User Research Case Study: Food Business Sustainability
**Special thanks to Sunny Choi, my teammate and co-writer of this article!**
How can we help independent restaurants thrive in a system that produces minimal food waste?
Background
According to a study by Cornell University, 26% restaurants fail within their first year with 60% independent operators closing down by their third year. Failure rates were 4% higher for small, independent operations than they were for relatively large, franchised restaurants. Although these numbers seem small, they are statistically significant. Unlike large restaurant chains, a lot of small independent restaurants lack the resources to run their business efficiently and scale their business. In recent years, some restaurants started moving towards cloud kitchens with delivery-only services that are easily 6–15x cheaper than renting a physical space. However, food delivery operators commonly prevent restaurants that run on their platform from engaging a rival’s service. Small businesses that are essential for the industry to flourish are put at a disadvantage this way.
Meanwhile, these restaurants generate an estimated 22 to 33 billion pounds of food waste each year, which adds up to approximately 40% of total food waste. We started to think if we could solve these disparities in the food industry, or if it is possible to minimize food surplus and instead allocate those resources to small businesses so they can grow. We came across the concept of business sustainability, which is the management and coordination of environmental, social, and financial demands to ensure responsible, ethical, and ongoing success. Such a business is sustainable because it contributes to the health of the structure within which it operates, thereby helping construct an environment in which the business can thrive. What if we could apply this concept to design a system where small businesses could thrive and scale ethically while producing minimal food waste?
With this project, our team aims to construct a system for independent restaurants to manage and coordinate environmental, social, and financial demands to ensure responsible, ethical, and ongoing success of their business. We’ve identified the restaurant owner’s motivations based on Maslow’s hierarchy of needs. On a self-actualization level, business owners would like to feel fulfilled by running their business, and make a positive impact on the environment that their business belongs to, which directly relates to running a business in a sustainable manner. However, these needs cannot be even considered if the needs on the lower level needs are not met. Majority of independent businesses struggle to keep their business open, therefore, it is difficult to consider the higher level needs of self-fulfillment and doing good for the environment. With this project, we want to create an environment where independent restaurant owners can meet their needs on all levels, from survival (financial sustainability) to self-actualization (environmental sustainability).
Target User
To start our research, we needed to define who our user is. Independent restaurants by definition are standalone properties with the owner working daily in their property. Because it is relevant to current times, we also included cloud kitchens as well, which are essentially independent restaurants with no physical storefront. As we also learned from our prior research, they do delivery-only services and heavily rely on their online channels. Both of these personas have less than 50 employees.
User Interviews
After doing so, we immediately started talking to these small restaurants and used the data to draft a journey map showing their day-to-day journey in running a restaurant at a high level. Our goal was to find out where the highest frustration points are and which stages produce food surplus.
It was difficult to set up interviews with the current situation, but we managed to get in contact with a total of 11 independent restaurant owners and conduct interviews with 7 of them, ranging from delivery-only businesses with 1 employee to traditional, storefront restaurants with 30 employees. Looking at the journey map, the inventory part of the system stood out the most to us, since it had the most pain points. For example, all our interviewees had to source their ingredients from multiple suppliers, some of which did not match their expectations, so they had to look for different distributors. We also considered bookkeeping, which our interviewees do by hand, making it difficult to keep track of all hidden costs and projected costs involved in running a restaurant. We decided to go a bit deeper into the inventory aspect to scope down our project, so we scheduled a visit with one restaurant located in Atlanta, to find out more about their inventory processes in detail, and followed up the rest of our interviewees.
Insights
Overestimation of Sales
Overestimation of sales was an issue that was shared among multiple restaurants that we interviewed. Because independent restaurants are operating at such a tight profit margin (average of ~20%), they feel the need to overestimate their sales and over stock their ingredients, which can directly lead to production of food waste. Another factor that influences their inventory is sales.
One interviewee mentioned that she overstocks on drinks whenever they are on sale regardless of how much inventory she already had. The cost of over stocking and over prepping ingredients is not taken into consideration because restaurants feel that it’s necessary for them to make the most sales possible. Majority of our interviewees mentioned that they stock their inventory several times a week, ranging from 3 times a week to everyday.
“We are constantly buying and prepping so we don’t run out often. We label food with the date it goes inside the fridge. So, yes sometimes the inventory is a little bit off but we don’t mind because we’re very busy.”
No proper inventory tracking
All restaurants that we’ve interviewed tracked their inventory by hand, whether it’s through physical notes or digital notes on their phones, and sometimes mental notes. More technologically advanced owners utilized tools such as Excel and Google Sheets, but there was no automation in the process. All these processes rely heavily on the restaurant employees’ working memory. With their inventory data spread out between the restaurant owners’ phone, post-it notes, and mental notes, there was no single, reliable “database” for everyone involved to refer to. From here comes the issue of communicating with employees, sometimes they would forget to tell the manager which items are running low in stock resulting in issues with sales. To avoid this, many restaurant owners were depending on overstocking, as mentioned previously.
“I can’t possibly keep track of everything in the inventory because there are so many items. Or sometimes I forget. Also my employee forgets to tell me when he opens up the last box when he’s supposed to.”
Multiple suppliers and storage locations
As we mentioned before, all our interviewees source their ingredients from at least 3 different suppliers. Most ingredients are purchased from wholesalers so they can purchase in bulk and other items such as spices are usually acquired from specialty stores. Other distributors mentioned were farmers markets, grocery stores, and on rare occasions imported ingredients. This is reflected in their processes as we saw they had lists separated into columns, with each column representing ingredients needed from each supplier.
On the other hand, the ingredients themselves are also kept in storage locations scattered around the kitchen. For example, one of our interviewees has 3 fridges, an extra freezer, a pantry and a cooler which she rarely ever uses. She explicitly mentioned that going in and out of the cooler is a pain point. These storage spaces are not exactly the most organized nor accessible, which leads to some spaces and ingredients being underutilized.
“Honestly, ingredients are the most difficult part in my business. I get my ingredients from multiple sources, some are from wholesale supplier websites, some from markets, some are even from Instagram. I also import ingredients from overseas.”
Another aspect we had to consider was the fact that there are existing standards for storing food which plays a role in the way our target users store their ingredients. For example, meat has to be placed on the bottom shelves to prevent the juices from contaminating other ingredients and overstocking the fridge has to be avoided so the fridge can maintain the correct temperature.
Minimize waste, maximize profit
From the insights that we’ve gathered from the research, our team will be focusing on forecasting sales and managing inventory to prevent potential food waste, and helping independent restaurant owners to generate more profit throughout the process. Our goal for this project is to target under 4% of total ingredients to become food waste, which is under the national average range of 4–10%. Instead of doing the forecasting ourselves, our aim as design students is to design a platform that would facilitate the data analytics process in order to calculate how much demand to expect and optimize the inventory handling process. The system should be easily integrated into existing business practices, and provide accessible design for our target users, who are accustomed to manual bookkeeping. We would also like to incentivize users to reduce waste, by calculating prevented food waste and presenting the information in a relatable format.
Next steps
We thought the research phase was a good learning experience and we are glad we were able to do this during the pandemic. If you felt that there were missteps in our process, please feel free to reach out or leave a comment, we appreciate any feedback we can get. Over the next few weeks, our team will begin ideating user flows based on our insights.
