US Foodservice is getting into the biofuels business with the purchase of a company specializing in recycling used cooking oil into biodiesel.
US Foodservice acquired Bluffton, S.C.-based WVO Industries with plans to convert the waste vegetable oil used in its customers' deep fryers into biodiesel to fuel its fleet. Terms of the deal were not disclosed.
"In my mind, it's a closed-circle oil product," said Durwood Owens, president of the U.S. Foodservice-Columbia division in South Carolina.
In a phone interview, Owens explained that US Foodservice sells fresh vegetable oil to restaurant customers for use in their deep fryers. For the last 18 months, US Foodservice acted as WVO's exclusive waste oil collector, picking up the full five-gallon sealable buckets and leaving empty vessels in their place.
The buckets will soon be taken to a tipping station now being constructed at the company's Lexington distribution center. At the tipping station, expected to be operational in about six months, the oil will be warmed and placed in large tanks where the food solids settle to the bottom and the particle-free oil is siphoned off the top.
The tipping station is designed to process about 400,000 gallons of bio feedstock annually. The company will blend the feedstock with petroleum diesel on site into B20, a fuel comprised of 20 percent bio feedstock and 80 percent petroleum diesel. US Foodservice's Columbia division will use about 200,000 gallons of the B20 per year, with the rest being sent to other US Foodservice business units or sold to other companies.
Owens said the acquisition is aimed at containing costs, rather than turning a profit. The process will likely reduce operating expenses when diesel prices are high; should prices come down, he expects to break even.
The move will also help US Foodservice reduce its carbon footprint, the company claims, citing EPA research finding that life cycle greenhouse gas emissions associated with waste grease biodiesel were some 80 percent less than petroleum diesel. A few years ago, US Foodservice participated in the pilot phase of the Green Portfolio Partnership, a joint program created by Environmental Defense Fund and parent company Kohlberg Kravis Roberts & Co. The company saved millions of dollars by improving the fuel efficiency of its fleet by 5 percent, the company reported in 2009.
The arrangement makes sense to Kaleb Little from the National Biodiesel Board. Taking out the "middle man" will help US Foodservice control costs and hedge against future petroleum price increases or volatility, he said. US Foodservice's relationships with its customers, which include restaurants, universities and healthcare facilities, also ensure a steady supply of valuable waste oil for the division's 150-plus truck fleet. The process may be replicated in other regions.
"The price of crude oil is continuously rising and will keep rising, at least in the near term," Little said. "On the biodiesel side, if you can secure a stream of the feedstock, which is the used cooking oil, that's where the main cost of producing biodiesel is -- that biodiesel input."