Food Waste Is Ripe for Profit

Every year Americans discard $165 billion worth of things they could eat. These startups are working to fix that

  • Just an hour and a half north of Silicon Valley, home to the vast campuses of Facebook and Google, Nick Papadopoulos is running a startup out of a barn. Under a chandelier made of recycled wine barrels, two laptops perched atop wooden slab tables account for the bulk of the assets of his company, CropMobster. A dusty pommel horse sits in a corner of this grange turned office not far from the woodstove his four co-workers use for warmth when the weather turns. In this unconventional space, Papadopoulos is laboring to find a profitable solution to a multibillion-dollar problem: food waste.

    Papadopoulos, a former consultant, runs a seven-month-old firm that is a sort of for produce, pairing farmers who have surpluses with food banks, restaurants and home cooks who need inexpensive tomatoes and peaches, to cut down on needless spoilage. The Natural Resources Defense Council (NRDC) estimates that 40% of food in the U.S.--worth some $165 billion--goes uneaten every year. That's a 50% increase since 1974, the earliest government data available.

    There are plenty of reasons waste has worsened: Farmers grow too much as a hedge against uncertainty. More food is thrown out when distributors reject slightly bruised or misshapen fruits and vegetables. Grocery stores often overstock to keep their displays looking bountiful. And consumers toss perfectly edible produce at home, often by mistake. Food now takes up more space in landfills than paper or plastic. The resulting buildup of decomposing organic material accounts for 16% of environmentally harmful methane emissions in the U.S.

    Goaded by drastic improvements in logistics and a desire to chip away at social issues like hunger and climate change, entrepreneurs are trying to find ways to solve the problem of food waste. CropMobster isn't the only one. There's Washington, D.C.--based Food Cowboy, which reroutes food rejected by distributors. Daily Table, founded by former Trader Joe's president Doug Rauch, is turning bruised-but-edible food into meals that can be sold at a low cost. And a raft of appmakers are targeting consumers in hopes of changing the way they plan meals and shop for groceries.

    While most such ventures are still small, their founders believe technologies such as online marketplaces and nearly ubiquitous GPS can help wring inefficiencies out of the food market. (Big companies think so too; Amazon is plotting an expansion of its nascent grocery-delivery business on the basis of some of the same principles.) "In my years consulting, I've never seen such massive waste," says Papadopoulos, 38. "It would be like if 40% of the smartphones that came off the conveyor belt were just thrown out."

    Papadopoulos, who runs a family farm in Petaluma, Calif., got the idea for CropMobster on a Sunday afternoon in April, while sipping a beer and looking at cauliflower, leeks, kale and other vegetables that hadn't been sold at that day's farmers' market. He posted a picture lamenting the would-be waste on Facebook, and a few hours later, one of the farm's social-media fans came to take the leftovers to share with her neighbors. Seven months later, via its website, CropMobster has brokered sales of about 100,000 lb. of food from area farms. (The name refers to the agricultural term crop mob, farmers who don't own land but volunteer to work for others.)

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