Food waste poses a business challenge

Grocers look to improve sustainability

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MADISON, Wis. — Food waste is more than a societal problem, according to Brandon Scholz, president and CEO of the Wisconsin Grocers Association. For grocery stores, food waste is also a business challenge — one that is not always a challenge they can solve. Often, food is wasted by the consumer, not the grocer.

“When you waste food, when you have to throw it away, you will never find a way to get that money back,” Scholz said. “For a grocer, that’s tough.”

Scholz spoke Nov. 28, 2023, at the Professional Dairy Producers Dairy Insights Summit in Madison. He said grocery stores are more likely to avoid wasting food than anyone else, due to tight margins. 

Scholz said for every $100 of food that a grocery store sells, the grocer is left with 80 cents after expenses related to wages, health care, cost of goods, cost of financing, credit card fees and the rest of the paydown. And that 80-cent margin is before taxes.

The dairy section probably has the best inventory control of the store, Scholz said. First, it has a cooler. Second, it is different from other departments like produce, meat and deli in terms of supplier and delivery.

“When we look at waste in the dairy aisle, it’s very little,” Scholz said. “Milk is (delivered) on a fairly routine basis.”

When there is potential food waste in other departments, a grocer must be careful about how it is handled. Most consumers assume that leftover products can be donated. Scholz said that is easier said than done when trying to keep products moving on the shelves and honoring the sell-by dates.

“There’s no question that grocers do what they can to support a cause whether it’s the food bank or a food pantry,” Scholz said. “Food safety laws in Wisconsin and across the country are really prohibitive in terms of what we can give away.”

It can also be difficult to find organizations that will accept food donations, in part because they may not have a workforce or transportation that can pick up food or a grocer who is able to deliver it. One successful donation agreement that Scholz has seen is grocers who donate produce, beef and bakery items to the zoo. Another grocer was donating food to a pig farmer who fed his stock with the waste.

Grocery stores can eliminate waste by repurposing items that can no longer be sold as an ingredient. Overripe bananas from the produce department can be made into banana bread, leftover rotisserie chicken can be made into chicken salad in the deli, and beef can be trimmed and ground in the meat department.

“Those are things they can save money on and things that consumers most likely don’t know what’s happened to that product before it got to the store,” Scholz said. “There’s nothing wrong with what’s going on here.”

Inventory control is a way to reduce expenses as well as waste. There are companies that specialize in going to stores to help control inventory and rotate products to try to better appeal to the customers.

While the coronavirus pandemic made it harder for grocery stores to manage inventory and prices, it did help to educate consumers, Scholz said. Many customers were more conscious about the quantity of items they were purchasing. They were also more careful about making a list, meal planning and cooking at home. While impulse purchases and flash sales are a necessary part of a grocer’s business, educating consumers on how to shop smarter can eliminate waste as well.

“It costs money to throw stuff in the dumpster, but there is a responsibility that grocers have to their community,” Scholz said. “They are an integral part of their community, and the last thing they want to do is be someone who doesn’t try to make their community better.”

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