Why KPI setting is the missing ingredient in food waste reduction
Every food and drink business already runs on KPIs.
Sales, staff turnover, customer satisfaction, gross profit, and efficiencies on the production line. These get tracked and reported, and often incentivised, for example, through bonuses, appraisals or supplier performance.
Food waste reduction rarely gets incentivised, despite usually representing a bigger, more controllable cost than incentivised KPIs.
Your business generates waste data every day, but very few businesses use that data to measure success of food waste reduction initiatives and interventions. If you measure food waste regularly, you should set similar metrics for success – including KPIs. Otherwise, it’s lost sales, lost stock, wasted labour, and profit going directly into the food waste bin.
A KPI needs to be specific enough to track, comparable over-time, and tied to an action someone can take. The tracking spreadsheets in the ‘One Month Challenge’ are a good illustration of what that looks like in practice. They build up a small family of KPIs, each giving valuable, reportable metrics.
Total weight of food waste
Total tonnage of waste can be useful to see the scale of the challenge ahead, but it is important to break that down into smaller, actionable KPIs, for example:
- a hospitality business tracks waste per cover
- a manufacturer would track waste per unit or per tonne produced
- a retailer might track shrink per £ of sales.
Cost, not just weight
Kilograms matter for a sustainability report. Pounds and pence get attention from people who don't normally think about waste. Converting weight into a cost per unit of output, and an annualised cost to the business, turns a waste issue into a cost to the business.
A breakdown by source of waste
Zero Waste Scotland helps you split waste by where / how it happens. In hospitality that might be spoilage, preparation, plate and buffet waste. In manufacturing it might be raw material loss, process waste, and rejected product. In retail it might be over-ordering, damage and date-code write-offs. This is probably the most important KPI because each category points to a different intervention. The breakdown makes the issue manageable.
The true cost, not just the raw material price
WRAP's research into hospitality found the cost of food purchase is typically only around half to two thirds of what wasted food actually costs a business, once you add the energy, water, labour, transport, administration and consumables that went into it before it was binned. The same logic holds anywhere in the supply chain. The ingredient cost is rarely the whole story, and a KPI built only on raw material price will understate the business case for doing something about it.
Change over time
Measure and monitor on a regular basis to show impact. Comparing an early period against a later one, after a process change, a new spec, or staff training, this evidences success, or a need to try something else.
Getting started
A business doesn't need bespoke software to begin, and the same shape of KPI works whether the operation is a production line, a distribution centre, a retailer, or a kitchen.
- Normalise for output (per unit, per cover, per £££ of sales) so figures are comparable.
- Track cost as well as weight. Cost moves people that kilograms don't.
- Break the total down by cause, so action can be targeted at the team and process responsible.
- Include the wider costs beyond raw material price, so the business case reflects reality.
- Set a target for reduction and reward when it is achieved.
