Using Entrepreneurship to Reduce Food Waste

November 14, 2017

Each year American restaurants and supermarkets throw away $57 billion worth of food due to spoilage or lack of demand. An additional $15 billion in foodstuffs never even leaves farms, often because the crops are either damaged or simply too ugly to sell. Although companies try to donate as much unsold inventory as possible, the scale of the problem is far larger than the industry can currently handle.

That’s where startups like Spoiler Alert and FoodMaven come in. These firms work within the industry to ensure that unsold food doesn’t go to waste. Spoiler Alert, for instance, helps manufacturers and wholesalers manage unwanted inventory that can then be donated to interested parties. Founded by a group of graduates from MIT, Spoiler Alert recently worked with the foodservice giant Sysco to donate about 700,000 pounds of food. As for FoodMaven, the startup connects suppliers who have too much stock with companies looking for a deep discount. “It uses the power of markets to actually try to solve a problem,” said Walter Robb, a FoodMaven investor and former top executive at Whole Foods.

The process starts when someone lists their excess stock on the FoodMaven website. Many items cost as little as half their original price because of factors like cosmetic damage or quickly approaching sell-by dates. Others use the service to list unusually large quantities of otherwise acceptable food. In one case, a rancher put $15,000 worth of tenderloin on FoodMaven after a large processing order left her with more beef than she could sell on her own. The company makes money by taking a cut from every transaction performed on the site. FoodMaven’s CEO says the business moves hundreds of thousands of dollars worth of product each month in its home state of Colorado. He intends to expand the company nationally within the next five years.

Questions:

  1. Why does the food industry waste so much inventory?
  2. Do you think startups like Spoiler Alert or FoodMaven will solve the country’s food waste problem?

Source: Heather Haddon, “How to Sell $15,000 of Tenderloin, Fast,” The Wall Street Journal, November 8, 2017.

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