Ask any veteran c-store foodservice retailer running a successful grab-and-go program and they’ll tell you food waste is a necessary expense.
Too little waste when it comes to your roller grill program or grab-and-go sandwich offering is as much a sign of a problem as too much waste.
Customers want to purchase sausages off a roller grill when that roller grill looks full and inviting. They are more likely to reach for a sandwich from the open-air cooler when it’s full of options and the expiration dates show those sandwiches are fresh.
“If you’re looking at a roller grill and it looks beautiful with fresh, moist rolling food, and in the back right corner is that one hot dog nobody wanted to throw away when they should’ve, and now it looks like a stick of beef jerky, that’s what the consumer’s going to see,”Jerry Weiner, president, Jerry Weiner Consulting, and former foodservice director for York, Pa.-based Rutter’s, told CSD. “That will turn them off. Make sure that when your food is no longer salable, you get rid of it.”
Accounting for necessary waste, however, can be easier said than done. It requires understanding from executive leaders all the way down to frontline employees, who sometimes cringe at the concept of throwing away food.
Determining Waste Ratios
Finding the correct waste ratio drives foodservice profitability, Jeff Keune, Yesway’s senior vice president of food service and innovation, told CSD. Des Moines, Iowa-based Yesway operates 150 locations in eight states.
“Too little waste is a bad thing if you are looking to grow overall sales and margin. If you are only working the percentages—going as low as possible on percentage waste and as high as possible on percentage margin—you might be missing big opportunities in sales,” he said. “Consumers don’t want to buy the last food item, and an appetizing food display means not looking too lean in your offering.”
The first step is determining the amount of spoilage that allows you to maximize sales.
“A lot of people take spoilage as the way to get to a bottom line, and it actually isn’t. The way to get to a bottom line is maximize your sales. Spoilage is an expense of doing business, so it’s a cost that needs to be managed,” Weiner said. “You don’t drive the waste number, you drive the sales number and then manage the waste number.”
“With too much spoilage, at least you know you’ve maximized your sales. You certainly are cutting away at your margins, but they can be managed,” Weiner said. “Too little spoilage really is a signal that you’re losing sales, and that could keep people from coming back.”
Weiner suggested choosing a location with one of your best managers, who will report back to you accurately. Set food presentation standards and give them waste guidelines to test.
This can help you determine what the program should deliver when it’s run properly. Even then, waste costs will vary depending on if you sell more lower cost or higher cost items, among other factors.
“You have to give yourself that room. Once I have determined, when run properly, what the program should deliver, and that range of what the high end and the low end is given the items in the menu mix, that becomes the guideline,” Weiner said.
Keune agreed. “Managing waste is usually not an exact science—based on traffic flow some days will be better than others—so build your targets with a little room on either side to ensure you still hit your numbers,” he said.
Unfortunately, simply turning a guideline over to store managers won’t result in overnight success.
First, operations supervisors need to be involved.
“The best tool I found for getting operations involved was moving spoilage to an expense line because that got their attention,” Weiner said. “Those are the lines they manage and are responsible for, and so once it’s an expense line then they needed to know how to fix it.”
Weiner also advised taking operations supervisors through a training process to help them understand how to determine food cost and why it’s a crucial figure to manage.
When you are deciding on the margin you want to achieve, include the percentage of expected waste in your cost calculation, Weiner advised.
In other words, if an appropriate waste level is 12% on a hot case item, Weiner would include that expense into the total cost of an item.
“This ensured that when I sell an item knowing I am going to throw away that 12% cost, I will still make my target margin,” Weiner said.
Waste will be different between sections, Weiner said. Cold grab-and-go sandwiches have a longer sell time, compared with roller grill items, for example. Commissary items might have a hold time of three to five days, compared to only one to three days for cold grab-and-go items and one to three hours for hot grab-and-go items.
Typical waste ranges will also differ between foodservice sections. Weiner noted typical waste ranges for commissary items are 18-25%, cold grab-and-go items are 8-12% and hot grab-and-go items are 12-18%. All of these factors need to be considered in the calculations.
Don’t forget to also track waste according to daypart.
“That will help you determine what your policy needs to be on different items at different times of day,” Weiner said. It also differs between stores. Some c-stores may do a busy breakfast program while others have more traffic at lunch.
Weiner estimated that it takes about three weeks to gather enough data to make clear determinations, and even then, “waste is a moving target.”
“You must constantly monitor those numbers so you can adjust your production to accommodate and make sure you maximize your sales,” Weiner said.
“New products should have a higher waste target as you are driving trial and adoption,” advised Keune. “Existing products should be easier to predict and manage, therefore allowing a lower target. Manage to the target, not to zero.”
The more complex your offering, the harder it is to manage waste, Keune added.
“Finding that balance between having a robust enough offering to drive sales and as lean as possible to ensure you are selling through to your waste target by item is the challenge that every category manager should take on,” Keune said. “The best practice is to do the math and ensure you are confident you have a realistic plan by item.”
Keune has found it’s easier to manage the waste on higher volume items compared to lower volume items. Adjusting pricing or using promotions to increase movement on slow moving items can help with waste. Another option is to eliminate those slow movers from your offering.
“It sounds simple, but there is a tendency to push variety in hopes of driving sales and sometimes that will get you in a tough position on waste,” Keune said.
The math is an important step in getting waste ratios right and in turn driving sales. Yesway makes it a point to do the math around how many SKUs to carry, as well as the projected unit movement necessary to hit waste targets and determine what it will take to hit both topline and bottom-line successes.
“Knowing the math helps us make better decisions on variety, price, promotions and innovation,” Keune said. “It helps us focus on those things that are most likely to drive growth without risking losing margin with higher than targeted waste.”
Once the tests and the math are complete and the operations team is onboard, it’s time to train frontline staff in proper waste management. The biggest mistake is to assume simply alerting them to new practices will result in overnight changes on waste management.
Weiner estimated that even after communicating with frontline employees, it can take months to effectively change the operational mindset of the team. He recommended using a bonus program to reward frontline employees, restock managers and store managers when their locations meet their numbers on waste.
What’s more, some companies make the mistake of telling frontline employees, “you’ve got to get your waste down,” instead of sharing an easy-to-follow plan for managing waste. C-store employees often respond by doing exactly what you don’t want—putting out less product, which results in diminished sales. Frontline staff needs to understand that the worst move is leaving out food that is not salable.
During an educational session at the National Association of Convenience Stores (NACS) Show in October, Heather Davis, director of foodservice, for Savannah, Ga.-based Parker’s and Ieva Grimm, president of SYNERGE, joined Weiner in a talk about foodservice waste.
During the session, Davis pointed out that for companies doing fresh foodservice in-house in addition to hot and cold case grab-and-go items, it’s possible to repurpose items to make them last longer.
“Minimize the number of items you are purchasing and select items with multiple purposes,” Davis said. “Too many unique items mean you’re going to have wasted products.”
Developing recipes that help repurpose items can help reduce waste. For example, a fried chicken product in the hot case only has a shelf life of a few hours, but once that time expires you can use the chicken to make a salad or chicken salad sandwich for the cold case.
Grimm recommended using a simple form to show employees how much of each particular food item should be in the cooler, in the freezer and so on, so when the kitchen manager is not present, the correct amount of product is still being pulled. Ask employees to write down when product is out or almost out. Remember too that often food is discarded without being recorded.
“Just because waste isn’t showing up, doesn’t mean it’s not there,” Grimm said.
Some employees may be reluctant to throw away food, so it’s necessary to talk to them about food waste and help them understand why it’s so crucial to discard old items. One way to ensure employees are removing old food, is to consider a waste donation program, Grimm said.
Some retailers worry that such programs come with liabilities or too much time and expense for c-store operators, but that’s not always the case.
Feeding America, for example, provides meals through 200 food banks, prides itself on being easy to operate, includes protection from liability, and requires only a minimal investment. Some companies donate weekly, monthly and so on.
Giving back to the community while inspiring frontline employees to keep only fresh items fully stocked? Now that’s a win-win.