As restaurants have tightened their food-handling policies to cut wasteful overproduc-
tion, programs that channel excess food to human-assistance agencies have seen
donations drop. That is a cue for charitable agencies to seek a closer alliance with
potential donors.
/
M a n y communities in the United States have programs that take leftover prepared food from restaurants and distribute that food to those in need. Formally known as "prepared and perishable food- rescue programs," food-donation programs thrive on the waste and mismanagement of the food-service industry. By definition, these pro- grams scavenge excess prepared food that the industry cannot use. Food- service operators, however, have become steadily more efficient and better able to predict demand in recent years, thus reducing the amount of excess food. Improve- ments in production speed, storage capabilities, and food products all help reduce food waste, carrying implications for food-donation pro-
grams. In this article, we explore the status of food-donation programs, including internal-operations issues, and consider their future prospects.
Trends in Food-Service Management The food-service trend that most seriously affects food-donation op- erations is an increased focus by restaurants on offering value to the
An assistant general manager at ObaChine (HTolfgang Puck's new Asian concept), Christopher Adams holds a Master of Management in Hospitality degree from the Cornell University School of Hotel Administration, where Mary H. Tabacchi, Ph.D., is an associate professo~
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customer. The value-price focus is driven by competition among res- taurants and hotels that has, in turn, created corporate pressures to cut food costs. Food-service chains are using all means at their disposal to reduce food costs, including reduc- ing food waste and finding ways to reuse the food they have already purchased and prepared.
Waste reduction. The food- service industry declared all-out war on waste in the 1990s. In an inter- view, Morgan Hull, a corporate chef for Brinker International's Macaroni Grill, for instance, succinctly sum- marized the matter:"Any food that passes through this restaurant is money. If we are not using 100 per- cent of the product, our food cost goes up, our profits go down, the company has to lower my salary and raise prices, the customers get upset and don't come back, and we go out of business." That drive to reduce waste changes the landscape for food-donation programs. Bulk do- nations of food become more scarce as operators develop new products and uses for foodstuffs. Moreover, food-processing technologies that increase shelf-life of prepared food
will allow operators a longer time period in which to use up a product.
Chain operators in particular are slashing their food waste with better systems, storage, and product use. The chains are steadily improving their demand forecasting. Brinker International, for instance, has nego- tiated raw-food-purchase contracts as far out as 18 months for its 400-plus Chili's units. Economies of scale stemming from this kind of forecasting not only reduce product costs, but allow for greater control and less inventory in the individual restaurants.
Industrial cuisine. Although seemingly trivial, changes in food packaging are in fact the basis for large reductions in food waste. Such techniques as sous vide and modified atmosphere packaging offer indi- vidual restaurants the prospect of offering guests a broad menu at low prices.l The experience of Taco Bell offers a classic example of how new systems and technology were com- bined to create a revolutionary pro-
See: BradfordT. Hudson,"Industrial Cuisine," Cornell Hotel and Restaurant Administration Quar- terl B Vol. 34, No. 3 (June 1993), pp. 73-79.
duction approach. Taco Bell changed from preparing and cooking items from scratch in each restaurant to using ingredients prepared in central commissaries to be assembled and reheated in the individual unit. 2 Each restaurant like this that does not have a kitchen is one less source of substantial food donations. Taco Bell is by no means the only com- pany making such changes.
Food-Donation Operations Our two surveys of food-donation programs, conducted late in 1993 and in spring 1994, were attempts at census surveys of all 133 agencies known to exist at the time. The first survey garnered a 58-percent re- sponse rate, while the second survey, a more in-depth questionnaire, achieved a 78-percent response. The second survey was conducted in conjunction with Foodchain, a na- tional organization of food-donation programs established in 1992 by the National Council of Prepared and Perishable Food Programs. Based in Atlanta, Foodchain was funded by United Parcel Service and was estab-
2 Ibid.
April 1997 • 6:3
A Framework for Food Acceptance
The following framework will assist food-donation agencies in formulating safe-food policies. In addition to the type of food, careful consideration should be given to the preparation, expiration date, handling, and storage history of food offered for donation. The chart lists questions that should be considered for each food category: high caution, moderate caution, and low caution. Examples of high-caution foods are poultry, red meats, dairy products, shellfish, eggs, and cooked potatoes, rice, and beans; moderate-caution foods include cured meats, hard cheeses, and soups; and low-caution foods are fresh fruits and vegetables, grains, flour, nuts, and uncooked beans. Foods that are in most cases unacceptable for donation programs are protein salads, sauces, dressings, and mayonnaise-based items.--C.A, and M.H.T.
FOOD TYPE
High caution Moderate caution Low caution
1. Expiration date Prepared before date Pickup within 3 days Check for spoilage
2. When was food prepared? One day prior 48 hours prior Check for spoilage
3. How long held between Less than 2 hours Less than 2 hours NA unsafe temperatures of 45o-140OF?
4. How quickly was hot food Within 4 hours Within 4 hours NA cooled below 40°F?
5, How long has food been Less than 24 hours Less than 48 hours NA refrigerated below 40°F?
6. Food spoilage No odor or spoiled No odor or spoiled No odor or spoiled ~ appearance appearance appearance
7. Container Sanitized with lid Sanitized with lid Sanitized with lid
12. Heating procedure Rapidly to 165°F Rapidly to 165°F NA
lished to improve communication among food-donation programs.
The surveys revealed the funda- mental diversity of food-donation programs, a factor that makes assess- ing survey information difficult. Some programs are community- focused and operate on a shoestring budget. On the other end of the scale, New York City's City Harvest operates with an annual budget of nearly $2.5 million. Some programs have full-time employees, while others rely exclusively on volunteers. The annual volume of food handled ranged from 8,000 to 5.5 million pounds, and the number of donors involved ranged from 10 to 3,300. This diversity makes statistical assess- ment and program analysis difficult.
The lack of standard criteria for food-donation programs made it difficult to summarize the survey results and assess the effect that spe- cific food-industry trends might have on the agencies. Nevertheless, the surveys found that donations had diminished, probably from the drive to cut food costs, and that smaller donations had seriously affected food-donation programs' operations. The surveys also revealed that many, if not most, operators of these food- rescue programs were unaware of the industry's drive to economize on food costs and could not explain the diminishing donations. Not surpris- ingly, those operations had taken few steps to prepare their programs to operate in a new environment.
Donations diminish. Despite the food-donation programs' diver- sity, the surveys revealed a number of consistent findings. The first of these was that 87 percent of respon- dents explicitly stated that they are seeing smaller donations from one year to the next. Few had developed programs to allow for collection of smaller amounts of food than they previously handled. Many respon- dents stated that smaller amounts were "difficult, inefficient, and costly to collect."
Liability issues. Although so- called "good Samaritan" legislation removes much of the liability associ- ated with food donations, respon- dents reported that many potential donors are either not convinced or unaware that they are protected.Just over half of the respondents cited "fear of liability" on the part of the restaurant operators as a definite obstacle to obtaining donations, while nearly three-quarters of the respondents mentioned that their donor restaurants were at least con- cerned about liability.
Recycl ing. Some food products that were once donated are now candidates for recycling and reuse, as companies seek to cut back on waste. In 1992, for example, KFC donated over 100,000 pounds of fried and roasted chicken to local food banks. That volume dropped to zero in 1993 as the chain introduced menu items such as the shredded BBQ sandwich, which used all of the food that would have been do- nated the year before.
Off-site kitchens. A central- kitchen strategy allows food-service operators to control food produc- tion and ship individual units only the amount of food that they will use. For example, Olive Garden's central kitchens and improved pro- duction techniques of the early '90s reduced food waste by as much as 10 percent.
Third-generation food. Recy- cling and commissary production
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has created a new class of'food, third-generation food, which has been used and reused before it is finally donated. A prepared roast that is made into stew or buffet vegetables that are added to soup are two examples of foods that are used twice. Third-generation food is generally harder to hold and trans- port than the original item, and it has a shorter shelf-life. This food is also harder to use, because it already has been processed twice.
Repercuss ions . While donating extra food to the needy sounds like a reasonable and humanitarian ac- tion, it also can become a revelation to a restaurant manager--and a negative one at that. A donating organization that begins to keep track of the amount of such extra food soon begins to realize the magnitude of its waste. Once that realization hits, restaurant managers often try to cut back on waste--and the biggest donors soon become among the smallest. Donated food is often tracked for tax purposes, while discarded food is not. Some respon- dents noted that national chain ex- ecutives often confront donating managers regarding their food waste, and some managers would rather discard the food than relay informa- tion about donations to the corpo- rate accountants to have the good counted for tax purposes. Ironically, such thinking is naive, since food waste can be tracked regardless of whether the extra food is donated or discarded.
M i s u n d e r s t o o d . Over half of the respondents (54 percent) said that the food-service industry does not understand the operational needs of food-distribution programs. The question apparently hit a nerve, as a number of respondents made comments such as: "They don't make pickups easy or convenient"; and "They don't care." Ironically, the basis of this feeling appeared to be an assumption by the recipients that the donors have some kind of re-
sponsibility to be active in the do- nation program. This response indi- cates the presence of operational pressures connected to food rescue, including staffing, transportation costs, and scheduling, but we con- sider it a stretch for the recipient organizations to expect the donors to have the same level of involve- ment as the recipients themselves. The respondents noted that inde- pendent and chain restaurants were far and away the most active food donors, followed distantly by hotels and supermarkets.
Missing Trends Perhaps the most disquieting finding was the almost total absence of awareness of food-industry trends on our respondents' part. Because the food-rescue programs rely so greatly on restaurant donations, we believe their operators should keep abreast o f industry trends. About half of the surveys came back blank on questions asking which food- industry trends were having the greatest effect on the food-donation programs and which was the great- est single trend. Furthermore, half of the respondents had little or no knowledge of trends affecting food- donation programs. These findings point to the fact that operators of food-donation programs are focused primarily on the framework and logistics o f keeping the program alive. One operator stated: "We don't have time to research the in- dustry aside from keeping up with some of the popular press.We un- derstand how important it is to think about the future of the indus- try, but we rarely have time to de- vote to that kind of planning."
San i t a t ion wor r i e s . We are also concerned about the finding that only 72 percent of our responding food-donation operators provide their volunteers training in sanita- tion and food-handling procedures. In fact, one food-rescue group, U.S.A. Harvest, was outspoken in
resisting sanitation procedures. Commented founder Stan Curtis: "We take food from people who are inspected by the health department and we deliver it to people who are inspected by the health department. We don't encumber our people with all this training that people are allegedly concerned with. ''3 Sanita- tion worries, however, are at the heart of restaurant operators' liabil- ity concerns, which, as we stated above, is a top problem in food collections.
Management Framework While we cannot resolve the opera- tional problems of food-donation programs, we believe a strategic approach to working with food- service operators will allow the programs to make the best use of the food that is available and to cultivate new sources of excess food. We propose that food-donation programs should approach food rescue as one would a competitive business environment. The root concept in this approach is to treat the donors as customers, rather than expect them to be part of the food- rescue effort. Food-service compa- nies, after all, operate to make a profit serving food. Managers who once might have had humanitarian or tax-related motives for donating excess food are increasingly focused on reducing food waste and costs. Those managers might consider leftover food as a black mark on their record, rather than an oppor- tunity to do good. Inevitably, some food will be left over, and managers would have to pay for its removal. Food-donation programs that offer a sound, business-like service of removing excess food should be successful in at least maintaining the levels of food donations.
Food-donation operators need to recognize that food rescue is in
3 "Hungry in America," Restaurant Business, December 10, 1993, p. 84.
April 1997 • 65
Tax Benefits of Donating Food Seattle's Table prepared the following information as an example for companies that would donate food. The specific tax consequences are best determined by a tax adviser. The federal tax code permits deductions amounting to the cost of the food plus half of the profit margin on a given food item, to a maximum of twice the original food cost. This treatment applies to what is known as "ordinary income property," commonly defined as property held primarily for sale to customers in ordinary business. The applicable law is found in the 1976 Tax Reform Act, Section 2135. That law is spelled out in Internal Revenue Code (IRC) Section 170(c)(3) and Section 12221(1) and (2).
As an example, say that a menu item would sell for $12.00 and has a food cost of $4.50, yielding a gross profit of $7.50. Under normal circumstances, the tax deduction resulting from the donation of such an item would be equal to the sum of the food cost plus half the markup, or $4.50 plus $3.75, for a total of $8.25. The maximum deduction in this case cannot exceed $9.00, or twice the food cost, as stated in IRC Section 170(e)(B).--C.A. and M.H.T.
many ways a business service in the eyes of the donor. While the result is providing food to the hungry, successfully marketing the program will be necessary for food-service operators to view the programs as effective. Programs should meet the high standards expected by do- nors who need to feel comfortable with the programs' food-handling procedures, for instance. Food- donation operators should share strategy and marketing ideas with each other so that successful ideas from one area can be used in an- other area.
Value added. One of the chief lessons of marketing strategy is to add value to the customer's experi- ence. Adding value, however, can be a challenge for non-profit agencies. Scott Schaffer put it as follows: "Unlike customers in traditional competitive markets, the purchasers of non-profits' services are not the people being served, but third par- ties--contributors and government agencies--that have an interest in seeing the services provided. ''4 The following are value-added services that he suggests could be used by food-donation programs:
4 Scott Scha££er,"Feel-Good Era Is Over for Non-Profit Mai~agement;' Chronicle of Philan- thropy, November 2, 1993.
• Maintaining a toll-free number; • Producing a newsletter; and • Requiring sanitation training for
workers and handling instruc- tions for the donors' employees. Alliances. Perhaps the best plan
to ensure the long-term survival of food-donation programs is to de- velop strategic alliances with other organizations, preferably those with food to donate. This concept is not new to food-donation programs, and it has been extremely effective in some cases. The Pizza Hut Har- vest Program, for instance, provided excess food products from over 2,800 units to 700 food agencies and food-rescue programs. Under the umbrella of the Tennessee-based Food Donation Connection, each unit donates food to food-rescue programs and receives an income- tax credit based on the volume of food donated. Food Donation Con- nection spokesman Bill Reighard told us that in 1994 the program collected some 3.5 million pounds of food.
A more complex alliance was needed to obtain "bycatch salmon," which otherwise would be dis- carded. By working with the Na- tional Marine Fisheries Service and Terra Marine Research, Second Harvest National Food Network was able to obtain 50,000 pounds of the previously prohibited bycatch salmon. The project required the cooperation of the National Marine
Fisheries Service, the federal agency with jurisdiction to issue necessary permits; Terra Marine Research, which was the project coordinator; 14 fish-catching vessels and three fish processors connected with the Bering Sea trawler fleet; and Second Harvest National Food Network and Food Lifeline, which distributed the fish to 258 different agencies. In its first year, 1992, the program col- lected 23,000 pounds of ocean perch in addition to the 50,000 pounds ofbycatch salmon.
Job training is another by-product of alliances. Both the D.C. Central Kitchen and the Sacramento Area Community Kitchen (SACK) have developed job-training components for their food-rescue programs. Be- cause unemployment is a funda- mental cause of hunger, assisting individuals in becoming employable is a logical extension of a feeding effort. SACK provided its partici- pants with skills in safe food han- dling as they worked in the kitchen to prepare large quantities of food.
The SACK training effort was itself an alliance of California Emer- gency Foodlink, a food-distribution agency; Consumnes River College, which donated an instructor, kitchen lab space, and college credit for the course; the Sacramento City and County Hunger Commission, which provided overall coordina- tion; and the county Department of Human Assistance, which re- cruited people for the program. The SACK students prepared over 500 meals per week, using food acquired by SACK in its food- rescue program.
Another successful training pro- gram opened in Seattle in 1992, when chef David Lee started the Josephinum Cafeteria Job Training Center as an offshoot of his Com- mon Meals food-service-manage- ment program. The center provided jobs and training for 16 homeless and disabled individuals as of April 1993, when we contacted Lee. He
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pointed out that job skills are only part of the training program, but that they are also learning "'job maturity,' simply learning how to work with and for people."
The concept of alliances such as these can be extended to include the donating agencies themselves. A successful worker-training program could provide a source of employees for the restaurants, most of which are constantly seeking entry-level workers with basic food-service skills who have demonstrated some level of dependability.
Offer ing in fo rma t ion . Food- donation agencies can make it easy for restaurants to donate food. Many organizations find it useful to pro- vide information sheets with answers to frequently asked questions. The sheets explain what types of food cannot be accepted, how to arrange regular schedules and on-the-spot pickups, and how to arrange for containers and food packing.
Educational efforts are undoubt- edly required to attract more restau- rant operators to donate food. An informal survey by Foodchain in 1993 found that only 55 of 100 operators in three markets had given any thought at all to donating food, and just 41 were aware of the theo- retical protections offered by good- Samaritan laws.
One of the strongest nonhumani- tarian arguments for donating food is the potential tax benefits of mak- ing such donations. The Seattle's Table food-donation program even went so far as to give restaurant op- erators a specific example of the tax consequences of donating a $12.00 menu item with a food cost of $4.50. While each operator should be working with a tax-advice pro- fessional, the tax law appears to al- low a deduction of $8.25 for donat- ing the unsold food in that instance, as discussed in the box on the facing page.
Liability. Our survey found that more than half of food-donation
operators thought that liability is- sues ranked high as a concern for would-be donors. Many in the food-service industry were reluctant to donate food for fear of being held liable for any injury that might arise from donated food that spoils. Such concern is understandable in light of the increasingly litigious legal environment faced by food- service operators.
Counteracting the liability are good-Samaritan laws on the books in all 50 states and the District of Columbia. These laws establish a standard of care for food donors acting in good faith and protect those who meet those standards from being sued for injury due to spoiled food. The food-liability statutes are designed to encourage would-be food donors and over- come their fear of reprisals if some- thing goes amiss.
Food-donation operators must be versed in applicable local and state legislation so that they can address potential donors' concerns. Moreover, the specific provisions of these laws vary between jurisdic- tions, according to a 1992 survey by SOS (Share Our Strength) Founda- tion. Many states, for instance, pro- vide extensive and precise coverage, while others provide only general protection to food donors. Stan- dards of care likewise vary. Some limit protection to injuries that are "not the result of negligence," while others insist that to be found liable a donor would have to have "actual or constructive knowledge of the harmful quality of the food." As of 1992, SOS had found no case in which an injured party filed suit against a good-faith donor in the United States. However, SOS noted that none of the good-Samaritan statutes had been tested in court, and it also pointed out that none of the laws hold donors completely harmless in the case of an outbreak of food-borne disease from donated food.
Rather than rely on the uncer- tain protection of law, the key to relieving donors' liability concerns is for food-donation programs to use extreme care in the handling and storage of donated food products. Most agencies carefully screen po- tential donors, using site visits and health-department records.Just as important is screening recipient kitchens, to ensure sound food- handling practices. Most food- donation programs also execute "hold harmless" agreements for both donors and recipient agencies, and they train staff members to spot food spoilage.
To sell restaurateurs on the idea of donating leftovers, food-donation programs must maintain the highest standards of food handling to ensure food safety and eliminate risks to donors and recipients. As food- service chains have discovered in cases of food-borne illness, any in- stance of negligence with one food- donation group might have far- reaching effects on food-rescue programs across the country. Rob Johnson, director of Atlanta's Table, succinctly put the matter as follows: "We try to show that we are trust- worthy. We provide [donors] our food-handling procedures, which we developed with the assistance of our local health department." A helpful technique might be to show potential donors a list of restaurants already providing food.
The issue of donor reticence is overshadowed by the structural change in the use of food by the restaurant industry. Companies such as Pizza Hut and KFC that have supported food-rescue plans in the past have reengineered their menus and operations to decimate food costs and substantially reduce left- over food that could be donated. As a consequence, the management of food-rescue programs will have to be much more focused on meeting the needs of donors to garner what food remains available. CII
