TooGoodToGo: Fighting Food Waste

While a significant number of people still starve in this day and age, an enormous amount of food directly goes into the trash on the other side of the globe. Estimates from 2016 put the global share of agricultural products that are thrown away at 13.8 % (Source: Statista) As one might expect, food waste is more prevalent in developed countries. A 2011 study identifies the United States and other highly developed countries as the top offenders with food equivalent to as much as 1572 kcal going to waste every day. The platform TooGoodToGo has set out to fight food waste by making the action of saving food a frictionless win-win for suppliers and customers.

While a lot of food waste appears on the level of individual households two other important domains are grocery stores and the restaurant industry. Both industries struggle with the problem that demand is hard to predict combined with low customer acceptance for the possibility that certain items are out of stock.

In both industries limited tools for demand steering exist, e.g. via price reduction or targeted promotions of certain items. These tools can be hard to integrate into the usual operations of a restaurant or supermarket. Moreover, in the case of targeted rebates, there is also low acceptance of customers for constantly changing prices of items at a supermarket or restaurant.The limited demand steering capabilities leads to restaurants and super markets needing to buy (often times) superfluous buffer supply to ensure the best possible availability of all items/products. This superfluous inventory will end up in the trash as soon as its best-by date has passed.Food waste is not only a moral problem and a detriment to sustainability efforts, it also has a real economic impact as all the superfluous inventory has to be written off and dilutes margins.

The general population, especially in more developed countries, has become very sensitized to sustainability issues and the desire to make a positive impact exists. Moreover, there is a demand for cheap restaurant quality meals or groceries especially by people with limited economic means, e.g. students. Yet, a bargain hunter mentality can be observed throughout all income classes.Some of these needs can be addressed by more traditional food-saving groups but some of their properties limit their mainstream appeal. They are usually tight-knit communities with a strong set of shared values and require active participation and training to join. More importantly, the pick-up batches tend to be of a high-quantity low-variety type, e.g. 25 cabbage heads or 5 boxes of apricots. The food saver is now “doomed” to spend the Sunday afternoon mass-producing apricot jam.

TooGoodToGo creates value by removing those frictions for suppliers and customers. The platform bring both sides together on a transparent open platform and makes food saving more convenient by offering house-hold appropriate unit sizes.

Restaurants and supermarkets can offer their superfluous food supply on the platform. They set a price point (usually around 30-50% of normal retail price), pick-up time and general description. One key aspect is that the exact food or dish the customer will receive is not specified. This “lucky bag”-approach allows suppliers to get rid off the items they have left over at the end of the day.

Customers can browse the offerings via the usual filtering and sorting functionalities (price, distance, food type,…). A recommendation engine is in place to help customers find the right offering. TooGoodToGo provides users with the ability to rate the offerings they have picked up. This is parallel rating system is important because users can not rely on Google Maps or Tripadvisor scores when it comes to assessing a supplier: The quality of the pick-up does not need to strictly correlate with the general quality of the restaurant. Just imagine a well-regarded steak house only giving out half-wilted salads for pick-up. Once the user has selected a suitable offering payment is processed via the TooGoodToGo platform and the selected food unit is reserved for them. At the specified pick-up time the customer presents a digital receipt on the TooGoodToGo app to pick up the purchased food.

TooGoodToGo generates revenues by taking a small share of each food purchase. The platform profits from network effects as a big number of suppliers increase attractiveness to customer and many paying customers bring in more suppliers.