HARVARD BUSNESS SCHOOL

Business Solutions That Help Cut Food Waste

Up to 40 percent of food grown in the United States for human consumption is wasted. But
solutions are starting to come together from retailers, farmers, academics, policy makers,
and social service organizations, according to José Alvarez. [by Dina Gerdeman]

As much as 40 percent of food grown in the United States for human consumption is wasted.
Source: Eivaisla
After decades of wasteful food practices, where perfectly good food is discarded even as poverty
keeps many families hungry, solutions are starting to come together from food retailers, farmers,
academics, policy makers, and social service organizations.
“We’re seeing a movement to rethink what we are doing as a food industry and as consumers,”
says José Alvarez, a senior lecturer at Harvard Business School who was once CEO for Stop &
Shop markets. “We’re trying to find ways to take the food that supermarkets and manufacturers
and farmers can’t sell, recover it, and give it to people who could use a donation or reduced price
meal. We are also trying to reverse decades of misguided thinking about what constitutes safe,
consumable food.” “There are millions of pounds of delicious, nutritious food that is just plowed
under every year”.Alvarez was a facilitator during a conference in June at Harvard Law School
on the topic Reduce and Recover: Save Food for People. The conference included seminal
figures in the movement, such as Dana Gunders of the Natural Resources Defense Council,
author of the white paper Wasted (pdf); Emily Broad Leib of the Harvard Food Law and Policy
Clinic, co-author with Gunders of The Dating Game (pdf); and Tristram Stuart, author of the
book Waste.
The issue is more than just an academic subject for Alvarez. An immigrant to the United States,
his mother passionately reinforced at her dinner table the message of not wasting food. It was
clear that other family members in their mother country weren’t enjoying food abundance.
So, combatting the wasting of food has become something of a crusade for Alvarez. At the
conference, leaders from a range of fields discussed how to remedy the fact that up to 40 percent
of the food grown in the United States for human consumption is wasted, even as about 15
percent of US households are considered “food insecure,” meaning they lack reliable access to
affordable, nutritious food.
As a produce buyer early in his career, Alvarez would visit farms after they had been picked over
for the best fruits and vegetables to be sold in stores and was astounded at the amount of edible
food that was rejected.
“If you could get consumers to go to a farm to see what the fields look like after the perfect
product gets picked, they would be sick to their stomachs at all of the perfectly good food left
behind,” he says. “There are millions of pounds of delicious, nutritious food that is just plowed
under every year.” In recent years, that has started to change.

Conference attendees discussed organized efforts to collect and put to good use food that would
otherwise be discarded. For example, voluntary gleaners are visiting farms to gather produce that
had been rejected as too imperfect to sell in regular stores, so the food can be donated. And tech
experts are creating computer applications that allow farmers, retailers, manufacturers, and food
wholesalers to connect with organizations that accept and distribute food that would otherwise
get tossed.

Food waste solutions

Alvarez has written several case studies, including a 2012 piece about the former president of
Trader Joe’s and a fellow at Harvard University’s Advanced Leadership Initiative: Doug Rauch:
Solving the American Food Paradox. The case was co-authored by Ryan Johnson, research
associate with the Global Research Group.
Rauch came up with one solution: In June 2015, he opened Daily Table, a not-for-profit grocery
store in Dorchester, Massachusetts that works with growers, supermarkets, manufacturers, and
other suppliers who donate or offer special buying opportunities for their excess food. The store
then sells the food at significantly reduced prices from what is charged by grocery and
convenience stores—in many cases, half the price—allowing families to eat healthier even on a
tight budget.
Open for a little more than a year, the store is thriving—and it may be the first of many like it to
come, says Alvarez, who joined the board of the organization after writing the case.
A key decision for Rauch was to sell the food at low cost rather than simply hand it out for free
at food shelters.
For many people accepting handouts is embarrassing, Rauch says. “They want to provide for
their family in a dignified manner. Retail, because the customer holds the power of the purse,
gives the power to the shopper and builds a more dignified exchange into the relationship.”
In addition to produce, bread, and other grocery items, Daily Table operates a large commercial
kitchen with executive chef Ismail Samad, whose team prepares healthy “grab-and-go” meals,
including chicken, fish, beef, and vegetarian entrees, as well as a variety of soups, chili,
smoothies, and salads. (Entrees typically cost $1.99 to $3.99; a large basic salad is $1.49, and a
large salad with a cooked protein is $2.99.) Ready-to-eat meals have proven popular because
many people in the community use public transportation as they juggle multiple jobs and have
little time to cook.
Recently, the organization did a study to understand whether a family on the Supplemental
Nutrition Assistance Program—formerly known as the Food Stamp Program—could make it
through the month eating at Daily Table. The results showed that Daily Table is likely the only
place in the United States where it is possible to do so.
“One of the key things Doug understood after meeting with community groups was that just
providing the ingredients wasn’t enough,” says Alvarez, noting that Dorchester has one of the
highest obesity rates in Massachusetts. “It’s helping the community find an easy and affordable
way to feed themselves, and it’s having a huge impact.”
Alvarez, who spent 20 years in the retail food industry, looked for his own solutions to the food
waste problem as chief executive of Stop & Shop from 2006 to 2008, where he oversaw $16
billion in sales. One thing that irked him: Store food displays were too big, which meant a lot of
food was wasted, particularly perishables including seafood, meat, and produce.
“It was all about pile it high, make it look beautiful, and watch it fly out the door.”
But a day later, he would observe, 10 pounds of food had been sold, but another 20 pounds
remained, touched by numerous shoppers and left wilting under the lights. “I looked at it and
said, there’s a lot of waste here. What can we do?”
Staging with smaller amounts of food was a start. Alvarez and his team took a numbers-based
approach, putting out for display only the approximate amount of food the store was likely to sell
that day. This allowed managers to order what was needed for the day with any oversupply
stored safely in boxes and refrigerated to keep it fresher longer.
“If you’re going to sell half a box, only show half a box,” was the idea, he says. “Within 18
months of implementing this new process, we were saving $100 million a year in wasted food
and the costs associated with handling and disposing of it.”

The perfect is the enemy of the good

Part of the food waste problem also lies in our quest for marketing perfection, Alvarez says.
“We’ve created a really high bar for what’s acceptable to be marketed and eaten by humans,” he
says. “The apple that you see in the store has to be the perfect apple.”
He puts it this way: If you start with the premise that grocery store displays always have to be
full and always have to look perfect, employees eliminate a product that doesn’t look right,
throwing it into the compost heap. That drives similar behavior in warehouse and packing house
workers. It goes all the way to the person who picks the fruit and passes over many slightly
imperfect pieces, concerned that compensation won’t come from fruit that’s on the edge.
“You wind up with a system that drives waste all the way through,” Alvarez says. “So we’re
trying to get the industry to think about: Can we have ugly produce—carrots with an extra leg—
when we’re used to the perfect carrot? In nature, carrots come out in different ways. Nature isn’t
perfect.”
Another issue that contributes to food waste are “consume by” date labels on products. Alvarez
says they were created in the 1970s, to find an easy way for workers in stores to rotate products,
stacking the newly arrived items in the back.
We tend to think that food is no longer safe to eat after the dates on these labels, but Alvarez
notes that the products generally say “best if used by” and says it’s a misperception that the food
goes bad a day after the date on the product. “The date labels have nothing to do with the safety
and expiration of the food,” he says.
He is encouraged by congressional efforts to standardize food date labels and do away with what
is now a patchwork of state laws.
“A lot of manufacturers and retailers are listening,” he says. “Everyone has a grandmother who
says, ‘Don’t waste food.’ This has a lot of momentum, because it’s common sense.”