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This study examines how Sustainable Innovation contributes to Business Sustainability in food-sector small and medium-sized enterprises (SMEs) through the mediating role of Zero Waste Operations. The study responds to the need to understand sustainability not only as a strategic objective, but also as an operational process embedded in inventory control, product return handling, near-expiry product management, packaging practices, and waste-reduction routines. A quantitative explanatory design was employed at Pasundan Snack Purwokerto, a distribution-based food SME in Indonesia. Using a census approach, data were collected through structured questionnaires from 65 employees involved in operational and distribution activities. The data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The results show that Sustainable Innovation has a positive and significant effect on Business Sustainability and Zero Waste Operations. Zero Waste Operations also positively and significantly influence Business Sustainability. Mediation testing confirms that Zero Waste Operations partially mediate the relationship between Sustainable Innovation and Business Sustainability, indicating that innovation improves sustainability both directly and indirectly through waste-reduction routines. These findings suggest that sustainable innovation becomes more effective when translated into concrete operational practices, such as digital stock recording, FIFO or FEFO implementation, return classification, supplier coordination, packaging reuse, and near-expiry product handling. The study contributes to sustainability management literature by positioning Zero Waste Operations as an operational mediation mechanism in a distribution-centered food SME. Practically, the findings provide guidance for SME owners and policymakers to design feasible zero-waste initiatives that fit the resource limitations of small food distribution businesses in developing economy food supply chains.