Food waste (FW) is one of the major biomasses produced in large quantities in urban areas, which contributes to more than one-third of global greenhouse gas emissions. FW must be properly managed to minimize its environmental consequences. Hydrothermal carbonization (HTC) of FW is a promising technology compared to conventional methods. The objective of the present study is to maximize the mass yield (MY), higher heating value (HHV) and energy yield (EY) of FW by optimizing the operational variables of HTC process. Additionally, process water generated during HTC of FW under optimal conditions was evaluated for methane yield using anaerobic digestion. To optimize the HTC process, three operational variables, including solid-to-liquid (S/L) ratio, temperature, and reaction time, were manipulated using response surface methodology (RSM). According to RSM studies, the optimum operating conditions are 198.5 °C for 150 min with a 0.2 S/L ratio, resulting in MY, HHV and EY as 62.5%, 21.24 MJ/kg and 81.71%, respectively. Proximate and elemental analysis for the hydrochars synthesized at various operating conditions reveals that the temperature and reaction time have a significant impact on fixed carbon and carbon percentage. The anaerobic digestion results showed that the combination of process water and hydrochar, yielded a maximum cumulative methane production of 298.5 ± 16.34 mL/g COD. To mimic methane production, the modified Gompertz model was utilized. Thus, this finding contributes towards the commercialization of the HTC process to produce solid fuel (hydrochar) and provides a way to find an alternative energy source that enhances the HTC process and tackles the problem of process water disposal.