Canada’s Flashfood has closed a $12.3 million Series A round for its mobile app-based marketplace that partners with stores to “rescue” grocery items bound for the landfill and sell them at heavily discounted prices.
Funding will support Flashfood’s continued expansion at grocery retailers across the US.
How it works:
The Flashfood food rescue setup is simple for both consumers and retailers which, founder Josh Domingues has said in the past, is intentional.
- In the Flashfood app, consumers purchase available meat, dairy, produce, and other grocery items that are either surplus or nearing their “sell by” date for around 50% of the retail cost.
- In-store staff gather and scan the items and place them in a temperature-controlled case. Upon arriving at the store, consumers check in with customer service and a human being helps retrieve their order.
- To participate, stores have to provide their own cooler, rack for dry food, and a handheld device for running the Flashfood Partner App, which staff use to scan orders and manage inventory.
- Stores can still run their regular donation programs to food banks and other charities alongside Flashfood.
- Flashfood says its retail partners recoup about $100,000 per store each year on short-coded inventory, and that for every $10 spent on Flashfood, $15 is spent in the store.
- The Toronto-based startup takes a percentage of the transaction value for each order.
Why it matters:
Flashfood has over the last several years grown from a small operation in Canada to having a presence in more than 1,200 stores across North America. Retail partners include Meijer, Stop & Shop, Giant, HyVee, and Loblaws stores, to name just a few.
The company’s growing presence as well as this new funding round speak to a continued enthusiasm for food redistribution apps that rescue food otherwise bound for a landfill.
When Flashfood launched its food rescue concept in 2016, most North Americans were barely aware of that concept. Since that time, multiple companies have set up shop in the US and Canada and helped familiarize consumers and businesses with the practice of food redistribution. Too Good to Go, which helps restaurants offload surplus food, as well as grocery services Misfits Market and Imperfect Foods are just a few familiar names in the space.
The bigger picture:
Flashfood’s system addresses two increasingly problematic issues in the US right now: food waste and access to affordable groceries.
- Food waste in the US generates about 207 million metric tons of CO2 equivalent greenhouse gas emissions annually, the same output as 58 million passenger vehicles, according to a 2021 report from the Natural Resources Defense Council (NRDC).
- While retail-level food waste isn’t the number one food waste offender in America (that honor goes to residential homes), grocery stores have the largest potential for rescuing surplus food to be redistributed, according to the same report.
- At the same time, 1 in 10 families in the US face food insecurity — access to affordable and nutritious food — and more than 10% of US households were food insecure at some point during 2020, according to the United States Department of Agriculture (USDA).
- Meanwhile, inflation continues to rise and the economic impacts of Russia’s invasion of Ukraine will undoubtedly reverberate across the ocean to the US. Both factors could continue to strain US families’s pocketbooks when it comes to putting food on the table.
S2G managing director Chuck Templeton spoke to all of the above issues in a statement on why the firm chose to invest in Flashfood: “Through innovation, Flashfood has created a simple way for retailers and consumers to help put a dent in the food waste crisis in a way that creates value for everyone, the retailer, shoppers and the planet.”