Sustainability | December 2013 | By Daniel P. Smith

Sustainability 2.0

The green movement isn’t losing steam; it’s just evolving. Here’s how operators are trying to refocus sustainability for the future.

Quick service restaurant brands like Pizza Fusion expand idea of green operation
Vaughan Lazar, founder and CEO of Pizza Fusion, says quick serves today must take a more holistic approach to sustainability. pizza fusion
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When Arianne Bennett opened the Amsterdam Falafelshop in Washington, D.C., in 2004, she had some ambitious sustainability aims: green products, solar power, composting, community dumpsters. She had a vision of creating her own eco-friendly utopia in a world only then beginning to ride the sustainability wave, an adventure then entwined with environmental stewardship.

“We wanted to be as lean as possible … and we were careful about everything from the packaging we chose to the number of napkins we distributed,” Bennett says.

For many operators in the early years of the 21st century, sustainable and green were synonymous terms. Brown napkins, recycling bins, and LED light bulbs afforded restaurants an opportunity to hop on the sustainability bandwagon and tout their position as a better-for-the-planet enterprise.

That was then.

And now?

Sustainability today isn’t quite so simple. While still embracing environmental consciousness, quick-service operators’ idea of sustainability has come to incorporate new industry touchpoints, such as food safety, employee relations, animal welfare, product sourcing, and community involvement. Sustainability has transformed itself into a term more encompassing, more dynamic, and more complex than most could have ever imagined and now weaves its way throughout the restaurant operation. It applies to responsible decision-making throughout the organization and places principles and profits side by side.

“We’re finding an increased level of sophistication when it comes to how people think of sustainability and a definite broadening of the term’s definition,” says Charlie Arnot, CEO of the Center for Food Integrity, a six-year-old, Missouri-based organization dedicated to building trust in the food system.

Call it Sustainability 2.0. Quick serves today are investing in the future of sustainability by improving society, the food system, and the earth all at once.

“Sustainability is now a more holistic approach to the entire business, and it covers everything from the ovens in your kitchen to the employees on the floor and the origin of your food,” says Vaughan Lazar, founder and CEO of Pizza Fusion, a Florida-based concept with 15 units across the U.S. Pizza Fusion has incorporated several sustainable practices, including offsetting its energy usage with the purchase of renewable wind energy certificates, using eco-friendly and post-consumer recycled paper and packaging products, and building its restaurants according to Leadership in Energy and Environmental Design standards.

With concerns over climate change, food costs, energy prices, nutrition, and other social issues mounting, quick-service restaurants of all shapes and sizes are facing steady pressure to run socially sound operations. McDonald’s recently began touting sustainability efforts such as Rainforest Alliance–certified espresso and fish sandwiches with a certification label from the Marine Stewardship Council. It’s been an effort to heighten brand trust and loyalty, McDonald’s leaders have acknowledged, but also a response to rising consumer expectations for sustainable options.

Heightened customer interest hasn’t been the only thing pushing Sustainability 2.0. Corporate philosophies are evolving, and potential cost savings, particularly during the recession, compelled many quick-service leaders to look at the impact of their business decisions both inside and beyond a restaurant’s four walls.

By and large, restaurant leaders realized the hard and soft benefits of adopting sustainability’s expanding tenets.

With more energy efficient equipment, operators discovered, they could reduce their utilities as well as their carbon footprint. With an increased focus on employee welfare, they could better retain top talent and avoid the expenses associated with turnover. And with an enhanced focus on local sourcing, they could tap into the rising industry trend for local fare while simultaneously supporting regional farmers.

“I think a lot of restaurant leaders have become more mindful of our constituents and recognize that everybody along the line has to win,” says Rob Israel, CEO of Doc Popcorn, a snack concept with nearly 100 U.S. stores. “Now people are throwing a rock into the sustainable pond and not just looking at the immediate ripple, but looking across the entire lake to see the full impact of their decisions.”

Sandwich giant Subway formally added Corporate Social Responsibility (CSR), which includes sustainability, to its company plan in 2007. The vision was to make Subway restaurants as environmentally and socially responsible as possible, says Elizabeth Stewart, who oversees the chain’s CSR initiatives.

Subway’s efforts today address older sustainability issues such as energy efficiency and waste reduction, but also embrace the swelling Sustainability 2.0 definition by tackling areas such as supply chain management, food safety, nutrition, and personnel development.

“We’re still peeling back the onion,” Stewart says. “We believe our guests give us license to operate, but that they want transparency with that.”

Indeed, sustainability’s metamorphosis in both terminology and reality is far from over, particularly as issues such as water availability and obesity’s impact on the healthcare system climb in the national consciousness. In other words, today’s Sustainability 2.0 can quickly become tomorrow’s Sustainability 3.0.

“The expectation here is that the restaurant industry will contribute in some meaningful way to finding solutions,”
Arnot says.

To be sure, sustainability’s continued evolution brings some significant challenges for restaurant operators, so many of whom remain stuck in pursuit of eco-friendly changes in the Sustainability 1.0 world. The first and arguably most important challenge, experts say, is making sustainable decisions that are economically viable for the business, backed by credible science, and rooted in shared values such as fairness, compassion, honesty, and respect.

“If these practices don’t make business sense, then you can’t sustain them,” Arnot says.

For instance, when Israel founded Doc Popcorn in 2003, the Colorado-based brand put its devotion to the planet front and center, even to the point of using a costly compostable bag to hold the store’s signature popcorn products.

While the compostable bag proved to be a roving billboard for Doc Popcorn in its earliest mall locations, the packaging weakened margins for the chain’s franchisees and wasn’t completely understood by the concept’s customers.

“Without composting readily available, our bags were just heading to the landfills anyway,” Israel says.

Doc Popcorn responded by replacing the compostable bag with a more cost-effective recycled paper bag. While it wasn’t the pinnacle of environmental sustainability, the recyled paper bag still boasted an eco-friendly vibe and, more importantly, helped the upstart brand’s franchise partners achieve greater profitability.

Arnot says operators wishing to embrace sustainable practices should employ a pragmatic and realistic analysis to any endeavor. He says all operators must have an understanding of what they are doing and why, as well as of the financial realities and consequences of their decisions.

“Everything has to be done in the context of the economic environment,” Arnot says.

Costs, as Israel discovered, can temper restaurants’ sustainability aims—not only in what stores must invest, but also what consumers will tolerate. The truth is that nearly all consumers have a price breaking point that will send them elsewhere for a meal, regardless of the values they share with a business.

“As businesses, we have to survive. We can’t let the drive for sustainability pull down our restaurants,” Amsterdam Falafelshop’s Bennett says.

Fortunately, hundreds of vendors entering the sustainability space, particularly on the environmental and energy side, have helped decrease costs and made things like composting and waterless urinals more accessible to restaurant operators. In addition, many entrenched industry players covering food distribution, waste disposal, utilities, and packaging have also embraced an earnest adherence to sustainability with innovations, reconfigured operations, and operator support systems.

These developments, in particular, encourage leaders of growing, sustainable-minded brands like Amsterdam Falafelshop, Doc Popcorn, and Pizza Fusion that sustainability will become more mainstream and accessible in the years ahead.

“With more competition in the field, the costs should continue to go down and sustainability should be within the reach of more restaurants,” says Bennett, whose brand has three units in the Northeast and another dozen in the development pipeline.

There is also a growing wealth of resources helping restaurant operators navigate the future of sustainability, including food distributors like Sysco and US Foods, third-party auditing agencies, nonprofits, and organizations like the Environmental Defense Fund and the National Restaurant Association (NRA).

The NRA, in particular, announced in September the formation of its Conserve Sustainability Advisory Council (CSAC). The 14-member CSAC panel features foodservice and sustainability experts committed to helping restaurateurs become more
resource efficient.

“With the advisory council’s input and real-world advice, practicing sustainability will be easier to implement, result in long-term cost savings, and benefit the environment,” said Jim Hanna, Starbucks’ director of environmental affairs and CSAC co-chair, upon news of the CSAC’s formation.

Moving forward, Arnot says, restaurant leaders will be consistently challenged to discern the sustainability practices central to their business before laying out a path for continuous improvement. Sustainability, after all, isn’t an all-or-nothing equation.

“We can’t let the perfect be the enemy of the good,” Arnot says. “Just because you can’t do everything doesn’t mean you should do nothing.”

Subway provides an example of this pragmatic, one-step-at-a-time approach. For years the sandwich chain has been serving skipjack tuna, the most abundant of the major commercial tuna species. 

While that practice in itself would grant the Connecticut-based company the freedom to publicly champion its sustainability, Stewart says, the company’s next step will be to purchase the tuna only from certified sustainable fisheries that employ responsible fishing practices.

In doing so, Subway will not only continue being kind to the planet, but will also step into Sustainability 2.0 territory by employing more responsible food sourcing practices.

“We’re just moving down the continuum,” Stewart says.

Subway has notably accomplished much of its sustainability work in a massive franchised system with more than 40,000 stores across 100 countries.

The company has consistently run potential sustainability decisions through its franchisees and adopted a position in which it points and nudges operators toward more sustainable options rather than setting rigid, all-or-nothing directives. As one example, Subway’s corporate office worked with its suppliers to make recyclable and compostable packaging readily available to franchisees.

“We didn’t just tell our franchisees they had to change, but we did the heavy lifting with our suppliers so that our operators would have a sustainable practice that was easy to implement,” Stewart says.

She adds that Subway also distributes best practices and tips on various internal communications platforms to help its operators make more informed sustainability decisions.

For Subway and many other quick-service chains, one thing has become clear as the 21st century’s second decade wears on: sustainability is here to stay. The drum keeps beating, louder and louder, with increasing force and power.

“This is a long haul for us and, I imagine, many others in the industry, too,” Doc Popcorn’s Israel says.

Sustainability will maintain its roots in environmental consciousness, the operators say, but continue deepening its reach into other social issues, such as employee welfare, sourcing, and food labeling.

“There’s this wave of awareness that just isn’t going away,” Pizza Fusion’s Lazar says. “Sustainability isn’t about left or right, but about making responsible decisions in your business.”

To succeed in today’s marketplace as well as in the years ahead, Subway’s Stewart says, restaurant companies will need to be economically viable as well as socially responsible and environmentally sound. That’s the reality of Sustainability 2.0 and any subsequent iterations of the “green” movement. “We don’t think of sustainability as a fad, but rather a cost of entry into the marketplace,” she says.

Israel, in fact, calls sustainability a “line item” and something restaurant operators cannot ignore.

He thinks it’s possible that cash-starved governments—local, state, or federal—could begin taxing businesses as a way to force greater efficiencies in purchasing, waste disposal, employee welfare, and other operational areas.

“It’s all about making choices that save money, improve business, and help the world,” Israel says.

By ignoring sustainability and failing to employ responsible practices in the restaurant, a business could expose itself to criticism from any number of stakeholders, be they activists, investors, or customers. And in the competitive world of quick-service restaurants, that ignorance could prove deadly.

“If you’re not being conscious about sustainability, then I think you’re going to be the dinosaur in this industry that doesn’t understand how people expect these things,” Bennett says. “And we all know what happens to dinosaurs: They eventually become extinct.”