Restaurants are struggling during the pandemic, many relying on outdoor dining and takeout to keep them afloat. The rules have rapidly changed over the past year, with stores opening and closing as the virus spread in waves. This left restaurants with an added level of uncertainty about how much food they'd need on a given night, often forced to throw food away at the end of the day.
The United States already has a massive food waste problem. The USDA estimates that 30-40% of our food supply is wasted every year. Food waste costs the hospitality industry a whopping $25 billion annually, and the pandemic has only worsened financial hardships. According to a December report from the National Restaurant Association, roughly 110,000 restaurants closed in 2020 as a result of COVID-19 induced economic downturn. A growing slate of apps — like Food For All, Karma, and Too Good To Go — have entered the market in the hopes of helping restaurants stay afloat, cut costs, and handle food waste during the pandemic.
These apps allow restaurants to sell their leftover food — from baked goods to pizza to groceries — at a discounted price to patrons. Restaurants and stores offer packages of leftovers for consumers to browse on the app, purchase, and pick up around closing time.
After being founded in Denmark in 2015 and operating in Europe for the past several years, Too Good To Go has introduced its product to the US market just a few months ago. The company already operates in New York, Jersey City, Philadelphia, and Boston, working with 1,100 restaurants, bakeries, and grocery stores. The company says it has saved more than 121,000 meals from the garbage. Additionally, Too Good To Go just secured $31 million in funding as part of its rapid US expansion. The company will move to Washington DC, San Francisco, Seattle, and Portland in the coming months.
Too Good To Go is optimistic for the future of its business and how it's helping local restaurants gain foot traffic and exposure, even when indoor dining is limited and takeout dominates the landscape. “Part of the appeal is that it helps introduce people to restaurants in their area. People may come back as returning customers.” Lucie Basch, co-founder of Too Good To Go, tells the Business of Business.
They’re not alone. There's also Food For All, which is based out of Boston and was initially funded by a Kickstarter campaign with more than 600 backers. The app launched in 2016 as part of a collaboration with Harvard University. Food For All now operates in New York, as well. Karma, which was founded in 2015, is the European leader in the space, operating in over 150 cities. Based in Stockholm, Sweden, the app works with grocery stores, wholesalers, farms and restaurants to sell excess food for a discounted price.
From both an investor and individual consumer standpoint, it's evident that there is growing interest in this space. While novel, their niche is still competing with a slew of other companies that bring people dinner, whether it be Grubhub, UberEats, DoorDash, or Postmates (all of which have seen growth). Seamless, operated by Grubhub, saw a surge in App Store ratings, up by almost 60,000 since the beginning of the pandemic.
While these apps curbing food waste don't directly compete with the likes of Grubhub per se, they are competing for an overlapping consumer base— people who want convenient dinner.
Grubhub, DoorDash, and UberEats will still reign champion amongst the average consumer, in part because they offer both delivery and pick-up services. The pick-up element of the food waste apps can be limiting and not as appealing to the “I'm exhausted from work and don’t want to cook” demographic. According to the Market Research firm Mintel, 56% of consumers order take out so they don’t have to leave their homes.
In the grocery space, food waste apps are competing with Instacart for attention. That’s an uphill battle as well. Instacart is now valued at $39 billion, thanks to a second round of funding ahead of its public debut. The company’s value already doubled during the pandemic.
For companies like Too Good To Go and Food For All, the shell is there, but if it will catapult into a widespread movement beyond just the conscious consumer, is yet to be seen.
About the Data:
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