Saving food that are Too Good To Go

A business innovation on fighting global food waste

By Silvia RIZZARDINI, Michele MALEGORI, and Anne Nai-Tien HUANG (EA)

Food waste: a global and widespread problem

Global population is expected to increase significantly in the next decades, requiring more resources and stressing the current food systems in place. The food industry strives to keep up with this growth, but it is more important to identify an approach to produce and deliver food that is sustainable under increasing demand and limited resources. The current players in the industry (e.g. breeding segment or crops, food production and provider) set sustainability goals to reduce resource consumption (e.g. water) or to reduce wastage during production. For example, beef supply chain is one of the largest contributors to global greenhouse gas emission, and the extensive use of fertilizer and water of the agriculture sector is alarming. Different actors focus on the upper levels of the value chain, pursuing initiatives to reduce their operation impact or exploring new business models to curb water and energy use. One pitfall is that some of these interventions will required years if not decades to realize the results. While it is critical to continue in this direction, we should also take action on the other side of the value chain – the consumption side.

We believe that in the food sector, among the different UN Sustainable Development initiatives that the food industry focuses on, such as Water, Life below Water and Life on Land, there’s great potential to explore the consumption side of the Responsible Consumption and Production goal.

Food waste is at a disturbing high level across countries in the European Union, around 88 million tonnes of food waste are generated annually with associated costs estimated at €143 billion, among them the U.K is estimate to waste 10.2 million tonnes of food every year, 7.7 millions tonnes in Spain (1). It is estimated that up to 40% of food produced in US is wasted.

If food waste was its own country of carbon emission, it would be the 3^rd largest emitter in the world, according to the World Resources Institute.

Matching supply and demand can be challenging in this industry and is even trickier for perishable food. Initiatives from side of value chain can be implemented more rapidly compared to ones from the producers, as they don’t require large investments, but rather some tools to help change in consumer behaviors.

Introducing Too Good To Go

To Good To Go (TGTG), a 4-year-old Danish startup who applies the platform business model tackles food waste in an extremely innovative way. As they state on their website: “There’s food lost or wasted along the chain from farm to table. It’s not just the food itself that goes to waste, it’s all the resources that went into making it, from water to land and labour. When wasted, food has a harmful effect on the environment – it’s responsible for 8% of the global greenhouse gas emissions which we all know is bad news for the planet!”

Headquartered in Copenhagen, TGTG currently has operations and local offices in 11 other European countries. Some statistics from the company’s website:

 

The business mode

• Food business (bakeries, sandwich places, supermarkets): register to the platform and anytime they have something perfectly editable but they would otherwise throw out at the end of the day, they can put them on the platform. Items can range from unsold bread or sandwiches, supermarkets have soon-to-expired inventories, to restaurants that didn’t sell all the food they had prepared for that day. Flowers businesses are also starting using the platform. They offer a considerable discount (more than 50%) to customers.
• Individual consumers: through the app, choose from the list of food merchant’s offers and make the purchase online. They won’t be able to choose the content in the “Magic Box,” but depending on the type of food merchants they buy from and the page descriptions, they customer can have a sense of what they are looking for. They go to the location at designated time slots to pick up their “Magic Box” that contains whatever items are unsold that day, and the merchants validate the transaction via the app.

The business model of TGTG is essentially a platform, nothing extremely innovative since it is a marketplace matching supply and demand. However, the application of this concept is extremely interesting, for two main reasons:

• they introduce a salvage value to perishable goods, reducing the overage costs of perishable goods for local businesses. In fact, the only alternative that this stores usually have is to throw away, donating them for charity purposes (not always the easiest to find one and solve transportation logistics), or in some countries, pay for which is socially good, but financially less sustainable than the option that TGTG introduces. In doing so, they positively affect the model of existing businesses, introducing an element which potentially can lead them to outperform competitors.
• they target customers that are both sensitive to food waste and also money conscious. Very often, products entailing any element of “sustainability” are more expensive than “normal” products, while in this case it is the opposite. We noticed there are no fast food chains are on the platform and many of the merchants are high-end organic and sustainable eateries and grocers such as Exki, Pret A Manger, Naturalia, Biocoop, etc.

The model uses the network effect: the more they grow, the more stores will offer products, the more choices for customers, the more customer will join and purchase, the more impact will be the model. The growth of supply and demand will feed each other’s willingness to join and use the app.

This app provided a platform of matching the supply and demand that is badly needed. What is really powerful in the idea, is that neither stores nor consumers have to be really sensitive about food waste and sustainability for getting the economic benefits of the exchange the platform enables. The model builds on the basic economic principles of increasing profits (for stores) and saving money (for consumers) and in doing so develops a social consciousness on the food waste topic. In this way, it is much easier to attract people and to “educate” them to better behaviors.

 

Cost & Risks

The app will need to accommodate increasing number of users, both from the customer side and the merchant side. Currently, the filter is not very sophisticated with few filters to choose from (key word search corresponds to exact titles of the merchant and not relevant terms; no filter for type of cuisine; no filter for distance from current location even though the list of merchants is based on ascending by distance). If the company wants to make the app more user-friendly, more filters will help customers narrow down the type of food they want. Whether the data already exist or not is not clear. If TGTG will need to collect these data from existing merchants to integrate them into the new filters, this will be a significant additional cost.

Another main cost is to get new merchants onboard. Many of the participants now are independent stores and they are grown organically, therefore the cost of getting stores on board one by one is costly. A business development member will have to visit different merchants and see their willingness to join – the onboarding cost of this organic growth is expensive and successful conversion rate is not guaranteed (especially in the early stage of a location where it hasn’t reached a critical mass yet). This is one of their major barriers to scale. The app is currently in 11 countries in Western Europe and Scandinavia. Very likely that the app will simultaneously expand to other European countries and increase the number of suppliers and users, but whether they will expand to other continents in the short-medium term is unclear.

The company has already been working with large chains of food providers and supermarket chains in each individual country, but so far it is still individual sites who decide whether to participate in this program or not (i.e. not all Carrefour outlets in Paris participate, for example). But if the company can reach an agreement with large food distributors such as Intermarché that every store will participate, it will boost its network density and also help with its international expansion (introduce the app through Intermarché in Portugal where the app has no presence yet).

Another obstacle for consumers to use this app is the “inconvenience” for many to be at a location as a certain time to pick up the food. Partnering up with a delivery service could help, but it also means another layer of risk the company is taking. Since the unit price of each portion is not high (generally ranging from €2-7), the delivery cost could be as high if not higher than the food itself, diminishing the attractiveness of the price. Also, bad customer experiences from late deliveries is another risk TGTG will have to bear.

 

Competition

Of course, TGTG is not the only company trying to tackle the food waste problem. Some competitors in the market are:

Flashfood and NoFoodWasted: only present in Canada and the Netherlands, respectively, working with grocery stores only.

Karma: currently in Sweden, the UK and just entered France. It works with mainly restaurants (could be high-end) and the meal is more personalized.

Food for All: current in the Boston and New York City. It connects customers to restaurants one hour before they close for a discount as high as 80%.

Various apps that aims to relief hunger by different matching mechanism such as connecting food donors with hunger relief organizations (Food Rescue US) or connecting food rescue heroes with nonprofits who serve those under food insecurity (Food Rescue Hero).

 

Further expansion

Whether this business model will work in markets outside of Europe is yet to be seen. For countries where food is cheap, a lower environmentally conscious customer-base, and no government regulation on food waste, the triple incentives are not strong enough for both the customer and merchants to join the platform.

 

Negative social and environmental impacts

No business model is perfect, these are some of the inconsequential negative social and environmental impact from this business model that we observed:

Negative social impact: Even though this concept raises individual consumer’s awareness about food waste and connect the end users to the merchants, it might take away food resources that would have been designated to charities and hunger relief organizations. The users of this app will require a functioning smartphone and a valid credit/debit card. Those most in need (homeless people and ones without a bank account) will not be able to benefit from this marketplace matching, while the availability of food aid from their go-to organizations might decrease because merchants will instead sell their food on this app than donate them.

TGTG partners with Les Restos du Coeur, a charity organization in France for users to make easy €2 donations through the app, but the impact and effectiveness of these kind of partnerships is unclear from the company’s website.

Negative environmental impact: all TGTG meals are for takeaways, meaning more packaging needed. Even though some merchants don’t provide bags, or ask customers to bring their own container, often the food is still prepacked in plastic containers and disposable utensils are automatically provided. Reducing food packaging waste will really depend on the willingness of the consumers and the merchants who strictly implement this principle without the fear of losing some customers who has convenience as priority.

In conclusion, TGTG is a great marketplace app connects consumers with unsold food in many European countries. For both consumers and food merchants, there are both economic and sustainability incentives for the network to grow. Have you tried out the app yet? Download the app today at https://toogoodtogo.com/!

(1) https://ec.europa.eu/food/safety/food_waste_en