Green Business is Good Business
How Sustainability Boosts the Bottom Line in Restaurants
Sustainability is a buzzword that continues to be thrown around in businesses of all sizes and industries, but what exactly does it mean for the restaurant industry? Imagine a restaurant that runs on 100 percent renewable energy, produces no waste, captures and recycles water, supports and helps grow local farms, has a customer line out the door, and has local community members eager to get hired.
Sustainability for restaurants means operating in a way that protects, preserves or restores the natural environment, promotes social equity, enhances the lives of people and communities, and contributes to economic prosperity for shareholders and stakeholders. Because the topic of sustainability is so broad and all-encompassing, let’s just look at the environmental aspect of sustainability in the restaurant industry.
With the emergence of three interrelated and interconnected trends that include a decline of our planet’s natural resources, increased demand for transparency, and increasing consumer expectations, implementing sustainable practices isn’t just a good opportunity for restaurants, but it will be imperative for the long-term health and success of the industry. The restaurant industry is facing many challenges today including slowing growth, high operating costs, employee recruitment and retention, and the need to attract a younger demographic of customers. A corporate commitment to sustainability for a restaurant business seems like it should be a no-brainer, as it directly addresses each of these issues.
About three in four Millennials (74 percent) and Generation Z consumers (72 percent) are willing to pay more for sustainable products and services, according to The Nielsen Company. Are you making an effort to reach these socially conscious young people? The report also states that consumer brands that demonstrate a commitment to sustainability outperform those that don’t, growing 4 percent globally compared to less than 1 percent. In addition, 86 percent of consumers are willing to switch brands to one associated with a good cause given similar price and quality, according to the 2017 Cone Communications CSR Study. This number is up from 63 percent in 1993.
Sustainability can also have a major impact on internal stakeholders by helping to recruit top talent, increase employee engagement and help reduce turnover by retaining employees. Reducing turnover and increasing the engagement and production of employees can lead to substantial cost savings and efficiency gains for large businesses. The National Environmental Education Foundation (NEEF) has done extensive research on the impacts of sustainability on employee engagement. In their most recent survey report, Winning in the Marketplace and the Workplace, NEEF concludes that a commitment to sustainability positively impacts nearly all dimensions of traditional employee engagement including alignment, pride, discretionary effort, and advocacy of the company. An engaged employee who is proud of where they work is likely to be a more productive worker and to stay with a company longer.
Within restaurants, sustainable practices will benefit a business’s bottom line by reducing operating costs. Reducing a business’s impact on the environment means reducing waste, and reducing waste means saving money.
Firing Up Sustainability in the Restaurant Industry: A 10-Step Journey
Cut Energy Waste
Most restaurants have enormous opportunities for cost savings through energy efficiency upgrades and renewable energy investments. It’s important to start with the development of a comprehensive energy management plan which should include the use of an Energy Management System (EMS) to allow for real-time tracking and monitoring of energy use across facilities. Abate Energy Group is a company that provides EMS technology to help restaurants identify energy waste in their operations and drastically reduce energy use through behavior change, new policies, or energy efficiency upgrades. Efficiency opportunities in the restaurant industry include LED lighting retrofits, Energy Star/efficient appliance upgrades, motion sensors, HVAC upgrades, and behavior changes. Many states provide rebates for businesses that install energy-efficient equipment, which can make the return on investment very attractive for restaurants.
Move Towards Zero Waste
Reducing solid waste, and especially food waste is a major opportunity for many restaurants to save money and enhance public perception and community relations. According to the World Resources Institute, approximately one-third of all food produced in the world intended for human consumption is lost or wasted. This inefficiency equates to a loss of $940 billion per year and contributes to 8% of annual global greenhouse gas emissions. These financial losses are much greater for the food waste that’s closer to the fork than to the farm because all the costs of agriculture, production, and distribution are embedded in that waste. A new landmark study on the business case for reducing waste has shown that in 1,200 business sites across 17 countries and 700 companies that have implemented food loss and waste reduction programs, 99% of them earned a positive return on investment. The median benefit-cost ratio for these 700 companies implementing food waste reduction programs was 14:1, meaning for every $1 invested, the median site realized a return of $14 in savings. Restaurants can address waste by implementing food waste composting, reduction, and reuse programs, implementing comprehensive recycling programs, eliminating the use of Styrofoam, and developing a zero-waste management plan. The True Zero Waste certification program can be a great guide for businesses to not only reduce food waste but to move their entire facility to zero waste.
Reduce Water Waste
Many of us are aware of the important water security issues facing California and other parts of the country and recognize that reducing water use is becoming more important to be a responsible business and good neighbor in the community. As our world continues to address the pressing issue of water scarcity and security, businesses will be wise to develop efficient practices that mitigate risk against future water regulations and build long-term resiliency within their operations. However, it’s important to understand the numerous economic benefits of water reduction in restaurants. Reducing water use not only directly saves money on the water bill, but it also saves money on the energy used to pump the water, the energy used to heat the water, and the costs associated with sending the water off to be treated. Like energy use, restaurants need to develop comprehensive water management plans that quantify the company’s total water use and cost, set reduction targets and develop strategies to reduce over time. APANA is a cutting-edge water management technology company that uses internet-of-things technology to track and monitor water use in facilities and provides automated alerts to identify and eliminate water waste. Some water efficiency opportunities in restaurants include low-flow nozzles and fixtures, water capture and reuse dishwasher systems, waterless urinals, and behavior change.
Manage Your Emissions
Greenhouse gas emissions are associated with many different aspects of the restaurant business from electricity, propane, and natural gas used in operations, to fuel used in employee commuting and embedded energy in supply chain activities. The first step in reducing greenhouse gas (GHG) emissions is to understand the company’s current carbon footprint or the total greenhouse gas emissions associated with a business’s operations. Many sustainability consulting firms offer GHG calculating services, and can also help companies identify GHG reduction opportunities and develop GHG management plans. Upgrading to more efficient equipment, increasing recycling rates, developing employee carpool programs, and using hybrid or electric vehicles can all contribute to GHG emission reductions. The use of on-site renewable energy systems or the purchase of off-site renewable energy through direct access energy providers, community choice aggregate energy providers, or Renewable Energy Certificates (RECs) can help restaurants reduce the greenhouse gas emissions associated with their operations, and also reduce energy costs in some cases. Companies that want to be a climate leader and enhance their brand reputation can take the additional step of purchasing carbon credits to offset their GHG emissions and become certified carbon-neutral companies. Natural Capital Partners is a highly regarded offset company that offers these offsets and certifications.
Impact Your Supply Chain
Another important sustainability issue for restaurants is the impacts across their entire value chain and the types of food products they are purchasing and serving to customers. By sourcing more local, organic, and healthy ingredients, restaurants can reduce the social and environmental impacts of doing business while also appealing to a new demographic of customers who are becoming more conscious about their food choices. Restaurants can develop sustainable procurement policies to help them reduce the impacts of their purchasing decisions by seeking products made from recycled material, which are durable and recyclable, and come with minimal or sustainable packaging. A supply chain sustainability engagement program can help address issues in the supply chain by collecting information on the current practices of the company’s significant suppliers, and then working with those suppliers to help them implement more sustainable practices and understand the benefits. These programs can not only reduce the impacts on the restaurant’s overall footprint but can also help strengthen relationships with key suppliers.
Fire it Up!
Implementing an effective and authentic sustainability strategy in a large organization is not an easy task. Our consulting firm is proud to be a leader in this space by assisting companies that want to realize the numerous social, environmental, and economic benefits of sustainability, and the National Restaurant Association’s Conserve program is also a great resource. We have developed ten steps that can help guide restaurant businesses that are ready to begin their sustainability journey.
1. Engage Stakeholders
To implement a successful sustainability program, the process typically needs to begin by engaging and receiving input from as many stakeholders as possible. This includes all groups of people that affect, or are affected by, the business including employees, suppliers, customers, community members, local non-profits, government, and others.
2. Assess Current Business Operations
Take a detailed look at the business and assess the company’s operations. Determine where the company spends the most money, and where the company uses the most resources, understand the employee turnover rate, assess relationships with key suppliers, identify where improvements can and should be made, and identify where the company is excelling.
3. Identify Key Material Impact Areas
After a complete assessment of the business, develop a list of areas where the restaurant has the greatest material impacts.
4. Develop a Sustainability Metrics Tracking System
Develop a comprehensive program to track all important sustainability metrics within the organization. This will include metrics such as energy use, water use, GHG emissions, waste, etc. Ideally, this metrics system will be updated regularly so the business can identify trends and opportunities for improvement. Use indicators specific to your business such as data per customer or square foot of building space.
5. Develop Baseline and Benchmark Performance
Determine what the company’s baseline performance is for each metric being tracked. Understand how much energy and water is used, waste is created and GHG emitted over the last year. This is your company’s baseline that you can use to set targets and gauge success. Benchmark this baseline against industry best practices and other peers to get an idea of where you currently stand in performance.
6. Set Formal Reduction Targets and Goals
Work with your stakeholders, research industry best practices or work with consultants to determine what would be an appropriate reduction target for each metric, and establish the overarching sustainability goals that will guide your actions. Targets and goals should be achievable, but should also be ambitious enough to excite, motivate, and engage employees and stakeholders.
7. Develop Employee Engagement Programs
Develop a formal program to engage employees in the company’s sustainability efforts. It can be valuable to have this initiative led by an interdepartmental sustainability team consisting of employees from all departments. Interdepartmental teams help to break down the silos within an organization and create discussions around important sustainability challenges and opportunities faced by each different department. Award programs to recognize and reward sustainability leadership by employees can encourage engagement, and engagement tools such as WeSpire can be very valuable as well.
8. Identify New Technologies, Policies and Programs
Assess the various key material impact areas, metrics, and reduction targets that have been established, and then research various technologies, policies, or programs that can help your company achieve its goals in each of these areas. Sustainability consultants can help guide businesses in this process by bringing forward best practices, and new technologies and conducting detailed financial analyses of potential projects.
After identifying and approving new technologies, policies, and practices, it is then time to implement them. It is important to keep employees and stakeholders informed on this process with constant communication. Communicating the successes of early sustainability initiatives can motivate employees, keep them engaged in sustainability, create a snowball effect, and help build a culture of embedded sustainability within the company.
10. Continual Improvement
The sustainability journey is never over – there is no endpoint. The goal is to continually improve your practices over time, continue to reduce costs, continue to build resiliency, and continue to contribute to a better world for everyone. Producing annual sustainability reports can help communicate your company’s success and help continually evaluate your progress over time. Numerous frameworks can be used to help guide your business in continual improvement including B Lab’s B Impact Assessment used for B Corp certification and the Global Reporting Initiative (GRI) framework.
Next month, leadership from the largest and most impactful restaurant chains in the world will convene at the annual Black Box Intelligence (formerly TDn2K) Global Best Practices Conference in Dallas, TX. I’m very much looking forward to attending the conference next month and expanding on this article to further communicate the importance and benefits of sustainability in the restaurant industry. There are huge opportunities ahead!