Organizational Governance

#BusinessCase:
Research Finds Hotels Saved $7 for Every $1 Invested in Cutting Food Waste

In a first-of-its-kind analysis for the hotel industry, food waste reduction programs were shown to be effective and financially beneficial. The research – which was conducted on behalf of Champions 12.3 – studied the costs and benefits of reducing food waste for 42 hotel sites across 15 countries. Over a three-year period, nearly every site realized a positive return on its investment; on average, hotels saved $7 in operating costs for every $1 they had spent on the programs.

By Sustainable Brands | Published 6 years ago | About a 4 minute read

Image: Champions 12.3

In a first-of-its-kind analysis for the hotel industry, food waste reduction programs were shown to be effective and financially beneficial. The research – which was conducted on behalf of Champions 12.3 – studied the costs and benefits of reducing food waste for 42 hotel sites across 15 countries. Over a three-year period, nearly every site realized a positive return on its investment; on average, hotels saved $7 in operating costs for every $1 they had spent on the programs.

Within just one year, the hotels had reduced food waste from their kitchens by 21 percent on average, and over 70 percent had recouped their investment. Within two years, 95 percent had recouped their investment.

The Business Case for Reducing Food Loss and Waste: Hotels is a sector-specific follow-up to a more general report released last year by the coalition that found even greater returns: savings of $14 in operating costs for every dollar spent on average for 1,200 sites across 700 companies in 17 countries. While the 2017 publication gave a good overview across industries, private sector managers reached out to the authors asking for more detail on their sectors alone. The new Hotels report is the first publication released in response to such requests, and more sectors are expected to be covered in future releases.

“We need to take action right across the food chain if we’re going to halve food waste by 2030. That means reducing food waste in homes, farms, retail, distribution, and in the hospitality sector,” said Dave Lewis, Group Chief Executive of Tesco and Chair of Champions 12.3. “This report clearly shows that reducing waste in hotels isn’t just the right thing to do. It also makes good business sense. So even if the moral imperative doesn’t move us, the business case for reducing food waste should persuade every CEO.”

WRAP and the World Resources Institute (WRI), which co-authored the Hotels report, isolated sector-specific data from the original datasets used in the previous report and analyzed it along with new data from hotel operations. Over three years, benefit-cost ratios for different sites varied widely, from 0.4:1 to nearly 29:1. There appeared to be no clear correlation between benefit-cost ratios and a site’s market segment, nor between benefit-cost ratios and geography. Half of the sites realized a return of $5 or greater for every $1 invested in food waste reduction (a 5:1 median ratio). The average ratio of nearly 7:1 is equivalent to a return on investment of nearly 600 percent.

The 7:1 return on investment comes from buying less food and thereby reducing purchase costs, increasing revenue from new menu items developed from leftovers or foods previously considered “scraps,” and lower waste management costs. The types of investments hotels made include: measuring and monitoring the amount of food wasted, training staff on new food handling and storage procedures, and redesigning menus. Nearly 90 percent of sites were able to keep their total investment below $20,000, which was less than 1 percent of sales on average. This shows that the cost of change was low and the benefits were high for all businesses assessed.

“With these figures, I hope more in the industry will see food waste reduction as an opportunity and an important part of the hotel business,” said Lionel Formento, Director of Food and Beverage, Sofitel Bangkok Sukhumvit. “Our customers increasingly care about the environment, and that shift shows no signs of slowing down. Sofitel Bangkok Sukhumvit has prioritized reducing food waste as an important part of our sustainability efforts. From engaging management to our chefs and suppliers, implementing a food waste reduction program has helped us stay innovative and a leader.”

The report recommends hotel owners and managers take a “target, measure, act” approach to reduce the amount of food wasted from their kitchens. It outlines five action steps for hotel managers, based on interviews with those who have implemented successful food waste reduction programs:

Measure the amount of food being wasted to know where to prioritize efforts;
Engage staff;
Re-think the buffet;
Reduce overproduction; and
Re-purpose excess food.

“The Sustainable Development Goals give us clear targets, which we need to achieve in just 13 years. We know that the worldwide food waste challenge is large and urgent. It will not be easy to solve and requires action by all of us,” said Liz Goodwin, Senior Fellow and Director, Food Loss and Waste at WRI. “This report demonstrates that action by the hotel sector can bring results quickly and that there are real financial benefits to be realized. There is no time to waste and we need more leaders to step up and do their bit, improving their businesses and securing the economic, social and environmental benefits.”