A big cost for the hospitality industry is food waste. Reducing food waste would not only help to cut costs for your business but it would also be good for the environment. Food waste costs the hospitality industry over €300 million annually in Ireland alone. But how much does it cost your business? This article will examine what makes up these costs and how to calculate the cost for your restaurant or café.
Food Waste Costs Make-Up
Both materially and environmentally food waste takes a toll. Firstly, food is expensive to buy and to dispose of. When you’re buying ingredients and stocking up your restaurant, you don’t want or expect this food to go to waste. Of course, some level of waste is unavoidable. Food going off unexpectedly, customers sending dishes back, accidents when cooking – are just a few examples of how food loss occurs.
However, the Environmental Protection Agency (EPA) found that a lot of the waste from commercial food businesses is avoidable. Minimising this waste also helps the environment. Energy is used to grow, harvest, transport, process, packaging, retail and prepare food, and all of this leads to food having a high carbon footprint. Food waste has a big role to play in global warming and in fact reducing this waste was identified as the 3rd most important action on a list of 100 climate responses.
What Elements to Include When Calculating Cost:
When calculating the material cost of food waste for your business there are a number of elements to consider. These elements include:
- Initial raw ingredients purchase cost
- Food transporting
- Food storing
- Food prepping costs (staff/energy costs)
- Disposing of food waste costs
Calculating Food Waste
How much are you producing in waste in the year? The best way to calculate this is to start by separating organic from general waste and place each into separate bins. Use a week that’s representative of the level of business during the rest of the year. Weigh the empty bin and subtract the weight of the bin after you’ve filled it to estimate the quantity of catering food waste produced. Multiply your weekly value by 52 to calculate the weight of food waste produced per year. Make sure to include the quantity of out-of-date waste food that you dispose of each year. Is this value higher than you expected?
Calculating Material Cost
Now you know the approximate quantity of food waste you’re producing each year. But, how much do you think it’s materially costing your business? To calculate the total catering food waste cost, you need to add up the disposal cost, fresh food cost, and staff cost.
To Calculate the Disposal Cost:
Multiply the cost of collection per kg, by the actual weight calculated. This gives you the total waste disposal charge for the year.
To Calculate the Fresh Food Cost:
Assess the average cost of new food ingredients from a sample of invoices.
To Calculate Staff Costs:
Though this is a little more difficult to calculate, you should include an estimate for the cost of staff preparing and dealing with food that is thrown out. The less food waste that needs to be dealt with and new food prepared, the less hours employees are required to work. One way to calculate this cost is to estimate what proportion of the total food bought is thrown out (as explained above). Then estimate the number of hours that staff spend preparing food and the associated cost. Then multiply the value by the proportion calculated above.
If you need finance to offset the cost of food waste or to implement a food waste prevention plan, GRID’s business loan could be the perfect choice for you. It offers flexible repayments that work by taking a percentage of your credit/debit card takings. This means that when you’re earning less, you pay back less! This option is great when you’re expecting an upturn in profits because it doesn’t leave your cashflow stretched in the meantime. GRID's loan works both to finance your everyday restaurant expenses or to fund a larger project like a refurbishment.
Find out more about GRID's Finance Option: