Food Waste Flyer from LeanPath

Volume 4 Sept. 2009

This Issue:

The Lean Story:

Proving ROI from Waste Management Investments

Buzz Worthy:

Real Cost of Waste

WasteWatcher:

Ralph Geslao, Lankenau Hospital

Reduction Tips:

Weekends & Holidays

Data Discovery:

Detail Reports Provide a Window into the WOW

Latest Trend: Proving ROI from Waste Reduction Investments

During these tough economic times, every operator is looking for ways to operate more efficiently and save money. By reducing food waste or diverting it from landfills, operators realize they can both lower food costs and reduce disposal costs.

However, reduction and diversion usually require an initial investment in technology or equipment. This leads to the latest trend challenging operators: How to develop compelling ROI (return on investment) models to prove the benefits of waste management expenditures?

LeanPath recommends waste management ROI's include the following elements:

1. Gross Savings Estimate. Focus on the three elements that compose the Real Cost of Waste: 1) Raw Materials, 2) Labor Invested and 3) Waste Disposal Costs (see definition below). Determine how much your investment in waste management equipment will reduce costs for each of these three areas -- without including the cost of the investment. This is your Gross Savings.

2. Depreciation Estimate. Don't count the full cost of the investment in Year 1. Use Depreciation Instead. Break-down the initial investment evenly over three years (or whatever number your finance department suggests) and show this as a Depreciation Charge for each year.

3. Net Savings Calculation. Add the Depreciation Charge + any annual service or maintenance costs associated with the investment to get the total costs for Year 1. Subtract this Year 1 total from the the estimate for Gross Savings.

4. Project Net Savings Over Multiple Years. Payback comes over time. Estimate the Net Savings for at least a three-year period. Don't be afraid to use reasonable estimates for growth in future savings. Add up the total cumulative savings after three years and use it to justify your investment.

Want to learn more? Contact LeanPath and we can share several different ROI models. Also, keep your eyes open for the debut of a revised waste cost calculator that the US Environmental Protection Agency is currently developing.

See LeanPath present:

September 9-12

CIA's Flavor, Quality & American Menus, "Preserving Menu Quality by Reducing Food Waste"

St. Helena, CA

October 7

Kentucky Dietary Managers Assoc., State Meeting "ABC's of Food Waste Management "

Louisville, KY

October 8

Ohio Dietary Managers Association Fall Workshop, "Healthcare Food Waste Management Strategies"

Toledo, OH

What is the "Real Cost of Waste"?

The Real Cost of Waste = Raw Materials Wasted + Labor Invested + Waste Management Expenses.

Raw Materials Wasted: Includes any wasted food or beverage product.

Labor Invested: Includes any labor invested in handling, preparing, or disposing or recycling food that doesn’t reach a customer.

Waste management: Includes standard expenses of treatment and disposal costs. These include fees for carting, hauling, tipping, containers, frequency of pick-up, and up-charges for organics waste into landfills.

Why should you want to know your company’s total waste costs? The same reason you should know any other business cost! Only when the total cost of waste is known will it be managed accordingly. What gets measured, gets managed!

Welcome new food waste trackers!

Kaiser Fontan a

Kaiser Permanente

Fontana, CA

Michigan Technological University

Houghton, MI

Our Lady of Lourdes Medical Center

Camden, NJ

Profile: Ralph Geslao, Chef, Lankenau Hospital

Wynnewood, PA

Chef Ralph Geslao has been leading a pre-consumer food waste tracking effort at Lankenau Hospital outside Philadelphia since December, 2005.

Chef Ralph’s overall impression of his experience over the last four years “I like it a lot.” While using the ValuWaste program Ralph and his team have been able to reduce food cost measurably. He reports the best part of ValuWaste is how it “Keep[s] employees aware of the items they throw away and the cost” associated with those items.

Read more about Ralph Geslao and his team's food waste reduction program.

Ralph Geslao

Chef

Lankenau Hospital

Weekends & Holidays - No Vacation for Waste!

We often focus hard during the week, watching production, traffic levels and targeting leftovers for re-use opportunities. However, operators often fail to think as carefully about weekends and holidays when traffic lightens. Yet, these times are prone to extremely high food waste levels (relative to sales). With lighter staffing and less supervision, it's easy for production to far outweigh demand.

The good news is that it's easy to fix this problem. Weekends and holidays are a perfect time to reutilize (properly handled!) overproduction from the latter days of the week and to lighten the menu and production levels to match traffic.

LeanPath customers have had great success targeting weekends and holidays by reducing offerings. For example instead of running four soup options, they can stick with two. Similarly, they can run one side of the salad bar instead of the whole unit.

Also, LeanPath customers have implemented a “save” cart or shelf in the cooler for late week overproduction. The chef reviews items in that area and builds them into the weekend menu. This is a great re-use opportunity and lightens the workload for staff during a period when you’re historically staffed down.

13,753 pounds =
The highest amount of food waste tracked by a single foodservice employee in 2008

Download a reference guide on waste management

Detail Reports: A Window into the W.O.W. (World of Waste)

After you start tracking food waste on a daily basis (with either an automated system from LeanPath or a manual process) the next step is to target the items costing you the most money in waste.

ValuWaste provides Detail Reports which are similar to familiar Declining Dollar reports and which show operators 1) their most wasted foods, 2) highest reasons for loss, 3) high waste dayparts and even 4) high-waste stations.

Armed with this data, you get an understanding of the biggest problems in your "waste universe" and can engage your team to set specific reduction goals for the highest items.

Once you’ve successfully reduced the largest waste items, you can target the next item on the declining dollar list and progressively lower your overall waste.

Now, that is a WOW!

Want regular updates on waste trends?

Read the Food Waste Focus Blog!

Food Waste Focus is an educational, non-commercial blog about food waste authored by the LeanPath team. Regular postings keep readers updated on food waste news, commentary, and waste reduction ideas. Sign-up to have blog updates e-mailed to you.