Eli5: How do supermarkets that offer prepared foods manage quantity to prevent waste?

Question

How do supermarkets like Costco and Wegmans deal with food products that have quicker than normal expiry to prevent as much waste as possible? An example is Wegmans producing pizza dough for customers, but also making their own pizza throughout the day to sell hot by the slice or pie, and cold whole pizzas they sell to customers to be heated up at home. *Not to mention the variety of dough they offer—white, wheat, gluten free; and the pizza varieties on those dough types.*

I know as a society we have a terrible issue with food waste, but how do supermarkets calculate their sales to production ratio enough to make a profit with so many different items expiring on different days?

In: 3

Answer 1

First off, stores like Costco, that sell both food and general merchandise, often make little to no money on food. Their food sales are designed to break even, with some “loss leaders” like rotisserie chicken being sold at an extreme loss just to get people in the door. Since people come for their food, and they have to walk to the very back of the store to get their essential food, along the way they pass by the general merchandise. Costco hopes that people will impulse purchase something like clothes that they have to walk past, and that’s where they actually make their profit.

Second, it is absolutely terrible for any store to be out of stock on non-niche items. Many customers will only go to one store, but if the item they absolutely need is out, this may be enough to get them to visit another store. They may end up liking that other store more and never come back. To prevent losing customers, supermarkets will keep a much higher inventory than they think they will sell before the item goes bad, just to ensure that they keep everything in stock.

All this is to say that for prepared foods, supermarkets barely consider waste at all. They often plan to lose money on these products, and they care most about keeping the customers loyal, so they expect to throw away a very significant amount of this food. They will recoup their losses in high margin general merchandise goods to offset the extreme amount of food waste they create. They’re worried about calculating the possibility of running out, they aren’t worried about calculating the perfect amount to put out to limit waste.