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FoodHero is a mobile app that connects grocery stores and consumers to quickly sell surplus food
On the VatorNews innovation podcast, Steven Loeb and Bambi Francisco Roizen talk to Renaud LeBlanc, COO & General Manager at FoodHero, a mobile app that connects grocery stores and consumers to quickly sell surplus food that would otherwise end up in the trash.
Highlights from the conversation:
- “Whether it's for health reasons, or the impact on the environment of the industrial farming of animals, or just the ethics of it, which I'm very sensible about, our food systems are starting to change, starting with the consumer mindset. Another thing that's a major change in consumer behavior is the fact that it now costs over $20 to have a good meal at McDonald's. So, inflation plays a huge part in it. Inflation obviously puts big pressure on consumer spending, but also in what they're looking for and how they're shopping.”
- “The supermarkets are trying to balance demand and supply, having to take into consideration a variety of factors that can change the demand drastically, like weather, for example; you can stock up on nice barbecue items for a nice sunny weekend and the forecast changes so it's a rainy weekend, they get stuck with a bunch of items to sell. So, it's always trying to manage having enough on the shelves, and not too much so that you don't waste. It's a tough business. Food waste is a normal challenge to have; I'm not saying food waste is normal, but it's a normal challenge to have, and you're seeing a bunch of solutions popping up trying to address this problem, whether it's in demand forecasting tools powered by AI and machine learning, or the chain type of solution, like FoodHero. When you're faced with the problem that you have waste, then that's when our solution comes in.”
- "[Merchants] do what they call a fresh culling route throughout the day; that's the process of removing items that they consider unsold or short dated, or literally expired, that are still sitting on the shelves. They do that already. Now, with FoodHero, instead of throwing those away, they're going to scan it using our technology tool, our store application, they're going to remove them from the shelves, and store them in a dedicated space in the store, most often in the back. We then, in most cases, have freezing routines so that we extend the shelf life of the items that were removed from the shelves; in the case of meat, in Canada how we process is that you have to freeze the item at least 24 hours before the expiry date, or the best before date, and that gives you an additional three months to sell it. Obviously, the items don't sit three months on FoodHero: on average, will stay between two and four days, but there's a period in which it's made available for consumers to purchase. Twice a day, our customers will see food fall onto the application, that’s what we call the inventory releases. We have one at 10 am and one at 3:30 pm and that's when they can purchase the food. When they see the food arrive at their local grocery store, that's when they can buy it. Currently it's a pickup in store only model so consumers buy it on the app and then pick it up at their local grocery store.”
- "How short dated inventory has most often been handled by grocers in the past is with marked down labels. So, they're going to have their clerk do the fresh culling, or an audit of near expiring products; when they would see there is one or two or three days to expiry for meat, for example, or let's say yogurts, where it's maybe four, five, six, seven days, they would stick a 50% discount sticker on the products, and it would still be sitting on the shelf. The problem with that solution is that, first, it's quite labor intensive. Second, it’s quite hard to track, and the third, but most important, one is the cannibalizing aspect of it. If I'm a consumer willing to buy a full priced piece of meat or fish or whatever, and I'm ready to eat it tonight, I'm going to go for a 50% discount one. Whereas, with FoodHero, this item is segregated and made available in a secondary market, that's our consumer-facing marketplace and, this way, the grocers can keep the full price or low discounted items on their shelf and use FoodHero as their liquidation platform.”
- “[Supermarkets] could create a dedicated section for all the stuff they couldn't sell fresh and create a new section in the frozen aisle for discounted food, but they would still risk the cannibalizing aspect of it. We come in as a secondary marketplace, so we bring in a new customer to their store that buys it on a discount. And when picking up their order, they typically make at least the same amount of purchases in their store as they made on FoodHero. So, our average order sits at about $30 to $35; the typical upsell is at least $35 from the consumer research and surveys that we did of when they came to pick it up. So, if they buy a nice piece of meat, a piece of fish, and maybe a piece of bread, and a couple of ready to eat meals on FoodHero, they're going to complete their order in the store buying their cheese, maybe some yogurt, some veggies, anything they need to complement their meal they’re planning for.”
- “All the sales that our merchants are doing with FoodHero are considered profit. So, the cost of the item that they're selling is not relevant in calculating the ROI for the store because that food would have otherwise been thrown out. Our current average is just under $100,000 per year, per store, in net new revenues for stores, with our most performance stores approaching $300,000 worth of net new revenues.”
- “We think that AI and demand forecasting will play a huge role in the future. I believe that taxation and involvement from the government, like it's been done with some nice regulations in France to start, some European countries, and California a few years ago, will incentivize supermarkets and businesses to not waste. It will remain a huge challenge, but that, through technology and regulation, it's really going to diminish drastically in the next 10 years. And I see FoodHero at the forefront of that movement. Our solution is perfectly adapted to the way in-store operations and technologies currently work, but we're always at the edge of our seats, trying to forecast how we can be helpful and relevant in this industry, not just today and in five years, but in 10 and 20 years.”
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