In this study, fatty acid feedstock preparation and lactic acid production as integrated processes in mixed restaurant food and bakery waste treatment were investigated. The treatment included the hydrolysis of waste using extracellular fungal enzymes in submerged fermentation. By hydrolysis, 0.27 g glucose, 4.7 mg free amino nitrogen (FAN) and 1.9 mg phosphate were recovered per gram dry waste material. After hydrolysis, a lipid-rich solid fraction, to be used as a source of fatty acids, remained. The nutrient-rich hydrolysate was used as medium in fed-batch cultures of the heterotrophic microalga Chlorella pyrenoidosa, which grew well at a rate of 1.4 day− 1. In order to establish a cost- and water-efficient process, hydrolysis and algae cultivation were performed in recycled culture supernatant without any negative impacts on the fungal hydrolysis and growth of C. pyrenoidosa. The extraction of lipids from algal biomass and lipid-rich solids resulted in a saturated and unsaturated fatty acid-rich feedstock. Defatted waste derived solids and algal biomass were further tested successfully as nitrogen sources in lactic acid production using Bacillus coagulans. The outcomes of this study contribute to the establishment of a ‘green society’ by utilization of waste material in the production of chemicals, materials and fuels.