Retail

Using Dynamic Pricing To Take On Food Instability

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A food desert is defined as a geographic area where mainstream grocery services are either very limited or absent, leaving consumers in those areas with limited access to fresh produce and meats at affordable prices. There is no one type of place where food deserts spring up — according to USDA research, these pockets of poor nutritional access occur in urban, suburban and rural areas. But all the places that are food deserts, according to the USDA, have some common overlapping features — the most outstanding being high rates of poverty and the ancillary effects that tend to follow it.

“Relative to all other census tracts, food desert tracts tend to have smaller populations, higher rates of abandoned or vacant homes, and residents who have lower levels of education, lower incomes, and higher unemployment. Census tracts with higher poverty rates are more likely to be food deserts than otherwise similar low-income census tracts in rural and in very dense (highly populated) urban areas,” the report noted.  

Fighting food deserts and flipping them into food oases is no easy task. The combination of low population density and poverty provides for a chilling effect when it comes to construction of large-scale supermarkets in such regions, which drives consumers toward higher cost, lower nutrition options that are more accessible. 

It is what drove former hedge fund manager Sam Polk to start Everytable in 2016 — the simple fact that for large swathes of the American population eating a healthy diet is not an accessible goal because the options for doing it are either inaccessible or unaffordable.  

“In my opinion healthy food is a human right, and shouldn't be a luxury product,” Polk said in an interview, noting that the costs of poor nutrition are incredibly serious and have costs for all of society. People deserve better than eating “basically toxic fast or heavily processed foods” and it is incumbent on businesses to find a way to profitably delivery that. And with two adjustments to the standard business model, Everytable believes that its health-focused fast casual offerings have found the way. 

The first upgrade, according to Polk, is the hub-and-spoke model the firm uses for preparation. For every region it serves, Everytable builds a single, central kitchen that services all of its restaurants in that region. The restaurant storefronts are thus much cheaper to build (around $200,000 vs around $1 million for a location with a full service commercial kitchen) and easier to manage. The food comes packaged at the store location in to-go containers, and the front can be managed by two people at once.  

The more notable shift, however, is in how Everytable handles pricing — which is set to the neighborhood the store locations is in, not the goods it sells. A meal in the pricey Brentwood region might sell a dish for $7 to $8 apiece — about par for a fast casual offering in that area. The same meal transported 25 miles to Compton means the price goes down to $5  to $6 a meal.  

Polk notes the brand is often accused of “subsidizing” the costs of operating in lower income neighborhoods with the profits from the higher-cost locations, but, he says that’s not actually accurate. Everytable, he said, is actually concerned with right pricing its offerings because it means more customers will be able to come in and buy them. And right pricing fresh food and ingredients means they have to be at a price point where the local customer can actually buy them.  

“We've designed Everytable to be profitable at every location, and we've succeeded in that. One of the things that we see is that in underserved communities, there's so much demand for healthy food — and frankly, zero competition — that those stores generate more meal-per-day sales than our affluent locations where there may be multiple options for a healthy meal,” Polk said. 

The goal, he said, is simply to build more touchpoints for consumers to access those meals — and offering them up at a price that is affordable and desirable. Today Everytable has seven storefronts, and the firm is currently in the process of building four more. By the end of next year the goal is to have over 20. And Everytable is thinking beyond the storefront itself. In 2019 it expanded to placing smart refrigerators in offices, schools and business in the great Los Angeles region to make it easier for customers to connect with the brand and grab a meal with a swipe of a card. Everytable has also started selling meals on subscription — and though the firm has no numbers to offer just yet, it says growth in its first year has been solid.  

Healthy food doesn’t have to be a luxury in the age of digital commerce and different ways to customize sales models, according to Polk. Today the firm is California based only as the firm is “incubating” its model and offerings. But the goal, he said, is a nationwide service — because food deserts are everywhere, he noted, Everytable believes it has a model that can start breaking that up. 

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