Buffalo Biodiesel faces $20M loss from cooking oil thefts - Buffalo Business First

Listen to this article 3 min

Waste oil theft is costing one Buffalo company millions of dollars. See how it is fighting back and why restaurants are caught in the crossfire.

STORY HIGHLIGHTS

Buffalo Biodiesel's social media newsfeeds are filled with dozens of photos and reports of waste cooking oil thefts at restaurants and businesses throughout the Northeast.

That waste oil is Buffalo Biodiesel’s bread and butter — the company recycles it and converts it into alternative fuel for clients, which include refineries and the aviation industry.

Each theft might be fairly small, but they add up to massive loss for the Buffalo-based company: about $20 million this year alone.

“It’s not getting better, it’s getting worse and it does put the company in jeopardy,” said Sumit Majumdar, founder and president. “Twenty million dollars in losses is unsustainable, no matter how you cut it. If we weren’t as large as we are, we’d already be gone.”

Since January, the company has reported more than 2,600 thefts from unauthorized trucks pulling up behind restaurants and breaking into Buffalo Biodiesel’s vats that are left out for pickup filled with waste oil.

Besides the larger impact on the company, restaurants are losing income as well, albeit in smaller amounts. In the past, they had to pay to dispose of used oil, and now they are paid a nominal fee for it– if the oil isn’t stolen first. If it is, the thieves resell the oil themselves, the restaurants don't get paid and Buffalo Biodiesel has nothing to sell.

It's a lucrative industry: According to Modern Restaurant Management, approximately 4.4 billion pounds of used cooking oil is generated annually across North America from restaurants and other foodservice businesses. With high resale values, Fortune Business Insights put the global used cooking oil market at $7.09 billion last year.

On Aug. 23 alone, six restaurant clients were hit by waste oil thieves on Transit Road — Fuji Grill, La Tolteca, Mirchi Buffalo, Olive Garden, Transit Lanes and the now closed Griffon Gastropub. Three of them hit again the week of Sept 15. Plus, Campobello’s was hit on Sept. 11 and Anderson’s was targeted on Aug. 27 and again on Sept 17.

Josh Cohen owns Campobello's and has interests in a dozen other restaurants. He says it may not seem like a lot, but missed revenue is important for businesses that work on very small margins, especially with the rising costs of food, labor and insurance.

“It’s only about $400 a year, but I will say this: In the restaurant business, it is nickels and dimes… $400 times 12 – that hurts,” he said.

Downtown businesses have been hit too, including Banshee Irish Pub.

“The problem is there are other oil pirates coming and emptying the barrels at night,” said Conor Hawkins, general manager. “We haven't been paid in six months for oil as it keeps disappearing.”

Buffalo Biodiesel has contracts with 25,000 producers of waste oil, including independent restaurants, supermarkets, hotels and colleges – anyone with a commercial kitchen across 15 states.

This year's losses are up from $15 million in 2023 from thefts at more than 4,000 locations. In just a one-week period in October, he tracked 116 reported thefts.

“We’re getting annihilated. We have revenue over $20 million and right now 50% of our revenue is being stolen,” he said. “Right now, we’re collecting probably around a million pounds but losing about the same weekly. In some jurisdictions, we have 50% pilferage.”

Buffalo Biodiesel has been converting waste oil into biodiesel fuel for nearly 20 years. Majumdar, a self-professed IT nerd whose father was a scientist, started out as a hobbyist in Canada, recycling waste oil as a hobbyist to provide fuel for his turbodiesel Volkswagen.

Buffalo Biodiesel was his second venture: After earning an MBA in e-commerce, his first company was Innofone, a telecommunications venture that went public on the Nasdaq stock exchange.

Oil from Buffalo Biodiesel's contracted suppliers is trucked back to Western New York to be processed at the company’s manufacturing and distribution facility on Sawyer Avenue in the Town of Tonawanda. Buffalo Biodiesel’s headquarters moved downtown in early 2023 after buying 17 Court St. for $3.3 million. In total, the company employs about 150.

Waste oil theft is just one area where the company is seeing losses: Buffalo Biodiesel has also sued hundreds of restaurants that ignored their contracts and sold their oil instead to competitors. Majumdar insisted that's just a fraction of his customer base. The bigger issue is theft, he said, which got worse about five years ago.

It's an industry-wide problem, with online reports pointing to data from the North American Renderers Association estimating annual losses at $75 million – and that data is a few years old.

“The battleground is no longer the courts. Our battleground is the street,” Majumdar said. “It’s a nice little crime where you can make half a million or a million a year stealing grease and the likelihood of you going to jail is zero.”

Though there have been 118 arrests in connection with Buffalo Biodiesel oil thefts, Majumdar is looking for stricter enforcement. He pointed to one person who was arrested six times but has faced no jail time; and others that have gotten off with little to no punishment. Last year, six individuals were arrested by federal prosecutors for thefts in Monroe County and accused of conspiracy and transportation and sale of stolen goods. The charges carry a maximum penalty of 10 years in prison and a $250,000 fine.

Instead, the U.S. Attorney’s office for the Western District in late October requested an adjournment after negotiating plea deals with each of the defendants.

But there has been some progress, and prosecutors, he said, are telling him they’re working on felony convictions and agreeing to prosecute new cases and seek jail time.

He's doing his part as well: Buffalo Biodiesel tracks and reports every theft to local officials. He’s also created a theft department and hired a team of attorneys and former prosecutors that include a local police captain in the New York-New Jersey area, a retired federal agent and a canine officer in the Albany area. Locally, he hired Tom George as COO four years ago, bringing a background that includes 23 years as Town of Evans police lieutenant.

“I actually do think we’re making ground, because quite frankly, without this path we chose to follow four years ago, we would be out of business," George said. "It would be worse.”

Law enforcement officials did not return calls for comments, including the U.S. Attorney’s Office, though the Erie County District Attorney’s Office sent a statement from Acting Erie County DA Mike Keane acknowledging an investigation is ongoing tied to reported oil thefts and encouraging those with information to contact his office.

“Theft is financially devastating to our local businesses,” it said. “While I cannot comment further due to the ongoing investigation, I want the residents of Erie County to know that I take these crimes seriously.”

Majumdar, who insists organized crime is a major part of the problem, said he's worried for himself as well as his customers.

“Am I scared? Sure I am. That’s why we have armed security downstairs,” he said. “We’re trying to make a difference and we don’t want to lie down and take it, so I’m doing what I can do.”