The Future of Sustainability in Foodservice
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- Dwayne Bridges
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1 The Future of Sustainability in Foodservice A MESSAGE FROM GEORGIA-PACIFIC: At Georgia-Pacific, we define sustainability as meeting the needs of society today without jeopardizing our ability to do so in the future. We create long-term value by using resources efficiently to provide innovative products and solutions that meet the needs of customers and society, while operating in a manner that is environmentally and socially responsible and economically sound. The following paper, which is based on recent research by Technomic, suggests that foodservice operators are striving to make their operations more sustainable and meet the growing needs of their customers. Many are finding that the most sustainable solutions are those that involve the right balance of the social, economic and environmental dimensions of sustainability. We hope that you find this report valuable. John Mulcahy, Vice President Sustainability & Compliance Georgia-Pacific Professional INTRODUCTION Today s foodservice operator faces the difficult, ongoing challenge of driving traffic and controlling costs in a highly competitive environment. In this environment, food and beverage quality, competitive pricing, attentiveness and speed of service, and cleanliness have become table stakes. As such, operators are aggressively seeking impactful points of differentiation. Being able to execute and communicate a well-defined sustainability program and its benefits to the foodservice patron may very well prove to be such a differentiator in the future. Consumers want to make a difference and reward operators that engage in important sustainability efforts. But, quite frankly, most consumers do not understand many of the complex sustainability issues that are relevant to foodservice operations. Still others want operators to make any patron contributions to sustainability initiatives very easy (e.g., having two waste bins recyclable and non-recyclable not five bins requiring careful separation). But, today, consumers leading criteria for where to purchase food continue to be quality, price, convenience, and other traditional factors. However, when operator sustainability initiatives enter the collective consumers top 6 or 7 criteria, as expected, the benefits of having a comprehensive sustainability program will become more pronounced to suppliers and operators. And suppliers and operators, through consumer awareness and education, will have the ability to make sustainability a stronger consideration. With greater consumer consideration, foodservice suppliers will be able to show operators that sustainability initiatives have tangible benefits to the consumer. It will be these tangible benefits that demonstrate the potential profitability that operators can achieve by purchasing sustainable menu items and supplies for their businesses. This, in fact, is an important takeaway from this white paper briefing - that operators willingness to purchase sustainable products is dependent on their recognizing the operational and fiscal advantages of doing so. In short, sustainability is a societal, environmental, and economic issue for foodservice operators and not necessarily in that order. The Future of Sustainability in Foodservice 2014 Georgia-Pacific Consumer Products LP. all rights reserved.
2 DEFINING SUSTAINABILITY IS THE NEXT STEP Only one in five consumers (20%) self-report that they have a strong understanding of sustainability (a percentage that is likely overstated). Furthermore, few consumers define sustainability in the same way. Over time, sustainability, corporate social responsibility (CSR), environmentally-friendly, and green are terms that have become misinterpreted and intermingled to the point that many consumers consider a wide range of issues to fall under the sustainability umbrella. Below is a listing of issues that consumers contend can reasonably be included in any definition of sustainability. Consumer Understanding of Sustainability 20% Moderate understanding Limited understanding 6% 50% No understanding Strong understanding Source: Technomic Consumer Survey (12/13) Elements of Consumers Definition of Sustainability Community involvement and development Charitable giving Diversity Living wages Equal rights Health insurance and other benefits Working conditions (here and abroad) Air pollution/greenhouse gas emissions Animal welfare/ humane treatment Carbon footprint Climate change Energy efficiency Recycling and reuse Source reduction Recycling and reuse Water pollution Fair trade/ethical sourcing Local sourcing Nutritional content Package materials/ material efficiency Product/ingredient safety Traceability Use of antibiotics or growth hormones The reality is that few companies in the foodservice industry have the resources or interest to become involved with a significant number of these issues in a meaningful way. Rather, it becomes important that foodservice suppliers and operators re-direct any sustainability discussion toward how they themselves define these terms. This will enable suppliers and operators to be part of establishing industry definitions and expectations. Of course, these definitions and expectations can be established to best align with one s own activities. Industry thought leaders will have the first opportunity to establish definitions; all else being equal, foodservice thought leaders efforts and definitions will be deemed most supportable. Only when issues are more clearly defined will widespread support for operator involvement develop; consumers have to understand the issues and understand what a particular cause means to themselves, their family, and their community. That is the point at which interest can evolve into commitment. Also important to note is that the issues that resonate most with consumers will be those that they themselves best understand. Currently, such issues include recycling, energy efficiency, and waste reduction, 2 The Future of Sustainability in Foodservice
3 among others. Consumers engage in these types of activities in their own lives so they have an expectation that these are issues easily replicated by foodservice operators. These are the issues that can be considered gateway issues to more complex sustainability concerns. GIVE OPERATORS A REASON TO INVEST IN SUSTAINABILITY More than half (53%) of all foodservice operators indicate that a formal, actionable sustainability strategy is necessary to remain competitive in the next two years. Without such a strategy, operators fear that they will be unprepared for the inevitable changing demands of consumers. Most operators understand that a proliferation of operator sustainability programs (and the corresponding marketing/communication of such programs) is a matter of when, not if. Hence, there is a need to develop formal strategies (if they haven t already) to ensure proper budgeting, resources, and planning. Operator Need for Sustainability Strategy Not sure Yes No 53% Source: Technomic Operator Survey (12/13) Operators also want assurances that sustainability efforts will resonate with their customers. Any investment must be based on a supportable hypothesis and actual proof that a sustainability commitment will yield positive financial results. The facts also point to most operators (national accounts, regional and local chains, street operators and noncommercial) having spending constraints. Therefore, a future sustainability plan has to be deemed costeffective. All told, from the operator perspective, an applicable equation for the effective execution of sustainability is: Cost effective implementation + Positive financial impact + Wise use of resources = Successful sustainability program In other words, a sustainability program must satisfy operational and profitability objectives as well as environmental goals; only under those circumstances will a sustainability program continue (and thrive). The above may not be a popular view to express. Ideally, the greater good benefits would be the primary, largely altruistic goal. But the reality is that few operators will maintain any program (sustainability or otherwise) that cannot demonstrate a return on investment. Of course, many operators genuinely want to make significant contributions to society; the chart below identifies the drivers that operators report being behind sustainability 3 The Future of Sustainability in Foodservice
4 initiatives. But, it is widely acknowledged that these drivers come with a caveat that any efforts make sense from an economic standpoint first. Primary Driver of Sustainability Efforts 12% Internal commitment to cause 29% 59% Customer interest in operator proactivity Competitive pressures Source: Technomic Operator Survey (12/13) THE RULES OF SUSTAINABILITY ENGAGEMENT WILL NEED TO CHANGE If foodservice suppliers intend to generate greater interest in sustainable products and establish their organizations as leading-edge, then there must be dedication to taking a new approach. Because (as of early 2014) consumers do not consistently identify any foodservice operators as clear leaders in sustainability. As a matter of fact, in a recent Technomic survey of 1,500 consumers (with each consumer having the opportunity to identify as many as 5 leaders), no one operator was identified by more than 19% of the population as dedicated to sustainability. Similarly, few foodservice suppliers are consistently cited by operators as being on the leading edge of specific sustainability causes. The bottom line is that there is a void in sustainability leadership in the foodservice industry; perhaps not in action, but certainly in consumer and operator perception. The good news is that suppliers still have the opportunity to interject their organizations into the discussion of leadership. To do so, suppliers need to appeal to consumers interests and educate them on the benefits of specific products. A starting point has to be an understanding of what consumers consider their own priorities. Personal Importance of Sustainability Concerns (Top 10) Humane and safe working conditions 86% Ensuring product/ingredient safety 86% Health and wellness 84% Equal rights 83% Providing a quality work environment 82% Reducing water pollution 82% Recycling and reuse 78% Employee wages 78% Supporting the local community 76% Energy efficiency 76% Source: Technomic Consumer Survey 12/13 (Base: Consumers) Question: how important are the following 30+ issues to you personally?) (%s reflect those indicating critical or very important) 4 The Future of Sustainability in Foodservice
5 Along a parallel path, suppliers should be educating foodservice operators on the operational and financial benefits of implementing sustainable programs that meet the needs of the consumer. It is this appeal to the operator that will be most meaningful. Sustainability in the foodservice industry will only expand if operators realize operational benefits. Therefore, suppliers would be wise to present a business case for sustainability highlighting the operational and economic benefits along with the societal and environmental impacts. While discussions of sustainability generally focus on the 3 Ps People, Planet, and Plate, the future success of sustainability in foodservice depends on discussions about a different P, Profitability. Foodservice suppliers have the ability to help operators achieve such profitability and, in turn, contribute to their own sustainability successes while making a positive social and environmental impact. Headquartered in Atlanta, Ga., Georgia-Pacific is one of the world s leading manufacturers and marketers of building products, tissue, packaging, paper, cellulose and related chemicals. The organization has always invested in the communities in which its employees live and work, and the GP Foundation supports initiatives to improve the quality of life for everyone. GP foodservice solutions are designed to help operators reduce consumption and waste, demonstrate a commitment to sustainability, help improve guest and staff hygiene, and increase operational efficiency. Because reputation means everything, we help enhance operator image with high quality branded products that patrons know and trust. Georgia-Pacific creates long-term value by using resources efficiently to provide innovative products and solutions that meet the needs of customers and society, while operating in a manner that is environmentally and socially responsible and economically sound. Technomic is the leading dedicated fact-based research and consulting firm serving the food industry. For over 45 years the firm has been tracking trends, advising clients, and publishing key industry reports. Georgia-Pacific authored this white paper in collaboration with Technomic. All data points in this white paper were collected via recently completed Technomic foodservice operator and consumer surveys. Technomic specializes in business planning, competitive evaluations, customer satisfaction, distribution studies, go-to-market effectiveness, opportunity assessments, specialty channels, and trend forecasting. Its clients are restaurants and supermarket chains, distributors, food/beverage/non-foods manufacturers, and trade associations. Technomic is headquartered in Chicago, Illinois. 5 The Future of Sustainability in Foodservice
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