Revolution Foods: Solving America’s Food Crisis
“Real Food for All” – Delivering Fresh Lunches to Schools
Image sourced: revolutionfoods.com
Business Model
Obesity rates for children in America have gone from 5% in 1980 to 21% today[1]. Revolution Foods, a California based company, aims to address this problem through a healthy school lunch program. Today, most schools buy inexpensive, unhealthy foods from large manufacturers and reheat them when it is time to serve lunch. Revolution Foods differentiates itself by producing kid and nutritionist approved lunches for students that are delivered daily, sourced locally, and cooked fresh. To ensure access for all populations, Revolution keeps the price of each lunch under the amount allotted by the National School Lunch Program, a federal meal assistance program. This increases adoption without forcing schools to bear extra cost. They are able to achieve this vision through their efficient supply chain and creative menu.
Additionally, beyond the school lunch program Revolution has expanded into ~400 local stores by creating healthy and affordable lunch kits for adults and kids outside of the school setting [3].
The growing business is supported by a unique operating model that effectively delivers on the company’s mission. Although the operating model is robust, there are three key elements that allow the business to be differentiated: Supply Chain, People/Culture, and Product Development.
Operating Model
Supply Chain:
Revolution Foods locally sources the ingredients for their meals. This helps them to control costs while still offering healthy options. Additionally, it allows them to cater to regional tastes [6]. They have built seven culinary centers where they put the meals together and try to grow scale in each of the nearby markets to increase the efficiency of these centers [4]. They then use these central facilities to deliver the meals daily to local schools. Additionally, their usage of central facilities has helped them expand in a sustainable way.
Since they are using healthier ingredients, meals do not preserve well or last very long. This is why delivering the food daily is a unique competitive advantage for Revolution. Additionally, many of the schools do not have the facilities to cook in-house so Revolution must deliver the meals hot and ready to eat. The structure of this supply chain, cooking and delivering food daily, generates a large amount of working capital for Revolution. Since they don’t get paid until the school receives funds through the National School Lunch program they use working capital loans to bridge the gap [4].
People/Culture:
Revolution focuses on building a culture around its social mission. They view their business model as solving the food crisis in America versus cooking school lunches. To execute on this mission, they hire many local and inner city workers who are passionate about this cause as well. Additionally, they have created nutrition programs that help school administrators and lunch staff transition to the new menu and understand the advantages [4]. These relationships make Revolution’s model hard to replicate.
Image sourced: revolutionfoods.com
Product:
Revolution has used their innovative supply chain and sourcing to differentiate their product and ensure a commercially viable price point. They have created a menu that satisfies regional preferences, kid’s tastes, and nutritionist’s plans. They are able to do this through their regional facilities and suppliers. Additionally, after they scaled their business they expanded their products to include lunch kits available in stores. These kits required innovative new packaging to ensure the products stayed fresh, such as separate packaging for meat to keep it safe without having to use preservatives [4].
Image sourced: http://www.flavofit.com/food-companies-changing-kids-eat/
The alignment of Revolution’s business and operating model has resulted in both impressive financial and social impact. Revolution now delivers over 1 million meals a week to the 20 million kids who lack access to other healthy options [2]. Additionally, financially they have grown from $18 million in revenue to over $80 million in five years [6]. I’m looking forward to seeing Revolution Foods continue to grow.
Sources
- http://www.cdc.gov/healthyschools/obesity/facts.htm
- http://revolutionfoods.com/
- http://www.bloomberg.com/bw/articles/2013-09-19/revolution-foods-takes-on-kraft-to-get-into-kids-lunchboxes
- http://impactalpha.com/revolution-foods-healthy-food-for-healthier-students/
- http://revolutionfoods.com/wp-content/uploads/2014/06/Revolution-Growth-Invests-in-Healthy-Meal-Provider-Revolution-Foods_6.4.14.pdf
- http://www.fastcompany.com/3039619/most-innovative-companies-2015/revolution-foods
- http://www.economist.com/news/united-states/21577098-new-company-trying-make-school-meals-healthier-biting-commentary
Revolution Foods sounds like a really great organization – if they offer healthier food at the same price point, I can’t see why any school wouldn’t jump to sign up! What I wonder is the extent to which their operating model is scalable, given their focus on sourcing local food. It seems like it would be a fairly resource intensive process to expand to a new geography, since they would need to find all new suppliers. Further, does this constrain the locations where the business model is viable at all? I.e. are there places in the US where sourcing food locally is too difficult/expensive to be able to provide food at the necessary price point?