Exploring the True Cost of Unsold Food in Retail

Our objectives for the cost of unsold food in retail project were to:

a. Map the exit routes for a sample of fresh, short expiry categories across a sample of food retailers in Europe, identifying the principle causes of food exit.

b. Identify the costs, both visible and hidden, of each of the different exit routes, from donation to people, through to land fill and everything in between.

c. Develop an interactive model that can calculate the true cost of food waste, at an item level, considering the costs to exit the product, and the potential costs of prevention, such as lost sales and reduced gross margin.

We carried out interviews and observations with four food retailers1, two in the UK and two in Europe. We attended seminars and discussion group meetings with ECR Retail Loss to strengthen the mapping process and the development of the true cost of unsold food model. We also carried out a detailed review of previous academic and industry projects, that supported our findings from the case studies on most wasted foods and exit routes.

We concluded that a full calculation of the true cost of food waste would include the cost to serve of items wasted or the profit foregone, in addition to the cost of handling food not sold at full price, the additional costs attached to different exit routes and consequential losses.