By Danielle Wiener-Bronner, CNN Business
Here’s how it works: The Flashfood app shows which grocers in your area have partnered with the startup. Once you click into the store, you can see which foods are nearing their expiration or best-by dates and, because of that, are being sold at a discount. Flashfood items are currently available in about 1,200 supermarkets, and the company says it expects to double that number next year.
Flashfood is part of a slew of startups — including Imperfect Foods, Misfits Market and Too Good to Go — that are making typically hard-to-sell foods cheaper for consumers. For the companies, it’s about making sales while also trying to chip away at the global food waste problem. Roughly 931 metric tons, or 17% of all food produced, may have gone to waste in 2019, according to a recent United Nations report. Wasted food is a big contributor to climate change.
With grocery prices surging, it’s also a good time for businesses promising cheaper goods.
“The idea, for all of these services, that you might be able to get something that’s fresh and healthy at a discount, could be a big driver,” said Melanie Bartelme, global food analyst at Mintel. But there may be challenges to the approach, which requires customers to take an extra step to purchase groceries.
Savings for customers, sales for grocers
Items sold through Flashfood are typically half off the regular price, said founder and CEO Josh Domingues. Meat is a top seller, he said, especially as prices have been soaring. Fruit and veggie boxes, about $5 for 5-10 pounds of produce, are also in high demand.
Some users treat the app like a game, scrolling through different grocers for discounts.
“It almost becomes this treasure hunt where they’re clicking stores and seeing what’s available, and seeing what deals they can get,” Domingues said. That strategy is also good for retailers, he said, which may end up luring in new customers through the app, because shoppers “want to go out of their way and pick [their purchases] up.” Once in the store, they may also buy regular items, increasing sales for the grocer.
But the gamified approach may not work for all consumers, Mintel’s Bartelme noted. “Anything that makes you take an extra step just might be a little bit tougher” than just running to the grocery store at your convenience, she said.
Currently, payment has to be made through the app and items can only be picked from a dedicated Flashfood Zone in stores. Flashfood is exploring expanding payment options and adding delivery to make things easier for more customers, Domingues said.
The idea of marking down items that are reaching the end of their shelf life is not new — grocers have long had clearance aisles to sell soon-to-expire food. Discounting prices in a more strategic way is something retailers may ultimately decide to do themselves, said Bartelme.
“That’s a tremendous white space for some of those retailers to do this internally,” she said. If stores go it alone, they will have to invest in the technology, but can keep profits to themselves. When retailers partner with Flashfood, they enter into a revenue sharing agreement.
The Giant Company, a Pennsylvania-based grocery chain that has partnered with Flashfood at its roughly 185 stores, joined forces with the startup because combating food waste is “too big to accomplish on our own,” said CEO Nick Bertram. “Finding a partner … was a better path to serve our customers and their families.” Plus, the partnership has “brought in new customers who did not previously shop at Giant,” he said.
Fighting food waste at home
Millions of Americans face food insecurity — even as so much food goes to waste. It’s hard not to wonder whether food that gets sold by companies like Flashfood is getting diverted away from food banks or soup kitchens.
Giant and Flashfood say this is not the case. “Flashfood is not having an impact on what we donate to our hunger relief partners,” Giant spokesperson Ashley Flower said.
Flashfood keeps track of grocers’ donations, Domingues said, to track any changes once they start selling through the Flashfood app. “The donation amounts do not decrease when a grocer partners with Flashfood,” he said.
“Food waste has been a challenge for the grocery industry for decades, despite ongoing community-focused donation programs,” he added. “Flashfood’s business model is built around the food waste that persists, despite ongoing donation programs.”
Donations for fresh, perishable foods can also be tricky to navigate, he added. “It’s a logistical challenge. Who picks it up, who drops it off, who pays the price and who guarantees the safety?” he said.
Preventing waste at the grocery level can help reduce waste and greenhouse gas emissions. But it’s not enough, Domingues stressed.
A big issue is what happens after that food reaches refrigerators at home. “We all have the salad container … at the back of the fridge,” he noted. “That is the main source of food waste and we all do it.”
Breaking that habit can go a long way, he added. “We just have to consume what we’re actually buying because really, the environment depends on it.”
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