Food waste KPIs: What if you could only measure one thing?
Why can’t retailers agree on what food waste KPIs to measure?
It’s Monday morning. And the CEO has one question.
“We’re committed to cutting food waste. If every store could be measured on just one KPI, what should it be?”
It sounds like a straightforward management decision. Only it isn’t.
When ECR Retail Loss asked 29 leading retailers operating more than 64,000 stores across 12 countries how they define, organise and measure food waste, there was no consensus.
- Some measure weight in kilograms
- Others measure financial value
- Some count donations as a success
- Others argue that donations prove prevention has already failed
Even something as simple as defining food waste turned out to be surprisingly complicated.
The challenge isn’t simply reducing waste. It’s designing food waste KPIs that encourage the right behaviours without creating unintended consequences.
The first challenge: What actually counts as food waste?
Before retailers can improve performance, they need to decide what they’re measuring.
Almost every retailer includes damaged or spoiled products within its definition of food waste.
Most also include products sent for energy recovery, while many include donations, equipment failures, markdowns and landfill.
But beyond those broad areas, agreement quickly disappears.
Some retailers include recalls. Others include unknown shrink. Some even include the financial cost of discounts used to clear surplus stock.
This lack of consistency makes benchmarking extremely difficult.
Two retailers may both claim to have reduced food waste while measuring completely different things.
Perhaps the most controversial issue concerns markdowns.
For some retailers, a yellow sticker represents food waste because margin has been lost.
Others see markdowns as a successful intervention, resulting in a product that’s at least eaten rather than discarded.
The choice isn’t simply about accounting. It fundamentally changes how success is measured.
Who should own food waste KPIs?
Our survey also revealed that retailers organise food waste differently.
Nearly half place accountability within store operations, while others assign responsibility to supply chain, commercial teams, finance or cross-functional governance.
Each approach has its strengths.
If stores own the budget, they are motivated to execute markdowns, rotate stock and maximise donations.
However, stores cannot control forecasting, ranging decisions, supplier quality or promotional activity.
They often inherit problems created elsewhere in the business.
Conversely, if commercial teams own food waste entirely, store engagement can quickly decline.
That’s because colleagues no longer feel accountable for preventing waste through excellent execution.
Many retailers are therefore moving towards a more balanced model.
- Commercial teams influence ordering and promotions.
- Supply chains manage freshness and transport.
- Stores control execution, markdowns and handling.
- Sustainability teams oversee reporting and external commitments.
- Finance measures the financial impact.
Rather than one department owning everything, responsibility is increasingly shared across the organisation.
Every food waste KPI changes behaviour
One message emerged repeatedly throughout the discussion.
Stores optimise whatever they are measured against.
- Measure waste value alone, and colleagues may become reluctant to record losses accurately.
- Measure donations, and stores may over-order because surplus can always be given away.
- Measure markdowns, and products may be reduced earlier than necessary, sacrificing margin.
Every different approach to food waste KPIs creates incentives.
And every incentive changes behaviour.
The challenge is ensuring those behaviours support the retailer’s overall objective rather than undermine it.
Should stores be measured on results or execution?
Perhaps the biggest shift emerging from our benchmark study is away from purely financial targets.
Many retailers are placing greater emphasis on process compliance for their food waste KPIs.
Instead of asking stores simply to reduce waste, they increasingly measure behaviours that colleagues can directly influence.
These include:
- Completing markdowns within the correct time window.
- Ensuring no expired products remain on sale without markdown stickers.
- Following donation procedures correctly.
- Complying with the retailer’s waste hierarchy.
- Maximising markdown sell-through.
As one retailer explained during the discussion: “It’s about process compliance rather than fiscal targets.”
That distinction matters.
Where forecasting and ordering are largely centralised, stores cannot always control how much product arrives.
They can, however, control what happens once it reaches the shelf.
Are donations really a success?
At first glance, donations appear to be one of retail’s biggest food waste success stories.
- Unsold food reaches charities rather than landfill.
- Communities benefit.
- Environmental impact is reduced.
But our discussion with several loss-prevention experts challenged that assumption.
Several retailers argued that donations represent an important safety net. But not the ultimate objective.
The highest priority should always be preventing surplus in the first place.
Only then should retailers consider markdowns, donations, animal feed or energy recovery.
One retailer summed up the philosophy perfectly: “Our ambition is eventually to have nothing left to donate.”
It’s a powerful reminder that successful food waste management begins long before products approach their expiry date.
Better food waste KPIs start with better questions
Perhaps the most surprising finding from this benchmark wasn’t which food waste KPIs retailers preferred.
It’s that there isn’t a single measure capable of balancing every objective.
Retailers must simultaneously:
- Protect sales
- Maintain product availability
- Reduce environmental impact
- Improve forecasting
- Minimise operational costs
- And avoid unnecessary waste.
No single KPI can optimise all of those goals.
Instead, the retailers making the greatest progress appear to be asking a different question.
Not: “What is the perfect KPI?”
But: “What behaviours do we want this KPI to encourage?”
That subtle shift changes everything.
Perhaps the purpose of a KPI is not to measure food waste.
It’s to change the decisions that prevent food waste from ever existing.
The best retailers may ultimately stop measuring waste as the primary outcome and instead measure the quality of the decisions that determine whether waste happens at all.
If that’s the future of food waste KPIs, then perhaps the most important metric isn’t the amount of food thrown away.
It’s the quality of the decisions made long before products ever reach the shelf.
For more facts and information about dealing with unsold food in retail, check out the essential data points from our research.
