Restaurateurs who donate their surplus food can now take advantage of some new tax incentives, including an enhanced deduction.
The changes are the result of the PATH Act, which Congress passed last December to modify Section 170 of the Internal Revenue Code. The law makes two big changes: making the enhanced tax deduction permanent and allowing all companies to claim the enhanced deduction, as long as they donate their food to 501(c)(3) charitable organizations.
Before the changes, only some larger companies were allowed to take the enhanced deduction. Now, smaller businesses can take advantage of it, too, says Jim Larson, program development director for the Food Donation Connection, which manages donations for foodservice companies.
“C corporations have been able to take these deductions since 1976, but non-C corporations – including small businesses like S corporations — have been able to do it only intermittently since 2005. Now, everyone wins,” Larson says.
Donating surplus food does more than divert waste from landfills. It helps disadvantaged members of your community, provides tax savings to your business and helps restaurants better manage their businesses.
Carl VanNostrand, chief operating officer of Central Florida Pizza, said the Pizza Hut franchise had earned more than $250,000 in tax credits by donating unsold pies instead of trashing them.
“I’d be kidding if I said that wasn’t important to us,” VanNostrand said. “But it also allows us to touch the community.”
Additional savings come from producing less garbage and lowering hauling fees, of Food Donation Connection, a service that matches restaurants with surplus food to charities that feed the disadvantaged.
Darden Restaurants’ Ingrid Hebel noted that the process highlights ways operations can expand margins by cutting food costs.
“If you’re donating walleye pike all the time, you start asking yourself, ‘What’s up?’ So there are business benefits to it, too,” said Hebel, who serves the Red Lobster and Olive Garden parent company as senior director of operations excellence.
Charities, stress how important the donations are to their feeding operations. They show their appreciation by scheduling pick-ups when the restaurants aren’t busy and getting in and out quickly so operations aren’t disrupted.
Patrick Doolan of Pacific Garden Mission, a Chicago charity, said his drivers can pick up a big order as in as little as three minutes and typically never go beyond seven minutes.
There are also the green benefits, you’re sending less food to the landfills, and there are less greenhouse gas production.”
Cut your restaurant’s food waste with these 4 tips
The National Restaurant Association is taking the mission to reduce restaurant food waste on the road – and they’re seeing lots of creative thinking out there, in restaurants and beyond.
Their most recent stop for the was Harvard University, where they joined hundreds of other leaders in the food-waste-reduction movement for a “Reduce and Recover: Save Food for People” workshop.
The NRA’s Laura Abshire, sustainability director, moderated a session on food recovery. Four tips from her panel:
Design a custom program. Saint Louis Bread (Panera) donates leftover bread and baked goods from more than 800 company-owned stores at the end of each night to local hunger-relief agencies. Panera Bread exec Mindy Gomez-Casseres said the company’s “Day-End Dough-Nation” initiative contributes more than $100 million in unused bread and bakery items each year.
Partner up. Foodservice companies made a whopping 1.6 million food donations last year through the Food Donation Connection, reported FDC’s Steve Dietz. FDC acts as a middleman between restaurants and grocers and 9,000 local shelters, rescue missions and food banks. Clients say working with FDC makes every aspect of the food-donation process easier, from cost to transportation to liability. A side benefit: It can be great for team morale, says Whole Foods Market’s Karen Franczyk. Her company is working with FDC to donate more hot, prepared food. “Employees didn’t like throwing away food at closing. They are happy it goes to the hungry.”
Understand your liability. Many restaurants fear liability when they donate prepared food inventory. But the federal Bill Emerson Good Samaritan Act protects donors against donation-related liability claims. “It’s clear lots of restaurateurs don’t understand this,” says Abshire. “We want to get the word out: U.S. law protects donations made in good faith.”
Watch for misguided mandates. Cities and states are increasingly passing bills to ban organic waste from landfills, Abshire noted. But the mandates often come before the necessary infrastructure is in place. Banning food waste won’t work if jurisdictions don’t have the facilities to support composting or other alternatives, Abshire said.
The event was hosted by Harvard Law School’s Food Law and Policy Clinic. The Environmental Protection Agency and the Massachusetts Department of Environmental Protection were partners.
An estimated 40 percent of food is wasted in the United States each year. A federal initiative introduced last year aims to cut food waste in half by 2030.