The cost of going green

We all know going green is the right thing to do, but the effect of those sustainability programs doesn’t always sit right with the bottom line. According to The Big Picture research, the actual effect on budgets varies by market segment and by program. B&I (42%) and colleges (37%) were the most likely segments to report an increase in costs due to sustainability initiatives like compostable disposables and local purchasing. Hospitals (17%) were the most likely to report these practices have actually decreased costs. While programs like recycling, water and electrical conservation and, in some cases, local purchasing have been known to decrease costs, most operators FSD spoke to report that it is disposables that are still causing the most cost problems.

Julie Stewart, foodservice manager for SAS, in Cary, N.C., says her department offers a wide variety of sustainability programs, which includes campus gardens, recycling and composting; however, the one area that has increased her costs is sustainable disposables.

“We have experienced an increase in the cost of disposables as we converted some items to biodegradable, but we have not changed completely over to those because of the cost,” Stewart says. “We will experience a cost reduction in disposable containers as a result of our Green To Go container pilot. We think the cost savings of recycling and composting offset some increase in cost of more sustainable products. We are hoping for a $4,000 decrease in costs because of these containers over the first year in one café.”

At Blue Cross & Blue Shield (BCBS) of Rhode Island, shopping around allowed its foodservice department to offer compostable disposables and actually see a decrease in costs. Foodservice is 100% subsidized by BCBS. Michael Mooney, manager for Epicurean Feast at the account, says that when he was looking to make the switch to compostable disposables, he was able to save the company money by going local.

“They want us to use all compostable products, right down to the trash bags,” Mooney says. “What you’ve got to keep in mind is a lot of the bigger companies have contracts with the big distributors so they get huge rebates. However, I found a local vendor here where the compostable items are cheaper than the plastic stuff I could get from the big companies.”

Sustainable disposables are also to blame for higher costs at the University of Nebraska, Omaha. Michael Milone, foodservice director, says his costs increased by about 50% with the switch to compostable disposables. “The amount of products available is limited, so therefore they are more expensive,” he says. “As a university, we want to be proactive in the foodservice area. However, I feel that costs will remain high until more companies get on board and start buying and selling similar products.”

In some cases, the cost of sustainable disposables has become too great for non-commercial operators. Jill Bachelder, manager of food and nutrition for the MedCentral Health System, in Mansfield, Ohio, opened a newly remodeled café in 2010 that used eco-friendly containers. That was, however, short-lived. 

“Unfortunately, our waste disposal company does not compost, so after 18 months we realized we were just throwing money away,” Bachelder says. “We switched back to regular foam containers to cut cost. At this time our sustainability is limited to some of our food purchases being locally sourced. Over the period of one year, I would estimate our savings at $40,000 easy.”

Despite the increase in costs for many, there are still cost savings to be had as a result of sustainability programs, especially for hospitals. Nicole Emmett, R.D., food and nutrition services at LDS Hospital, in Salt Lake City, says her waste costs have decreased.

“We have worked hard this year to reduce our use of plastic bottled water by actively promoting the use of reusable water containers and eliminating sales of bottled water in our cafés,” Emmett says. “Waste costs have decreased because recycling costs slightly less than general waste. I believe that as we become more aware of waste reduction and recycling efforts, it changes our focus in ways that we did not originally anticipate. By educating ourselves on sustainable practices, we automatically rethink our purchases, operating procedures and menu design and work harder to reduce the amount of waste we generate in the first place.” 

The Financial Impact of Sustainable Programs

Most operators say their operational costs have remained the same after implementing environmentally friendly initiatives (excluding start-up costs). B&I (42%) and colleges (37%) were the most likely segments to say their costs increased. However, the average overall increase in costs was 8%, while B&I and colleges did register lower increases (6% and 5%, respectively). Hospitals were the most likely segment (17%) to report a decrease in their costs after starting eco-friendly programs. The average decrease in costs was 8%.

Environmental Issues

Recycling and waste reduction are the top two sustainability initiatives operators employ. Colleges and B&I operations are more likely to be implementing each of these environmental/sustainable programs than the other markets, with two exceptions. More nursing homes/long-term care/senior living operators have eliminated bottled beverages than colleges (20% versus 18%) and more of that same segment has implemented trayless dining than B&I (21% versus 12%). However, overall only 9% of all non-commercial operations are not implementing any of these environmental/sustainable programs/initiatives.