Your next food delivery could be packed with ugly fruits and vegetables, and that’s a good thing.
Every year, Americans waste a staggering amount of food. The best guess is between one-third and one-half of all food goes to waste. The USDA estimates between 30 and 40 percent and a 2010 study of waste put the economic value at $161 billion in wasted food. And a more recent report from the Guardian estimates as much as 50 percent of produce is wasted each year.
And it’s not just the leftovers that we forgot about or the spinach that we were slow to use, a huge amount of food never makes it to the consumer. According to the U.N. Food and Agriculture Organization, 40 percent of food is wasted by consumers, the bulk of the waste is upstream. That’s because grocery stores and other food purveyors have some high standards for what produce should look like.
Apples that aren’t just right go to storage, potatoes that are too large or too small rot in the ground and carrots that are just plain weird looking are either sent straight to feedlots or left to rot on the farm. Sure there is some capacity for making ugly apples into apple sauce or cider, juicing those carrots or processing unattractive potatoes for hash browns, but that assumes the food supply system is agile or modern—it’s not.
Amid all those depressing factoids, one might grab their perfect Honeycrisp apple and sulk. But Abhi Ramesh saw an opportunity help change things for the better. Ramesh is the founder and CEO of Misfits Market, a food-delivery startup that gets food that otherwise would be wasted to consumers.
In a former life in financial services, he spent a lot of time figuring out supply chain and logistics.
“It always stuck with me that there was an incredible amount of inefficiency in the food supply chain world and how distributors dealt with their end customers. Everything is still done by phone, freight is scheduled by phone calls, farms are run by phone and fax,” said Ramesh. “My takeaway was that there is an incredible amount of inefficiency and a lot of waste here. I saw that if there is any over ordering, the distributors didn’t have the infrastructure to store this stuff.”
So he looked closer, even spending time picking apples. But unlike his fellow pickers, Ramesh said he was more interested in how the farmer ran the business.
“I remember seeing that they grew these really nice Honeycrisp apple, but for every perfect one there were basically two tossed into this gigantic bin that got dragged off to a cold storage unit,” said Ramesh.
The farmer said some of those imperfect apples found a home, but the bulk was thrown away.
“That was a mind-blowing experience. So I ended up buying those apples on the spot, a few cases that is,” said Ramesh. “He said basically, ‘I don’t make any money off these, so pay me what you want.’”
Low cost produce and a consumer trend toward sustainability led Ramesh to found Misfits Market. He said the food supply chain is one of many outdated industries that need a little disrupting.
“There’s so much going on in transportation like Uber and Lyft, I think people realize transportation is a fundamental need and we’ve been very old fashion about it. I think the same is happening with food right now,” said Ramesh. “There are a lot of inefficiencies in the model, but there’s no reason for it to be inefficient. So a lot of people in this tech era, they see these fundamental needs that can impact hundreds of millions of people, so lets go tackle this problem and innovate it.”
Currently, Misfits Market has a staff of 35 including staff for a shipping and receiving warehouse in Philadelphia. Currently, all the food goes to that facility for sorting and shipping.
Ramesh said his day-to-day is still a lot of phone time with people across the traditional supply chain—everyone from farmers looking to unload their ugly produce to distribution companies that are stuck with truckloads of extra produce.
“Yesterday, I got a call that there were 12,000 excess avocados being shipped to Philly, so someone ordered an extra 12,000. And the freight company realized that and they couldn’t drive it back down, they had to get rid of them or drive them to a compost facility. That happens every day, so that’s what we tap into,” said Ramesh.
He said as they’re continuing to get up to speed, those relationships are getting stronger. But still, it’s a case-by-case situation, but the message is working its way through the supply chain.
And for the food that is inedible, they work with pig farms to donate food that otherwise would have been wasted.
But it’s not just warm and fuzzy feelings or futuristic ideals, consumers get a great deal. Because almost every item in a Misfits box was written off already, the company can get its produce at very low prices. That’s passed along to subscribers, who pay $19 for a box of 10 to 12 pounds of fruits and veggies or $34 for an 18- to 20-pound box. A la Carte boxes start at $23. That’s 30 to 50 percent cheaper than a grocery store, according to the company.
The company has “a couple thousand” recurring weekly subscribers. But the delivery area is limited to Pennsylvania, New York, New Jersey, Connecticut and Delaware.
The company is not yet profitable, and has been funded by a combination of personal capital and a handful of investors.
“Our goal is to raise some capital to scale nationally, so our goal is to go raise in the coming months once we prove that people love this, and we’re mostly there,” said Ramesh.