Food service companies: How to find returns on sustainability investments
Six strategies that can increase gains and reduce costs
How can food and agriculture companies achieve a return on sustainability investments? Deloitte and NYU Stern Center for Sustainable Business (CSB) conducted a survey together to answer this question. We then published our findings, covering the food supply chain, in October 2024. This article focuses on the top three revenue-generating and cost-saving strategies that food service companies can employ to make the most of their sustainability investments.
Context
To better understand the financial drivers for investing in sustainability strategies across the food and agriculture value chain, Deloitte collaborated with CSB to use its Return on Sustainability Investment (ROSI™) methodology and framework.
The study concentrated on 12 ROSI™ strategies and included a 25-question survey completed by 350 global executives from five value chain segments: processing, manufacturing, food services, restaurants, and retail. Additionally, we interviewed leaders in the food and agriculture sector to further understand the survey results.
The results demonstrate a business case for investing in sustainability across the food and agriculture value chain and highlight the importance of cross-value chain collaboration.
Read on to learn more about the most impactful sustainability strategies that food service providers have deployed to add value to their businesses.
Food service value chain overview
Food service providers either distribute food purchased from processors and manufacturers to institutional clients, or they prepare it. In some cases, they do both. Their clients range in size of operations and needs—from public and private cafeterias to hospitals and universities. Given that they may not have full control over the facilities in which they operate, they often need to convince their clients of the value of implementing sustainability strategies.
Even so, our research shows that food service providers achieve relatively high rates of revenue growth from investing in sustainability compared to other segments, albeit with relatively modest growth: 86% saw at least 2% revenue growth, while just 11% of respondents reported revenue growth of more than 5%.
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Top three revenue growth strategies
Food service providers that experienced the most revenue gains as a result of their sustainability investments deployed these top strategies:
- Sustainable and responsible supply chain sourcing: Sourcing food from sustainable and responsible manufacturers and processors gave some food service providers an opportunity to differentiate themselves in the marketplace, especially when downstream consumers are willing to pay more for sustainable products.
- Invest in water stewardship: Not only can conserving water decrease costs, but also it can help strengthen client relationships since food service companies often work out of client-owned settings.
- Improve energy management: Similar to investing in water stewardship, when food service providers make an effort to reduce their energy consumption, it can have an impact on revenue growth. In cases of collaboration between the food service provider and client in client-owned facilities, it can lead to improved client relationships.
Both sustainable and responsible supply chain sourcing and improved energy management also resulted in cost savings for food service providers.
Top three cost-saving strategies
To cut down on their costs, food service providers found the following sustainability strategies most beneficial:
- Improve energy management: Food service includes many energy-intensive activities, such as refrigeration, transportation, and storage, so utilizing energy-saving practices such as installing more energy-efficient equipment or increasing the use of renewable energy can lead to significant savings.
- Provide healthy nutritious food products: While perhaps less evident, this strategy leads to cost savings by reducing volatility and risk. An excessively unhealthy food supply and menu, for example, may create reputational exposure and fines in places where high sugar or fat content is regulated.
- Sustainable and responsible supply chain sourcing: As noted earlier, survey respondents have noted that responsible and sustainable sourcing can lead to more stable supply, fewer supply disruptions, and improved risk mitigation related to regulatory non-compliance and negative publicity—all of which can translate into cost savings.
Path forward
Food service providers see the most success when they work to understand where their sustainability goals overlap with those of their customers. Working alongside customers can help create visibility into the benefits of energy and water conservation practices and encourage the potential adoption thereof.
Sometimes end consumers have the ability to influence purchase decisions, so food service providers that are proactive in adapting their product offerings to evolving consumer preferences often experience a competitive advantage.
*All charts are based on data taken from the NYU Stern Center for Sustainable Business (CSB) report published in October 2024
