DIGging INN to Climate Change x Sustainable Food Systems
The best defense is a good offense. Dig Inn is a veggie-obsessed fast casual restaurant chain, whose mission of supporting local food systems proactively tackles the risks brought about by climate change.
Securing 13 restaurants’ worth of fresh, sustainable vegetables and hormone-free meats every day is challenging enough, but the extreme weather conditions and species extinctions driven by climate change create even greater variability in the availability, quality and cost of food. Traditionally, fast food chains relied on a limited set of highly-processed foods to achieve economies of scale, but Dig Inn is championing an alternate model – one that prioritizes long-term vitality of the land, and the communities that manage it, by sourcing from environmentally-responsibly growers, and intentionally diversifying and building flexibility into its ingredient pool.
Sourcing local, in-season produce
55% of Dig Inn’s weekly produce comes from local farms (local defined as within a 300 mile radius) [1]. Reducing the distance that food travels from farm to table decreases greenhouse gas emissions (GHGs), which are especially high for perishable goods that may need to be shipped/flown-in expediently. De-centralizing food production has the broader benefit of ensuring that if there were a natural disaster in one part of the world, local areas would still have a safety stock rather than being completely cut off. Sourcing locally also compels Dig inn to adapt part of their menu to what is in-season, and in doing so, retraining consumption habits to start with what the earth can sustainably provide, as opposed to what any individual demands in the moment.
Organics and diversity
Dig Inn seeks out suppliers that follow organic pest control management, practice crop rotation and polyculture, and the business currently sources 17% of produce needs from rare or less well-known vegetable varieties (think eastern broccoli or honeynut squash) [2]. The idea is that reducing monoculture and encouraging more sustainable farming practices lead to improved soil quality and higher crop yields long term. Avoiding synthetic fertilizers not only reduces GHGs from producing the chemicals, but organically-managed soils sequester more carbon and perform better in volatile dry and wet weather conditions [3].
Recovered food
In the U.S. today, 30-40% of food goes uneaten [4], and food waste consumes 21% of all the country’s freshwater, 19% of all fertilizer, 18% of cropland, and 21% of landfill volumes [5]. Food waste is responsible for generating 8% of global GHGs [6]. Dig Inn has shifted 5% of its produce towards rescued “imperfect” produce whose appearance would not meet grocery store standards, but are perfectly nutritious [7]. Dig Inn also works with vendors like Happy Valley Farm to use excess meat trimmed off the chuck roll, which would normally be thrown out, in its beef meatballs. To manage its own waste, it partners with non-profits like Rescuing Leftover Cuisine and Lovin’ Spoonfuls to deliver unused food to homeless shelters and soup kitchens at the end of each day.
Empathizing with suppliers
Increasing trust and communication among different members in a supply chain reduces total costs to the system – Dig inn has close relationships with the farms they purchase from, which allows them greater visibility into supply, faster reaction times (e.g., recognizing end customer preferences and suggesting growth of new crops) and transparency on expected COGS. In fact, Dig Inn is starting their own 40-acre farm to walk a mile in farmers’ shoes, where they can test out new environmentally-friendly farming practices and grow their own unique varieties [8].
Challenges and opportunities
Dig Inn’s environmentally-conscious sourcing practices create a lot of complexity: managing a large, diverse group of smaller-to-mid-sized farms requires more sophisticated models for matching supply and demand. Consumer expectations must be addressed when there is a sudden under-supply or termination of a favored product, and frequent menu changes to incorporate specialty items may reduce throughput time for orders. Dig Inn already mitigates some risk by planning new menus far in advance so they can plan against growing cycles, as well as introducing trial runs of produce that are variable in supply before expanding to more locations. Going forward, the organization can benefit from expanding its data analytics capabilities: 1) tracking real-time consumption patterns and required supply lead times for all its produce types, to not only better project future demand internally, but potentially selling its market insights to companies that want to predict or act upon cutting-edge food trends, 2) measuring the positive impact of their practices on eliminated emissions/waste to evaluate ROI beyond qualitative metrics, which would spur more action by other industry players, 3) collecting data across all its farmers that demonstrate the impact of various changes in farming techniques/crop mix on productivity and profitability, to offer data-driven consultations to farms based on aggregated data that is not currently shareable.
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Photo Credit: Dig Inn, 2016
Citations:
[1] [2] [7] [8] Phone interview with Dig Inn managers, November 2016.
[3] Food and agricultural organization of the United Nations, 2016, http://www.fao.org/organicag/oa-specialfeatures/oa-climatechange/en/
[4] United States Department of Agriculture Office of the Chief Economist, September 2015, http://www.usda.gov/oce/foodwaste/faqs.htm
[5] ReFED 2016, https://www.refed.com/?sort=economic-value-per-ton
[6] International Energy Agency, 2014, http://www.wri.org/blog/2016/01/champions-call-reduce-global-food-loss-and-waste
(Kudos on conducting primary research!)
I’m impressed by the breadth and creativity in Dig Inn’s approach to mitigate its contribution to climate change. Sourcing locally seems foreseeable, but using lesser known vegetable varieties and rescuing “imperfect” produce to reduce food waste are clever tactics. It’s clear that this is a company that proactively addresses the issue of climate change by embedding mitigation tactics in its core operations.
Perhaps we can take your point on empathizing with farmers further. If Dig Inn is starting its own 40-acre farm to experiment with farming practices and grow specific crops, should it consider vertically integrating by starting more farms and growing more of its own food? I speculate that it takes a lot of effort to find the right farms considering their emphasis on local farms and penchant for lesser known varieties of vegetables. This results in the risk of limited quantities of produce, and Dig Inn mitigates against this by planning menus in farther in advance, but Dig Inn may have it easier operationally if it does not have to react to scarcity. I’m not suggesting Dig Inn be 100% its own supplier, but with its own farms, it can grow enough of the crops it wants to its own standards. Doing this would be costly, but I wonder how it compares to the costs associated with selecting, sourcing, and working with their current farms.
I like your suggestion to expand Dig Inn’s data analytics capabilities to improve its ability to forecast supply volumes and lead times, given the precariousness of its supply chain. Furthermore, developing better ways to measure impact and provide feedback to farmers would improve the relationship the company has with stakeholders along the supply chain. I’m wondering, though, if Dig Inn would have to invest heavily to build this capability, and if so, should they spend their time on better sourcing and sustainable farming practices, which they seem to be good at already.
I really like your ideas on data collection! As a former Dig Inn customer, learning that they use excess meat that would normally be thrown out, as well as imperfect produce, is a bit alarming. I realize it’s probably fine as it still passes FDA approval, but I wonder how that would affect purchase decisions of consumers. This is a situation where, in aiming for mitigating food waste, they could potentially compromise short-term business if the messaging around this isn’t clear.
This article does a great job of addressing a difficult trade-off between sustainable practices and predictive supply that Dig Inn and similar companies are facing. I feel as though sustainable dining has increasingly become a fad over the past few years as diners seek more transparency in the food they consume. It is interesting to see how Dig Inn has ridden this wave and figured out a way to manage customers’ expectations around having consistent year-round offerings of vegetables.
The article mentions that de-centralizing food production has the ability to help Dig Inn recover from shortages in a specific region. I’m curious to know the logistics that go into helping a certain region recover from a shortage. Does Dig Inn source crops from other unaffected regions and send these crops to regions with shortages? If so, how does that impact their GHG emissions? Does Dig Inn have a contingency plan in place to minimize the level of GHGs when dealing with shortages?
I also wonder if Dig Inn can learn from Whole Foods’ practices to improve their sustainability efforts. Whole Foods’ also has major initiatives around locally sourced produce; I wonder if there are lessons to be learned by analyzing their operations since Whole Foods is on a much larger scale compared to Dig Inn but has similar sustainability goals and challenges.
As a Dig Inn lover, I was impressed to learn about the ways in which they are conducting their business in order to improve their overall sustainability levels. The fact that 55% of Dig Inn’s weekly produce comes from local farms is a rare yet noble statistic. I appreciate their decentralized system, hedging their risk against idiosyncratic shocks to specific geographies. I do understand the complexities that the business is facing and understand that by employing sustainable practices, they are not necessarily making their lives easier. This seems to be the struggle facing most companies today.
As if I needed another excuse to eat at Dig Inn… but really, with these sustainable practices, enjoyable food and fair prices, Dig Inn is perhaps in for substantial growth. I wonder how they will adjust as the company expands to new locations and stores? As we’ve seen across cases, keeping culture in tact through growth is a huge challenge, and one that Dig Inn is likely to face if it decides to leverage its position in the sustainable dining “wave” as described in a comment above.