Amid Rising Food Costs, Startups Monetize Would-Be Waste

In even the best of times, food waste is a huge problem for restaurants and grocery stores’ bottom lines. With inflation sending food prices skyrocketing, the issue is even more pressing than usual.

The U.S. Department of Agriculture (USDA) estimates that 30% to 40% of the country’s food supply is wasted, and much of that waste occurs before the food reaches the consumer. Given the notoriously narrow margins of both the restaurant and the grocery industries, these losses can be difficult for businesses, especially small- to medium-sized businesses (SMBs), to afford.

Noting this challenge, a handful of startups are stepping in with solutions for businesses to drive revenue from would-be food waste. For instance, Loop Mission, a Montreal-based startup that creates a range of products, food and beverage (F&B) and otherwise, purchases edible but unsellable (or difficult-to-sell) perishables to create its offerings.

The company makes smoothies from so-called “imperfect” fruits and vegetables, beer from day-old bread, kraut from daikon radishes that farmers would typically throw away, and gin from the potato cuttings left in the process of making chips. These products not only allow the company to work with affordable ingredients, but also to woo the growing number of consumers who prioritize matters of environmental, social and corporate governance (ESG).

Other startups are taking a more marketplace-based approach. Take, for example, Flashfood, a Toronto-based company partnering with grocery stores to enable them to sell foods that would likely otherwise go to waste at discounted prices. In January, Ahold Delhaize-owned supermarket chain Stop & Shop announced that it is expanding its partnership with the company after a successful pilot.

Read more: Stop & Shop Monetizes Would-Be Waste With Digital Marketplace

“About $161 billion worth of food is thrown out each year in this country, and as a grocer, we must do our part in reducing that number,” said Stop & Shop President Gordon Reid in a statement. “Flashfood helps us do that, while also helping our local shoppers save.”

Another business taking a similar approach is Copenhagen-based eCommerce company Too Good To Go, which offers a marketplace for grocery stores, restaurants and specialty food stores to sell low-cost grab bags of the food they would have otherwise thrown away at the end of the day.

Given the under-penetration of the ESG-focused food commerce category in the U.S., especially for consumers unwilling or unable to pay for high-cost premium goods, the company is rapidly expanding in the country.

“We started in New York and Boston because we really wanted to … prove that the model that has been so successful in Europe could also work in the U.S. And actually, after just a few months, we realized that it was even more successful than what we’ve seen in Europe,” Too Good To Go Co-Founder and Chief Expansion Officer Lucie Basch told PYMNTS in an interview. “This has been the fastest launch we’ve ever experienced in the history of Too Good To Go.”

Read more: Anti-Food Waste Platform Too Good To Go Offers ‘Win-Win-Win’ for Businesses and Consumers