It’s been a rough few months for American food startups. A barnstorm of a BuzzFeed investigation in October uncovered distressing workplace violations at the warehouses of food delivery service Blue Apron. Soylent had to reckon with the fact that a key ingredient had sent its eaters into debilitating spells of diarrhea and vomiting. San Francisco-based cooking-and-delivery initiative Munchery has had leadership shakeups and tons of unsold, and ultimately discarded, meals. The pioneers behind vegan fake mayo company Hampton Creek had been exposed for creating tall fictions around their product, fluffing up sales numbers and and knowingly failing to vet the shelf life of its products. And so on.
This is the story of a good number of food startups. They encounter dire growing pains when chasing scale and trying to balance the needs of workers, consumers, and the various stakeholders in the food supply chain. As of late, there’s been a flurry of companies attempting to curb food waste who've entered this space. But getting Americans to care about food waste—and marry intent to action—has been notoriously difficult. Earlier this week, I spoke to Dan Pullman, who founded investment fund Fresh Source Capital three years ago with Lisa Sebesta. Last month, Fresh Source poured capital into a few food waste companies, diversifying a portfolio that already includes BentoBox, which hopes to simplify website creation and management for restaurants, and Just Add Cooking, a meal kit service for families in the greater Boston area.
Pullman told me that many companies that form around the so-called “food movement” must reckon with the bullishness of consumers. These consumers may be aware that food waste is an issue—and even talk the big talk about how much they care—but they can’t necessarily shift their own preexisting tendencies around food. “The reality is that consumers aren’t flocking to this food movement,” he told me over the phone. “It’s not a viral business. A lot of consumers have bad habits. Though they might think they’re passionate about eating healthy and organic, they still default to eating processed foods and going to traditional grocery stores.”
One of the companies Fresh Source just invested in, Imperfect Produce, is a California-based company that helps reduce food waste by purchasing cosmetically displeasing produce from a network of seventy farmers who have trouble selling that produce through other, more traditional distribution channels. It then packages this produce at a low cost, marked down between 30% and 50% from what one may find at a supermarket, and delivers boxes full of produce to subscribers.
“The biggest challenge for us has been around the education around the topic of food waste. Some people don’t know what to expect when they get their box,” Aleksandra Strub, the company's Director of Marketing, told me. Imperfect Produce launched just over a year ago. “We’ve even gotten the complaint that the vegetables aren’t ugly enough! People really want three-legged carrots!” There's also a linguistic hurdle, Strub told me—how do we talk about food waste without saying the word 'waste', which conjures images of unwanted scraps?
Another company in Fresh Source's portfolio, Spoiler Alert, is centered in the Boston metro area. It’s a technology company that provides a digital platform that matches organizations—schools, hospitals, food retailers, distributors—who have surplus food they hope to donate with food rescue operations, like nonprofits and food pantries. It was the progeny of what its two founders, Emily Malina and Ricky Ashenfelter, thought up as graduate students at the Massachusetts Institute of Technology’s Sloan School of Management.
When I spoke to Ashenfelter, he told me he’s run into hiccups of a similar sort, even though Spoiler Alert is a technology platform. “The food waste market is a really big one,” he said. “Figuring out where to focus as a starting point has always been a challenge. We needed to differentiate ourselves. It’s something that a lot of food waste startups have to figure out.”
Imperfect Produce has thirty full-time staffers; Spoiler Alert has six. The year has already given Imperfect Produce numbers to boast about: 6,000 packs a week for 10,000 customers just in the Bay Area in first year; it’s devoted just over 1.5 million pounds of produce to date; it donates 2500 pounds of produce a week. Ashenfelter was—understandably—a bit more sheepish about laying bare these metrics for the public, only sharing one with me: that they currently have 200 clients. It’ll be a few months, Ashenfelter said, before he’d be ready to share more granular metrics with the world.
Both companies cited a few other competitors who’ve been met with popularity in the food waste space, from Hungry Harvest in the Washington DC-Baltimore metro area (funnily enough, two of Hungry Harvest’s three founders now work at Imperfect) to Cerplus, who sells ugly produce to restaurants in bulk.
No matter the growing saturation of this space, both Strub and Ashenfelter have heady ambitions. Both hoped that, in five years, their companies would serve all metropolitan areas across the country. Imperfect Produce wants to begin what Strub calls an “Eastern creep” after expanding to Los Angeles early next year, followed by the whole state of California in 2017.
But right now, for the immediate future, both are focused on honing in on their respective coasts—and they understand they're subject to the whims of a wily consumer base. In our conversation, Pullman stressed that, for businesses to grow, they have to be very careful with their money and how they speak to their clientele. Consumers aren’t flowing to these businesses, and, in turn, that can impact who invests in them. “Consumers still worry about their pocketbooks, and they will buy a $1.99 chicken instead of an organic, free-range one for higher,” he told me. “There’s truly a slower change despite all of our great talk about the food movement and how fast it’s happening. It may take a long time for consumers to adapt to more sustainable habits, so businesses will only grow at a measured pace.”
Know of any food startups who are trying to curb food waste? Let us know in the comments.