A few years after Companion Bakery moved into its new 42,000-square-foot facilities, founder Josh Allen was having trouble getting the numbers to work. Sales were growing, but profits weren't.
After nearly three decades in business, Allen knew how to run a lean operation, yet he was unable to figure out where to make cuts.
The solution was in the trash, he told Insider. "I pulled out all those bills from the trash company and I said, 'I like to chart stuff. Let me throw some charts together and see where we are.'"
Turns out, there was a lot of money hiding in the garbage.
Scaling up a business is one of the hardest things to do correctly. The road is littered with businesses whose spectacular top-line growth led to increasingly unsustainable losses.
Here's how Allen found the secret to sustainable growth in his company's dumpster.
As your business grows, watch out for what bills are also growing
Companion paid roughly $108,000 to haul away 1.6 million pounds of trash in 2017.
"It just blew me away," he said.
As Allen saw when he moved from a 1,000-square-foot bakery, to a 15,000-square-foot space, to where he is today, when you grow a business, it's not just the good parts that get bigger.
Companion's original bakery used a communal dumpster service with other businesses, so Allen was used to simply cutting a check for his portion of the bill.
In the new space, the trash service provided a statement that detailed a pickup fee of $250 and a weight charge of about $54 per ton, according to documents reviewed by Insider.
At first, Allen says he didn't understand the significance of the numbers, so he filed them away until his conversations with the bank reminded him to take a closer look.
There wasn't much Allen could cut from the budget, but they could try to throw away less stuff.
"Nobody had any context for what 1.6 million pounds of trash meant other than 'Jesus, that's a lot of trash!'" he said.
Rally the team around a goal that's not just about money
Allen had long sought a single performance metric to get everyone from production to sales working toward a common goal.
"It was always these convoluted algorithms or something like a stock ticker price or an internal number to talk about," he said.
Armed with his new charts, Allen started obsessively talking about trash to everyone in the company. Each department was tasked with finding ways to reduce the weight of their garbage and recycling bins, and they did.
Bakers increased quality control checkpoints and reduced the excess dough, or "trim," to cut down on waste in production. Cafe staff asked if customers actually wanted utensils or extra napkins before putting them in the bag.
The customer service team realized it was printing duplicate invoices and simply throwing one copy away. With a stroke they were able to save half a ream of paper per day, or about 15 pounds of paper per week.
In less than three years, Companion cut its garbage weight by more than a million pounds to just over 600,000 – almost half of which is compost that doesn't go into a regular landfill, according to data viewed by Insider.
Now monthly the dumpster bill is $1,900, and the benefits go beyond the environmental and financial.
"What I didn't really anticipate was the emotional piece," Allen said, "the sense of fulfillment and appreciation and excitement and pride that it's generated in the staff because we're just not going to the dumpster that often."
No one wants to work hard on something just to see it get tossed in the trash.
Part of creating less waste is buying less stuff – and that also saves money
Soon, the bakery's budget waste-line was shrinking – in part because of lower tonnage fees, but also because the company was able to buy less stuff.
"Our office supply number in this whole thing has gone from $2,500 a month to about $400 a month," Allen said.
The same goes for excess trim and bad batches of dough, all of which cost precious time, ingredients, and energy to make.
Allen calculated a financial ratio of sales per pound of trash that he calls the "trash efficiency" metric, which he says gives insight into the health of the business.
Trash efficiency also provided a basis for evaluating other questions, like whether to invest in a major equipment upgrade.
Allen could either replace the bakery's dough dividing machine that cost $250,000 with the same model that lost up to 12% in trim, or he could spring for the higher precision model that cost $1 million and lost less than 3%.
"As soon as we started looking at waste differently inside of the organization, we recognized that the savings in waste would pay for the piece of equipment," he said.
When asked whether he was on the lookout for the next magic number to focus on, Allen said, "I don't know that we have the energy, the wherewithal, or even the need to look at another number besides waste, because it's just so impactful in every facet of what we do."
Join the conversation about this story »
NOW WATCH: A cardiologist revealed the truth behind red wine's health benefits