Talking about food waste is easy. Getting budget approved for waste monitoring technology is harder. You need numbers, and you need them in a format your finance team will accept.
Here's how to build the business case.
Step 1: Establish Your Baseline
You can't calculate return on investment without knowing your current state. You need two numbers:
Monthly food spend. This should be easy—check your P&L or ask procurement. Include everything: produce, proteins, dairy, dry goods, beverages.
Current waste percentage. This is trickier if you're not already measuring. Options include:
- Run a one-week waste audit (weigh bins, estimate categories)
- Use industry benchmarks as a starting point (8-12% is typical)
- Work backwards from your bin collection volume
If you don't know your waste percentage, start with 10%. It's conservative for most operations, and you can refine it later.
Step 2: Calculate Your True Waste Cost
Raw waste cost is just food spend multiplied by waste percentage. But true waste cost is higher because of:
- Labour: Someone prepped that wasted food (add 25%)
- Disposal: Bin collections, waste levies (add 5-10%)
- Energy: Storage, cooking, cleaning (add 5%)
A reasonable multiplier is 1.3x the raw ingredient cost. So if you're wasting €10,000 worth of food monthly, the true cost is closer to €13,000.
Step 3: Estimate Achievable Reduction
This is where people get tripped up. You can't claim you'll eliminate all waste—that's not credible. You need realistic reduction targets.
Based on industry data, achievable first-year reductions with proper measurement and intervention:
- 20-30% with basic monitoring and awareness campaigns
- 30-40% with detailed tracking and targeted interventions
- 40-50% with comprehensive monitoring, menu engineering, and procurement changes
For a business case, I'd use 35% reduction as a mid-point. It's ambitious enough to show meaningful ROI but not so aggressive that finance will dismiss it as fantasy.
Step 4: Calculate Annual Savings
Multiply your true waste cost by your reduction target to get annual savings.
Example:
- Monthly food spend: €80,000
- Waste percentage: 10%
- Monthly waste (raw): €8,000
- Monthly waste (true cost): €10,400
- Annual waste: €124,800
- Achievable reduction: 35%
- Annual savings: €43,680
Step 5: Factor in Technology Costs
Whatever system you're evaluating will have costs. Typical components:
- Hardware: Scales, cameras, sensors (often one-time or amortised)
- Installation: Setup, training, integration
- Subscription: Monthly or annual software fees
- Maintenance: Ongoing support and updates
Get actual quotes rather than estimating. Most vendors will provide pricing once they understand your operation. Make sure you're comparing like with like—some "cheap" systems have hidden costs or limited functionality.
Step 6: Calculate ROI and Payback
Simple ROI: (Annual Savings - Annual Cost) / Annual Cost × 100
If you're saving €43,680 and the system costs €12,000/year, your ROI is 264%.
Payback period: Annual Cost / Annual Savings × 12 months
Using the same numbers: €12,000 / €43,680 × 12 = 3.3 months
Finance teams love payback period because it's intuitive. Saying "this pays for itself in under 4 months" is more compelling than talking about percentages.
Making the Case to Finance
Finance people are sceptical by nature—that's their job. They'll push back on:
- Your waste estimate. Be ready to show your methodology. If you did an audit, present the data. If you used benchmarks, cite the source.
- Reduction assumptions. Have case studies or industry data showing what's achievable. Point to SDG 12.3 targets (50% reduction) as evidence this isn't wishful thinking.
- Hidden costs. Be upfront about implementation effort, training time, any productivity dip during rollout.
Present a range of scenarios if you can: conservative, expected, optimistic. Finance appreciates sensitivity analysis.
Beyond the Numbers
Some benefits don't fit neatly into ROI calculations but still matter:
- Regulatory readiness. Reporting requirements are coming; being prepared has value.
- Sustainability credentials. Increasingly relevant for procurement and customers.
- Staff engagement. Waste reduction programs often improve morale and retention.
- Risk mitigation. Rising food costs make waste reduction increasingly valuable.
Mention these as supporting points, but lead with the financials. The numbers make the case; the soft benefits make it easier to say yes.
Get the Complete CFO's Guide
For a comprehensive framework including board-ready templates and financial case studies, download our free CFO's Guide to Food Waste ROI.
Use our ROI calculator to run your own numbers, or request a savings report and we'll build the business case for you.