Spoiler Alert: At the End, Technology Defeats Food Waste
One start-up is rethinking approaches to food management with the goal of ending the extraordinary plague of waste.
Technology is making it easier for businesses to track their inventory and make smarter decisions about where it should go and how it can be utilized most effectively. One of the more exciting applications of this capability is the potential that it offers to the massive problem of food waste. Each year the United States spends an estimated $218 Billion on costs associated with food that is simply never eaten.[i] Boston-based startup ‘Spoiler Alert’ sees this extraordinary wastefulness as an untapped opportunity.
Who is impacted by food waste?
- Food Industry: Food is lost at every step of the supply chain – farms, storage, processing, distribution, and retail. Losses occur due to the difficulty of forecasting demand, food safety scares, labor shortages, unmarketable yield, refrigeration disruptions, and many other reasons.[ii] Because of these losses, the food industry forfeits many billions of dollars each year.
- Consumers: Approximately 25% of food purchased by American families is thrown out due to spoilage, confusion over expiration dates, and lack of awareness. This amounts to approximately $1400-$2300 in annual waste for households.[iii]
- Food-insecure Households:7% of US householders experience food insecurity at some point during the year. This amounts to 15.8 million people who weren’t confident that they had the resources necessary to meet their basic needs.[iv] This waste makes food less affordable for these families since the expectation of excess is built into the cost of food.
- The Environment: Approximately 52 million tons of food are sent to landfills each year.[v] Decaying food waste generates methane which is a greenhouse gas 21 times stronger than CO2.[vi]
What is Spoiler Alert?
Spoiler Alert seeks to combat this problem by offering 2 core software solutions:
- Marketplace – By connecting entities in the food business with those who want it, the Spoiler Alert Marketplace provides a mechanism to prevent spoilage by generating an accessible secondary market for at-risk food. Food businesses and farms can create easy listings for food that would otherwise go to waste. ‘Buyers’ like non-profits can then log-in and easily indicate interest in a particular offering. Once the transaction is complete, the system creates a report that allows the food business to set goals, easily quantify and share success, and provides email documentation of the transaction for tax-benefit tracking and accounting.[vii] Per one non-profit recipient of donations through the tool, “Spoiler Alert connects us to donations we might not otherwise know about.”[viii] To fund operations, Spoiler Alert takes a cut of any sales that are made through its platform.[ix]
- Enterprise – The enterprise platform is designed as an inventory management tool which helps businesses track and manage unsold food items. The core customers for this feature are wholesale distributors, food manufacturers, and grocery retailers. It provides item-level tracking functionality for corporate food donations, accounting tools to calculate tax deductions, and a tracker for financial, social, and environmental metrics. The tool should incentivize food businesses to think consciously about their food waste and easily set related goals so they can share results with customers and other interested stakeholders.[x]
How’s it going?
Spoiler Alert currently has 200 organizations using their service throughout New England and they are growing at 15% each month. They recently received a $2.5 Million seed investment to continue to expand operations.[xi] The company has been helped by a commercial food-waste ban which passed in Massachusetts back in 2014. Businesses that generate more than 1 ton of waste each week are subject to the ban which makes the Spoiler Alert Marketplace an excellent resource for the 1,700 companies seeking to comply with the policy.[xii]
What’s next?
At this point in its lifecycle, Spoiler Alert is focused on the right things – making the necessary investments to drive adoption, iterating on the services they offer, and proving the viability of the business. Though it’s clear that Spoiler Alert’s online tools will have value for many food businesses and non-profits, here are a few things they should consider as they grow:
- The revenue strategy of taking a cut of sales from the Marketplace works if there are many paid transactions flowing through the platform – since many of the ‘sales’ will be donations they should be wary to ensure the transaction volume will be enough to cover the costs of operations and generate profits.
- They should consider a plan to ease the logistics associated with deliveries rather than relying on each party to pick-up and drop-off.
- While the platform helps mitigate the loss associated with food waste, it doesn’t address the root causes. They should use the data they obtain and publish it for the industry so that institutions can have a granular understanding about the greatest sources of waste. Ultimately, their goal should be to put themselves out of business.
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Image Source[xiii]
[i] “Welcome to ReFED.” Food Waste: ReFED | Rethink Food Waste. Accessed November 18, 2016. http://www.refed.com/?sort=economic-value-per-ton.
[ii] Gunders, Dana. “Wasted: How America Is Losing Up to 40 Percent of Its Food from Farm to Fork to Landfill.” NRDC. Accessed November 18, 2016. https://www.nrdc.org/sites/default/files/wasted-food-IP.pdf.
[iii] Ibid.
[iv] “Key Statistics and Graphics.” USDA ERS. Accessed November 18, 2016. http://www.ers.usda.gov/topics/food-nutrition-assistance/food-security-in-the-us/key-statistics-graphics.aspx.
[v] “Welcome to ReFED.” Food Waste: ReFED | Rethink Food Waste. Accessed November 18, 2016. http://www.refed.com/?sort=economic-value-per-ton.
[vi] “Information Sources.” USDA Office of the Chief Economist. Accessed November 18, 2016. http://www.usda.gov/oce/foodwaste/sources.htm.
[vii] “Watch the Demo Video.” Spoiler Alert. Accessed November 18, 2016. http://info.foodspoileralert.com/watch-product-demo?submissionGuid=25fb3ab0-2d9f-4313-aa27-c9ddc39e5518.
[viii] “Non-profits.” Spoiler Alert. Accessed November 18, 2016. https://www.foodspoileralert.com/nonprofits.
[ix] Newberry, Laura. “MIT Grads Launch Online Marketplace Spoiler Alert to Connect Nonprofits with Surplus Food.” Masslive.com. 2015. Accessed November 18, 2016. http://www.masslive.com/news/index.ssf/2015/11/mit_grads_launch_online_market.html.
[x] “Enterprise.” Spoiler Alert. Accessed November 18, 2016. https://www.foodspoileralert.com/enterprise.
[xi] Vanni, Olivia. “‘Spoiler Alert’ Raises $2.5M Seed for a Food Waste Solution.” BostInno. 2016. Accessed November 18, 2016. http://bostinno.streetwise.co/2016/11/16/spoiler-alert-tax-deductions-for-food-donations-to-nonprofits/.
[xii] Jay, Jason, Sergio Gonzalez, and Marine Gerard. “Sustainability-Oriented Innovation: The More the Merrier.” MIT Sloan Management Review. January 12, 2016. Accessed November 18, 2016. Sustainability-Oriented Innovation: The More the Merrier.
[xiii] “Pilot Scheme Shows Promise.” SlowFood. Accessed November 18, 2016. http://www.slowfood.com/wp-content/uploads/2016/10/Pilot-scheme-shows-promise-in-repurposing-commercial-food-wastes.jpg.
Fascinating post! This is a great example of how technology can disrupt the status quo and lead to positive social implications. I completely agree that Spoiler Alert should play a role on the logistics end to increase its impact. However this would involve significant capital expenditures and logistics might not be their core competency. Do you think a partnership with non-profit organizations such as the Gates Foundation would work? Also I wonder if Spoiler Alert is mostly used for food donations or for discount sales. If the latter, is Spoiler Alert less incentivized to devise ways to deliver food efficiently to those in need?
Thank you for your post! I agree that the Enterprise platform can really provide benefits to wholesalers and grocery retailers. The ability to manage waste and spoilage is becoming even more important as grocery chains are increasing the amount of perishable items and prepared foods in their stores. For instance, Whole Foods currently has 67% perishables, Fresh Market has 66% and Fairway has 65%[1]. The growth in fresh prepared foods creates additional challenges for grocery retailers as they need greater insights into demand for each type of dish/product and truly understand the cost of waste given that these items typically have a one day shelf life. Digital platforms that allow these retailers to track demand and waste real time can really create competitive advantages in the space.
[1] Company filings
It’s exciting to see that someone is tackling such an important issue!
I am worried that the target customers of the Enterprise product would use the platform in the beginning, take their learnings to adapt an in-house competency, and leave Spoiler Alert behind. I would therefore advise Spoiler Alert to focus on developing stronger partnerships for its Marketplace service and consider bundling it with the Enterprise product for food distributors, grocery chains, etc (at least in the beginning to prove their value).
As a start-up lacking a core competency in logistics, Spoiler Alert needs to emphasize their social mission to “get in the door”. Once they’ve partnered with different organizations, they need to adapt their Marketplace platform to constantly improve their value proposition for both buyers and sellers. Ultimately, these efforts to increase the stickiness of their product need to be balanced by the growth aspirations to develop a scaleable marketplace.