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A variety of vegetables stored in a warehouse

Un-stranding Assets Part 1: Cold storage – learning from and leveraging an interim opportunity

  • Date: 29 June 2021
  • Author: Katherine Devine, Director of Business Case Development, Markets Institute, WWF

COVID-19 represents an opportunity to rethink conventional business models. We saw struggling restaurants get creative to stay afloat, with solutions ranging from innovative delivery menus to sales of pantry items. While many of these solutions may have served as temporary fixes during an unprecedented difficult time, others will continue, and they speak to the ingenuity required to drive businesses forward in times of challenge.

With many hotels at limited capacity due to restrictions from COVID-19, as well as limited travel, hotel rooms aren’t the only underutilized asset. Most hotels also offer food in the form of complimentary breakfast, or more robust dining services. With far fewer travelers, much of that kitchen and cold storage space is – or was – not being fully utilized. The same could be said of other venues, such as convention centers and stadiums, which largely lay dormant while crowds were unable to gather en masse. Although many of these resources are now open, there are off-times between events when storage could be used for other purposes, and we can use this moment to consider business models holistically to prepare for future disruptions.

Following market shifts and supply chain disruption, there has been an elevated amount of farm-level food loss, while unemployment levels surged, and many struggled to feed their families. Food banks, however, typically have limited cold storage space. What if excess food could be stored temporarily in hotel, stadium, or convention center cold storage, and then accessed as needed to resupply food banks, pantries, and meal centers? Cutting food waste is an environmental win to prevent the waste of natural resource inputs and the greenhouse gas emissions associated with it, in addition to the social benefits of feeding more food to people that need it.

Further details would need examination, such as who pays for logistics and storage at these facilities if this were to become a longer-term potential solution or part of the cold chain. Additionally, food safety and health precautions remain paramount. While food insecurity is sadly not a new challenge, COVID-19 drew new attention to how much food goes to waste while people go hungry, as rates of both have risen. We must not allow logistics to be the reason for this. The opportunity to better leverage cold storage has the potential to utilize a variety of temporarily stranded assets to solve several problems at once: prevent food waste, feed those in need, and provide revenue (or tax breaks) for farmers and businesses.

World Central Kitchen modeled using stadium kitchens in the humanitarian crisis following Hurricane Maria in Puerto Rico and has also strengthened relationships with restaurants across the US to address rising hunger that emerged as a result of job losses during the COVID-19 pandemic. This agile use of an under-used asset in times of need serves as an example of a way to build resilience within our food system. Expansion of this type of model could link farm-level surplus to end-users via cold storage in partnership with food banks and create innovative business models for short-term opportunities for those with available cold storage.

Food banks aren’t the only ones who could benefit from the adaptive use of these assets. The emerging phenomenon of the ghost kitchen accelerated during the pandemic. Ghost kitchens are restaurants that do not have a storefront- or consumer-facing presence, but rather exist for delivery and/or pickup only, thereby requiring less real estate and minimizing consumer interaction. Since they don’t require the level of investment of a typical restaurant, ghost kitchens could leverage both cold storage and underutilized kitchen space of some businesses to test out concepts, thus offering them a temporary space to determine if ideas will be short-lived for a crisis period, or if they have enough potential to consider a more permanent or longer-term space. Ghost kitchens could benefit by paying for space with shorter-term agreements than would be required by typical leases, and businesses with underutilized assets could profit from an unconventional business model.

The concept of optimizing the use of cold storage outside of traditional businesses in which they are located is not without challenges. In some instances, stranded assets may not currently be operating, which could incur costs to turn on the electricity, recall staff, and other operating expenses. Many restaurants set up for delivery or takeout have windows or the kitchen is not located far from the door. Convention centers, stadiums, and hotel kitchens may have logistical challenges based on where they are located within the properties. Additionally, products changing hands throughout the cold chain could lead to liability and ownership questions, as well as concerns about quality control. Nevertheless, flexible cold storage options present an intriguing potential solution for last-mile delivery challenges, and none of these challenges is insurmountable.

The economic harm wrought by the pandemic will alter the landscape of restaurants, hotels, and large places of gathering for years to come. Now is the time for creative solutions and making the most of what we have. What other models could accelerate the pace of adopting innovative solutions for cold storage capacity? Here at the Markets Institute, we’re looking at creative ways to close the gaps in our food system. Share your thoughts at [email protected].


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