How To Manage Unsold Food Inventory in 5 Easy Steps

As a business within the wholesale or food service industry, you may find yourself with a surplus of products at some point due to a variety of reasons: overproduction, unpredictable demand, misordering, cosmetic imperfections, damaged or mislabeled packaging, or an approaching code date. Surplus is inevitable - but what should you do when you have excess food inventory that you need to move quickly, specifically with highly perishable products such as fruits, vegetables, dairy products, and meats?

Throwing away food is expensive! And for many businesses, it is now illegal. Here are 5 steps to guide your strategy for managing excess food that restaurant clients don’t end up purchasing.

1. Explore discounted food sale opportunities. A first step to moving surplus inventory is to look into secondary resellers, such as online marketplaces, discount and salvage grocery stores, or reclamation centers. Also, consider selling or donating to nonprofit grocery stores, such as Fare & Square in Philadelphia or Daily Table in Dorchester, MA. Another option may be to sell surplus to local commercial kitchens or sauce, jam, soup, or juice companies (such as Misfit Juicery) who can utilize value-added processing.

2. Make sure you comply with food waste regulations. Multiple states and cities across the United States have passed food waste bans. Many food businesses and institutions are subject to these laws, which limit the amount of surplus food, food scraps, and organic waste a company can send to landfill per week.

Massachusetts passed a commercial food waste ban in October 2014, and RecyclingWorksMA has since developed great resources on best practices for compliance and how to start a food donation program. Working in California or New York City? Financial penalties will be hitting you soon.

3. Identify and maintain relationships with local nonprofits and vendors. Develop partnerships with local food banks, food rescue, and hunger relief organizations so that if you do find yourself with excess food, you can donate to a nearby location. You can use a food donation matching software, such as Spoiler Alert, to connect with local recipient organizations.

For food scraps, organic waste, and inedible food, it’s smart to explore relationships with local composting facilities and farmers, who can use food scraps as animal feed. Just make sure to follow the legal guidelines.

4. Understand the tax benefits of donating surplus food. In many cases, the tax deductions received from donating surplus product are greater than the tax shield that is earned from liquidating or disposing of the goods. Many food businesses worry about liability protection, but the federal Bill Emerson Good Samaritan Food Donation Act provides liability protection for food donations made in good faith.

In December 2015, Congress passed a permanent extension of enhanced tax deductions for food donations. Businesses are now eligible for enhanced tax deductions, up to 15% of their taxable income. Learn which data you should track for effective tax deduction documentation.

5. Aggregate data to inform stakeholders of waste diversion efforts. Despite even the most precise forecasting, some unsold food inventory is inevitable. It’s important to record and track metrics about your food recovery and food donation, such as waste diverted, pounds donated, meals donated, water saved, or greenhouse gas emissions prevented, to better understand how to manage surplus in the future.

As a whole, food manufacturers, distributors, and consumer-facing businesses waste nearly 26 million tons of food each year — which is equivalent to almost $60 billion in financial losses. Creating a strategy to manage unsold food inventory can help limit the amount of waste, both physical and financial. Next time you find yourself with excess, use these steps to help find a home for your food.

Spoiler Alert is a technology company that helps food businesses reduce costs of unsold inventory, find real-time outlets for their surplus food, and maximize tax deductions for food donations.