in the United Kingdom [10].

Similarly, the European Commission has committed to meeting the Sustainable Development Goals through aiming to halve the per capita food waste at the retail and consumer level by 2030. The EU Platform on Food Losses and Food Waste was established to meet this goal [11].

Technological tools have also been developed that address elements of the current and proposed sustainability goals. Anaerobic digestion, for example, is a method used to turn organic waste into a source of renewable energy [12]. Food waste from the hospitality industry is taken by food waste collection services and decomposed using anaerobic bacteria. The product of this biological process is biogas, which can be used to generate local electricity and heat to power the waste management facility or even returned to the electrical grid for public consumption.

Another example of a technological tool is Winnow, an integrated scale system that tackles the issue of food wastage from storage or preparation errors by providing a tracking mechanism for such waste [13]. Rubbish bins in the restaurant kitchen are installed with a smart scale that tracks the food waste discarded, and collects the data to provide analyses of the waste trends. Through this monitoring, it becomes simple to accurately identify where and how food is being wasted, such that appropriate actions can be developed and implemented by the kitchen.

Of the proposed sustainability goals, the focus on matching supply with demand and encouraging customers towards more sustainable consumption is not strongly addressed by the initiatives described above. This gap represents an opportunity to develop a new business model innovation that is centred around resequencing operations to better align supply and demand, and engaging consumers to contribute alongside the hospitality industry in minimising food wastage.

Proposed Business Model Innovation

We propose that food service providers reduce their food waste by signing up to an online platform where they can sell leftover food from the day for reduced prices. The platform owner can collect a small fee on each order.

This enables restaurants to minimize cooked food wastage due to lack of demand in store. They will be able to upload items available on the day as well as exact quantities, which customers can pick up after meal time hours have ended. If there are no items leftover, restaurants are able to refund customers. This enables them to not be bound to serving at a lower price if there is demand in store.

This flexibility allows restaurants to choose whether they want to serve customers if there is excess food supply, and opt out on days when they do not. This business model innovation allows restaurants to minimize their overage cost when preparing food, as they are able to monetize a sunk cost – food that would have usually been thrown out.

It reduces the risk of a demand supply mismatch, as lower prices encourage customers that would normally not have purchased from the restaurant, leading to an increased demand.It is a win-win attracting consumers who normally would not have been able to afford food at regular restaurant prices.  At the same time, they are moving towards more sustainable practices by reducing waste in the hospitality industry.

This platform will stimulate a positive feedback loop between financial growth of food service providers and the desired impact of reduction in food waste.  Rapid adoption of this platform either by customers or restaurants will increase marketplace thickness, as restaurants will follow competitors’ moves and sign up, which will improve the variety of cuisine and geographical locations available on the platform for customers. Subsequently, this increases the number of food service providers that make additional efforts to reduce cooked food waste in the hospitality industry.

As the platform will be able to record the amount of food being made available, and how much cooked food is prevented from being wasted, this information can be used in a two-pronged approach. First, it can be used to forecast demand and optimize food supply by members. Secondly, the analytics can be used for benchmarking against competitors, generating a rating similar to how Uber rates its drivers and customers. This rating can be used internally in the food service provider community to set targets, or shared externally with customers to drive demand. For example, the app could feature a restaurant of the month based on how well a member has done saving food since joining the platform.

As there is no added cost to these restaurants, it is financially sustainable for them to sign up to the platform. The commission charged by the platform is only incurred when orders are placed, which is generating revenue for them so it is still profit generating after netting out the fees. Additionally, it reduces food disposal costs, which are estimated to be an average of 97p per plate in the UK [14].

This is a simple yet game changing innovation for the hospitality industry. A regular customer would walk in to a restaurant and expect to be able to order anything off the menu. Setting up a menu online of what is available to be picked up later in the day allows restaurants to only use ingredients/food on hand, eliminating waste. In this way, the restaurant experience has been resequenced where the customers are being restricted only to what is left over from the day, and then they choose to order.

While there is massive potential for such a platform, it needs to be taken with a pinch of salt. There are several risks to implementing this loss reduction strategy. As consumers sign up to this app and buy the food to eliminate food wastage, the platform would have to manage and screen participating restaurants to ensure they’re not making a profit from the scheme and using it as an additional channel to maximize revenue.

Businesses would be tempted to sell off food that isn’t necessarily fit for consumption on the platform. If customers fall ill after consuming this food, the reputational damage to the platform will be hard to overcome. Ensuring that food service providers are adhering to safety and quality standards is a key risk that needs to be managed.

Restaurants may be hesitant to sign up to the platform as they will expect a lossin their usual clientele, reducing their regular revenue stream. Customers that were previously orderingtakeaway have an incentive to wait longer and get food at a lower cost instead.

On the customer side, there is adoption risk because of a perception that they are receiving uneaten food from restaurant customers’ plates. A great deal of marketing will be needed to remove this stigma and ensure they understand this is freshly cooked food from the same day that was never sold, rather than “leftovers”.

Innovation in practice – can it be done?

We’re pleased to inform you that the proof is in the pudding. The “Too Good To Go” app (TGTG) was piloted in Denmark by a group of friends at the end of 2015, soon after which it expanded across the UK. Users can place orders for surplus food from local restaurants, cafes and bakeries before their end of their shifts between £2 – £3.80 with the primary objective of reducing food waste, protecting the environment and battle societal inequality [15]. All profits earned are reinvested into expanding the business nationwide.

 “The ultimate goal is to use it for restaurants to solve their waste management problem, rather than it being about making profit,” says founder Chris Wilson. “The idea is that restaurants stop producing the extra food so they don’t need to throw it away in the first place, so really we want to put ourselves out of business by stopping food-waste.” [15]

Restaurants can control how many portions they make available on the app and what time they are collected on the TGTG App. TGTG has gone one step further to provide eco-friendly boxes to all its members for packing unsold food or to let customers fill up themselves in the case of a buffet. Their policy is only to serve food prepared on the same day, with a free no contract sign-up for member food service providers.

TGTG handles the payment streams and transfers revenue monthly to its members, along with a detailed sales report. The Statistics section of the app provides members with real-time totals of how much food they sell through the app on a weekly, monthly and annual basis, helping them better plan food production and manage stock levels.

As of August 2016, TGTG has foundations in six different countries. Their data from November 2016 shows that they were able to save 3500 meals from being wasted, and thereby preventing approximately over 7000 KG of carbon dioxide emissions. To date, their UK app has over 141,000 downloads, with 1.2 million users worldwide. The additional revenue they have generated for their customers is to the tune of £2.5 million [16].

TGTG also incorporates a social initiative piece into its business; its Pay-it-forward scheme allows customers to donate funds toward providing meals for others in need. The app includes a donation option of £1, with funds used to cover costs of the packaging and to pay restaurants for providing the food which they redistribute. While there’s no such thing as a free lunch, this app comes pretty darn close!

References:

[1] http://www.unep.org/wed/2013/quickfacts/

[2] http://www.unep.org/wed/2013/quickfacts/

[3] http://www.wfp.org/hunger/stats

[4] http://epa.gov/climatechange/ghgemissions/gases/ch4.html

[5] http://ec.europa.eu/food/safety/food_waste_en

[6] Stenmarck, A., Jensen, C., Quested, T., Moates, G. “Estimates of European Food Waste Levels”, Fusions, 31 March 2016

[7] http://www.wrap.org.uk/content/overview-waste-hospitality-and-food-service-sector

[8] http://www.wrap.org.uk/content/what-courtauld-2025

[9] http://www.wrap.org.uk/content/why-take-action-legalpolicy-case

[10] http://www.wrap.org.uk/content/what-courtauld-2025

[11] https://ec.europa.eu/food/safety/food_waste/eu_actions_en

[12] http://www.wrap.org.uk/content/anaerobic-digestion-1

[13] www.winnowsolutions.com

[14] http://toogoodtogo.co.uk/wp-content/uploads/2016/02/TGTG_Intro_Presentation.pdf

[15] http://www.odditycentral.com/news/this-app-lets-you-order-leftover-dishes-restaurants-would-otherwise-throw-away.html

[16] http://www.crowdfunder.co.uk/too-good-to-go