1. Motivation and impact on the SDGs
1.1. Our Motivation to address SDG #12
Our motivation is to address the problem of food packaging waste in a financially sustainable, convenient, safe, and environmentally friendly manner for consumers, F&B outlets, and food delivery platforms. Our aim is to align stakeholders in the food delivery industry to address UN Sustainable Development Goal 12 to ensure sustainable consumption.
1.2. The Problem
We believe this problem is a pressing matter in the next 5 years due to the following pressures:
- Demand side: Steadily increasing demand for food delivery services projected over next 5 years
- Supply side: Acceleration of F&B outlets participating on delivery platforms to boost resilience of distribution channels to their customers
- Environmental: The volume of food packaging has grown and now consists of 46% of all primary plastic produced.
- Hygiene and safety: The COVID-19 pandemic has put a spotlight on food safety and increased operating costs to maintain new hygiene standards
The modern consumer’s need for convenient food choices and a large assortment of culinary has fuelled the growth of the food delivery industry in the past few years. The food delivery industry is already a US$107bn industry and expected to grow 16% annually for the next five years which means increasing three-fold until 2030.
Food Delivery Industry (sales worldwide)
Source: https://www.statista.com/outlook/374/100/online-food-delivery/worldwide#market-revenue
With COVID-19, major markets have also seen a spike in demand for food delivery services as more people work from home and restrictions on dining-in in restaurants remain during the recovery. In the post-COVID-19 recovery, restaurants could increase their delivery solutions to minimize potential disruptions to their distribution channels.
Source: McKinsey April 2020
Currently, most online food delivery services do not provide reusable packaging services and it is upon the restaurants to procure their own packaging. F&B operators use single-use plastics to safely and conveniently deliver food to end consumers at an affordable price.
This contributes to the plastic waste pollution as most of the packaging is not recycled due to food residue and is thrown away.
Classification of Waste Category from Food Deliveries
Source: http://css.umich.edu/sites/default/files/publication/CSS18-36.pdf
We have innovated a new affordable, hygienic, and convenient solution that food delivery companies and F&B operators can adopt to become sustainable and realign the food delivery industry with the UN Sustainable Development Goal 12 to ensure sustainable consumption.
1.3. Our Value Proposition and Suggested Solution
Our solution introduces a new, circular system of reusable packaging that is managed by the food delivery platforms eliminating the need for end-user buy-in which has prevented previous models or alternative solutions from succeeding.
Busy environmentally-conscious urban consumers in large European cities need a flexible, diverse and sustainable option for meals which is compatible with their lifestyles because the best option today is food delivery which is convenient and affordable but uses a single use packaging and conflicts with their beliefs.
We would monetize our solution by charging Food Delivery Platforms a service fee for the:
- Provision of reusable packaging at scale
- Provision of cleaning services
We would target Amsterdam as the first market to test and launch this service because of:
- High Willingness to pay:
- 2018 food delivery spend per capita of €71 in Netherlands vs €55 in Western Europe
- Sufficient scale and frequency of food delivery demand:
- Market size of €1.5b market with 8.8% CAGR
- An average of 3.9 orders per week per capita in a city of 823k residents
| Stakeholder | Needs | Our Value Proposition |
| End Consumer | · Convenience
· Affordability · Flexibility · Diversity of meals · Sustainable solution |
Customers enjoy the flexibility and convenience of ordering food online in a sustainable manner with minimal costs to food delivery. |
| F&B Operator | · Low cost of packaging
· Reduced cleaning effort · Repeat customers |
Reduces operational expenses by eliminating the need to purchase single-use packaging from suppliers.
Eliminate the need to wash packaging.
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| Food Delivery Platform | · Lock-in of end customers and F&B operators
· Resilient revenue stream |
Food Delivery Platforms can re-sell our services to the massive pool of F&B operations on their platform for a fee, locking in F&B operators on the platform.
The Food Delivery Platforms can also award “green certifications” to F&B outlets using our service and reward end customers with points for using this service too. |
Circularity of reusable packaging– 95% reused within closed loop
- Food delivery companies subscribe to our universal packaging solutions that are made of durable, reusable materials as well as uniquely designed to collapse after using to save space and make for convenient transportation.
- These reusable Easy-Take containers will be distributed among partnering restaurants.
- As orders come in, as usual, the restaurants will prepare the food using these new containers instead of single-use materials.
- Once the food arrives at the customer’s location, the delivery person will hand over the Easy-Take containers to the customer who will transfer the content to their personal plates or bowls immediately. Easy-take has been specially designed for a mess-free and fast transfer of both solid and liquid content.
- Then the containers will be passed back to the delivery person who collects and takes them to a local collection point.
- The collected packages from the local collection points are pooled daily and then transported to a central facility for cleansing.
- The process then repeats by redistributing the containers back to the restaurants.
- If the customer is unable to return the package immediately, a deposit is charged and would be offset from their next meal purchase if they return the packaging during their next meal delivery.
We believe this system can be adopted immediately and instantly start to have significant impact on the Ensure Sustainable Consumption SDG.
- Minimal impact on consumer behaviour changes or user experience
- Minimal impact for the restaurants as they will need to use the new packaging provided by the food delivery companies.
- Food deliveries platforms will need to adjust their logistics to incorporate the new local collection points that are required for collections, cleaning, and redistribution
Defining and measuring project goals
| Goals | Goal Description | Measurement |
| Market share |
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| Customer satisfaction |
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| Financial |
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| Sustainability |
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SDG Goal 12 related Indicators:
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2. Business Model
2.1. Rethinking the value of packaging
Currently, under a single use model, unused packaging would provide F&B businesses with value as a container for food to be delivered. After the packaging is used, there is little value in the container as the cost of reusing the packaging outweighs buying a new container.
As such, F&B businesses balance the value of the container against the cost of the container in terms of $ per container.
If we change our value metric to $ per use, we can start seeing where value can be derived from. For a single use container, the $ per use is the same as the $ per container. For multi-use container, the $ per use starts decreasing by the ratio of how many times it is used when compared the $ per container. To the F&B businesses, a reused container still provides the same value. The difference between the costs per use of container against the F&B businesses’ willingness to pay for container, in this case a single use container, will ultimately be our business profit.
In the following example, we see the value add of reusable containers. We can safely assume that F&B businesses will be unlikely to pay more than they currently pay. Hence, willingness to pay in this case is the cost of a single use packaging. In our study, containers cost around 0.15€/container. Reusable containers have a higher per container cost, at 0.40€/container. However, as it is used repeatedly, the cost per use decreases and plateaus. The difference between these two lines is the value add.
There are several key takeaways from this graph:
- As long as the logistical service for cleaner containers can fit within the value add, we can derive value. Hence, scale will be key to profitability!
- The cost per use nearly plateaus after around 25 uses, as in the cost per use decreases minimally for each additional use beyond 25 use. Hitting an average reuse figure of 25 will be key to value creation (of course the more reuses, the better it is for the environment)
2.2. Understanding profit drivers
2.2.1. Revenue drivers
| Revenue Item | Stakeholder | Type | Notes |
| Providing Easy-Take containers to businesses | F&B Businesses | Variable | Containers will be provided to businesses at a cost per use that slightly below the current market cost per container.
This creates incentives for the businesses to use our service, while bolstering their sustainability brand image |
| Deposit | End Customer | Variable | The focus of this mainly provide liquidity to the business as containers prior to return. Revenue should be minimal to encourage customers to return containers and reuse service. |
2.2.1. Cost drivers
| Cost Item | Type | Notes |
| Easy-Take Containers | Fixed | Initial +Replacement costs |
| Facilities | Fixed | Warehouse to bring in all the dirty containers for sanitation and for packaging to deliver to businesses |
| Equipment (Dish washing) | Fixed | Continuous belt conveyer dishwashers with high throughput to wash containers. |
| Utilities (Electricity, Water) | Variable | |
| Labour | Fixed | |
| Logistics and Delivery | Fixed | Minimal as most of the fixed overhead already exists by partnering with delivery service. Costs are incremental only and will leverage unused capacity. |
| SG&A | Fixed |
2.2.2. Profit analysis
Given that most of the costs are fixed while revenue is variable, profitability will require that enough scale is achieved to cover the fixed costs.
We have conducted a sample Profit and Loss projection to better understand what the profitability would look like a typical European city with average adoption rate.
2.2.3. Operations optimization
Our projected costs for our business will also be expected to be lower than the sum of all the containers that we will replace for the F&B businesses. For a traditional F&B business, the containers they have to procure will include inventory on hand (depending on the frequency and reliability of the supply chain) and will have to include a safety stock to address for variability. These factors increase the working capital involved with the excess inventory and the storage space required to keep these containers. With rent prices being high, this can mount to be a substantial cost.
With our business, as we will be able to provide containers for many businesses, simple statistics work in our favour in that we will be able to aggregate the variability, reducing the inventory we need to keep on hand. Furthermore, our business will utilize the driver capacity to reduce lead time for inventory, enabling our containers to be sanitized and stored in a cheaper location.
2.3. Profitability and Sustainability Alignment
Profitability increases mainly as scale increases, indicating that not only more businesses are adopting our service instead of using single use containers, but that the number of uses for each container increases. As such, profitability and sustainability aligns well and has no conflicts. Furthermore, as scale and profitability increases, the environmental impact of the logistics will decrease per unit, as the logistics will utilize existing spare capacity and replace traditional logistics required for single use container. We believe the logistics portion will also be aligned as profitability and scale is achieved.
2.4. Risks and Mitigation Strategy
2.4.1. Risks
Our business has two main risks associated:
- Adoption – Because of the scale needed to make a profit given the fixed cost, defining an adoption strategy will be key. Simply put, without enough adopters, the business is not viable given the investment and scale it requires to operate properly.
- Logistics – Ensuring the continuous flow of containers will be important to ensure that this business model makes sense from the restaurant’s perspective.
2.4.2. Aligning Incentives with Goals
We propose aligning incentives with goals in the following manner:
- Businesses – opting into this system will help businesses save money since it will be cheaper for them versus continuing to utilize single use containers, therefore presenting a detailed breakdown of costs to businesses will be instrumental in convincing them to switch over to this model
- Customers – customers will need to be given other incentives to make this model attractive. This might include offering extra rewards through food delivery apps for choosing restaurants that follow this model, or discounts on orders from these restaurants
2.4.3. Interface with Customers and Organizations
- Customers – the model will likely attract the interest of environmentally conscious customers initially, which will have a pre-existing interest in moving away from single use plastics. However, to really be successful, the platform will have to target even customers who do not have any interest in these topics, since they form the bulk of the user base.
- Organizations – initially, this model would probably be attractive to smaller establishments that might have more flexibility in these areas as well as possibly smaller order volumes. The goal though would be to expand to all types of restaurants since a crucial element of the platform is wide-reaching scale.
2.4.4. Mitigation Strategy
The main mitigation strategies are as follows:
- Incentive Alignment – Business model is designed with providing incentives to all stakeholders to encourage adoption of this service. Mainly, the costs are more effective for F&B businesses and end users do not have to deal with processing the single use container.
- Geographically focused – The cities we pick will have to be the right market. Specifically, it has to have take-out orders in order to drive the scale that we need. Furthermore, as we start with using a delivery network to complement our business, we focus on cities with frequent delivery use.
- Increasing convenience – Ensuring that the drop off and returning of containers is simple and easy to access will be key to the rotation of containers throughout the system. Convenience must also be achieved for the F&B businesses as many smaller businesses cannot handle additional administration.
3. Downside of the business models and environmental impact
- There is an increase in logistic requirements to bring container from home to collection points and from drop-off point to washing facility. We expect delivery person to make 2 drops/day, once after lunch and dinner. As collection point is selected on the route, this would minimize delivery disruption or carbon footprint addition. We would require a van to collect from different collection sites and delivery to the washing facilities daily. We plan to utilize electric vehicle to minimize this environmental impact.
- There is an added cost and environmental impact from operating washing facilities. We plan to use conveyer rack washer system with heat-recovery heatpump to minimize both water and electricity usage. Estimated water and electricity consumption is 138L of water and 23KWH per 2500 plates. The increased in energy consumption could be further offset through renewable energy sources
- Since our model would increase the average time per delivery by approximately 3 mins on average. This would result in a cost increase of EUR 0.4 per delivery.
- Our customer will have to make minor adjustment in their routine of receiving meal delivery. They will be required to use their own dishes and silverwares and wash them afterward. If they elect to keep the Easy-Take containers (eg out-of-home delivery), they would be required to later return them to a drop-point. However, we believe environmental conscious consumers would be willing to make a minor adjustment to their routines.
4. Why are the project goals achievable in the next 5 years
Our Business model is consumer centric
Several innovative businesses have focused on implementing a closed-loop system, where consumers would have to bring dishes back to restaurants or drop points. However, this requirement is inconvenient and time consuming. Our model solves these pain points by allowing consumers to return the container immediately and eliminating complex reverse logistics. Consumers can easily take environmentally friendly action through a minor adjustment in the way they receive their meals.
Easy-Take container minimize the impact from increased delivery time and cost
We designed the operation to minimize disruption to the delivery process, while avoiding the complexity of reverse logistic of dirty containers. We estimate a 10% increase in delivery time from the transfer of meal content. This results in a EUR 0.4 increase in cost per average delivery. Our research has indicated that this increase is within customer’s willingness to pay to know that they diverted waste from landfill. Consumers will also be rewarded with Green rewards as a positive reinforcement, which they will be able to use as a discount for their next delivery.
5. How does this project scale? What are the barriers for scaling?
The business can be scaled up in three possible ways: incrementing the number of F&B businesses that use our service in Amsterdam, convincing more consumers to choose our packaging solutions and/or starting the business in other cities as well.
The business already implies a substantial participation of F&B businesses in Amsterdam because ccontainers will be provided at a cost per use that slightly below the current market cost per container to incentive the businesses to use our service. We think that our service allows customers to enjoy the flexibility and convenience of ordering food online in a sustainable manner with minimal costs, so increase the final customer base is correlated to the perception of environmental benefit. Finally, to scale the business geographically will be fundamental to find other cities with the same pros of Amsterdam: high willingness to pay, high sufficient scale and frequency of food delivery demand and similar delivery time.
The idea is that the target city has to provide a positive market environment in which final customers uses delivery services, are willing to take this service and utilities and commercial rents are comparable or cheaper than the one in our starting market.
In our opinion the main barrier for scaling is the partnership with Food Delivery Platforms because our service can only work is those players are perfectly aligned and have mutual interest with ours.
6. Is there a cheap and easy way to experiment with the viability of this project?
Even if per se the model requires a substantial scale to generate positive financial results and has to be implemented with Food Delivery Platforms on all their orders in a particular cities, a cheaper and feasible way to experiment the viability of this project can be found. Partner with a smaller Food Delivery Platform, maybe targeting as much as possible our main customers (busy environmentally-conscious urban consumers in large European cities that need a flexible, diverse and sustainable option for meals), would let us see what is the market response of our core target.
Another option would be to start from a smaller cities with the same socio/economic conditions of Amsterdam, like Bruxelles. With its 180,000 inhabitants, it could be a good spot to propose an MVP and test our main assumptions both operational and financial.
7. What would be the immediate next steps to launch this project? What resources do you need?
The immediate next steps to launch this project would be to start discussions with Food Delivery Platform to gauge their interest and plan operational work ahead. Choosing the right city is fundamental and strategic. Only when the city is chosen and Food Delivery Platforms are full on board (approve the projects and have started engaging with the F&B businesses) we can begin to look for commercial spaces to set up our local collection points and washing facility and advertise our products and services.
To achieve these goals we need a strong business development team, with great connections in the Food Delivery space, to engage these players early on and investors to financially sustain the setup of this initiative with approx. 300 k€ to cover the setup expenses for the first 6 months of activities.
Written by Davide Chieppa, Gary Leung, Hill Pruksananont, Sreya Vempatti, Gavin Yeow