The Food Industry Is Ripe For Disruption
What food startups can do to meet today’s consumer needs.
The past few months have exposed a weakness in our food supply chain. Millions of families have been affected by inventory shortages at the grocery stores they depend on. This unprecedented dilemma has affected almost everyone during the pandemic.
Supply issues are an even harder challenge for those with food allergies or dietary restrictions. Unknowingly, the demands for groceries have teleported us years ahead of predictions on how the food industry needs to modernize. These aren’t just challenges for Americans. These same issues are happening all over the world.
When the pandemic first forced millions of Americans to stay inside, the fear of going to the grocery store due to Covid-19 led many to switch to online shopping. I had already been a user of FreshDirect, an online grocery delivery service in the North East. Unfortunately, FreshDirect and dozens of other online grocery stores weren’t prepared for the number of new sign-ups when in-person grocery shopping wasn’t an option.
While this might be a “good” problem for these companies to have, as a consumer, it threw millions of others into panic at the reality of trying to get the most basic of food supplies.
What about consumers with food allergies?
To compound the situation, some local grocery stores were no longer stocking “specialty items” such as dairy and egg substitutes. Instead, groceries were prioritizing regular milk over rice milk simply because of supply and demand.
According to FARE’s website, “Researchers estimate that 32 million Americans have food allergies, including 5.6 million children under age 18. That’s one in 13 children or roughly two in every classroom.” For people like Howard Attias, whose 7-year-old daughter has an egg allergy, finding the staples they needed to cook and bake with during the onset of the pandemic was challenging at their local Publix in South Florida.
“If it weren’t for one of the managers helping set aside some of the food order for us, we wouldn’t have been able to get what we needed without daily trips to the store and exposing us to the virus even more.”
Unfortunately, this isn’t a new struggle. Companies have been trying to fill the gap between grocery stores and families shopping with special needs for a long time.
In 2012, when founders Peter Balsells and Dan Doble grew frustrated by the difficulty of manually comparing online or offline food, they began work on what would become the Everything Food database. The company, founded in 2016, has been building its platform ever since based on a straightforward goal:
“Empower people to make informed food choices.”
Their online database enables people to sort through the bottomless sea of food options and set personalized preferences on brands, food ingredients, quality levels, allergies, favorite grocery stores, and more. In some ways, Everything Food allows its users to create their virtual supermarket. Recently they added support for taking these food preferences and ordering them directly from online grocery stores.
“Our long-term goal is to provide transparency to the food industry, thus putting the power of that information in the consumer’s hands.”
Challenging times for restaurants, too
Finding food supplies isn’t just a challenge for individual families; restaurants are also struggling to adapt. The restaurant industry is only one of many hit hardest by the soaring unemployment rate. Engadget recently published an interesting article highlighting how unemployed chiefs were now turning to Instagram for on-demand catering. It’s a unique example of the rapid evolution chefs need to make to survive in a continually changing environment.
There hasn’t been a tectonic shift like this in the restaurant industry in decades. While creating new business models out of selling food through social networks is a novel short-term solution, it is a signal that consumers are willing to adapt along with these changes, even on a macro level. So far, Instagram has been unable to pivot its business model to take advantage of this new opportunity.
Outside of online food shopping issues, the United States is running into logistical problems keeping the food supply chain flowing. To account for the commercial food surplus that is going to waste, there is a significant shift to convert retail food supply chains into consumer-friendly ones.
Some restaurants have had to shift their business model from in-person dining to take out only. Unfortunately, it’s not always enough to keep them afloat or use up the massive amounts of raw food they need to buy in bulk to stay stocked enough to meet demand. In response to consumer demand for groceries, some restaurants have been selling their excess food stock to those in need.
Until there is a return to some normalcy, whatever the new normal may look like, vast portions of the world’s population will continue to rely on alternative ways of sourcing food. While there will always be a need for the traditional brick and mortar grocery store, we are starting to see new opportunities to modernize how families procure what they need. With consumers drastically changing their shopping behaviors from offline to online, new business opportunities open in how to also make local, sustainable food sources available to help offset the current challenges of sourcing food across the country.
This vacuum is creating a unique opportunity for startups and even established food companies in some of these crucial verticals:
1. Online food sourcing
Currently, there are several different apps focused solely on food delivery (Instacart, Peapod, Shipt, FreshDirect, etc.). Still, there is no customer-focused way to connect all of these services to streamline the process of filling out a recurring shopping list across multiple venders based on stock and availability.
2. Direct from farm shopping
A few startups have begun connecting consumers directly to farms that produce the food they are looking for. This not only cuts out the middleman, but enables farmers to make more money and customers to get better, fresher food without additional shipping, packaging, and processing.
3. Recipe ingredient substitution
Grocery stores continue to struggle to keep up with customers’ demand for ingredients required to cook staple recipes. When an ingredient is out of stock, how do you alter the recipe based on what you can have? There is an opportunity for shopping based on specific needs ahead of time by identifying items in stock or offer substitutions.
4. Safer food shopping
While governments are still trying to figure out how to lift the restrictions placed on its citizens safely, the elderly and those with underlying medical conditions will always be at risk when shopping in person. This is also a demographic of people that may not be currently using online shopping and will need to learn how to adapt quickly. Also, family members may need to help out by ordering food for those unable to do it themselves.
Ordering for others can be modeled after systems similar to wedding registries or wish lists to have others buy and deliver what is needed.
5. Restocking and inventory management
Most households don’t keep an up-to-date inventory to help them manage their current food supply. Some smaller apps and services have begun to fill this gap. Still, very few households use them or even track when the food they have will expire. Knowing this ahead of time could cut down on food waste and help manage weekly shopping lists with online retailers.
5. On-demand grocery services
There is a prime opportunity for a new on-demand food ordering and helping restaurants convert their bulk orders into consumer-friendly consumables. This opens up a new revenue stream for restaurants and helps those able to shop to add other people’s items to their order and make money delivering it.
6. Food banks and kitchens
And finally, given the current unemployment rate and trajectory for how things will be going in the job market, the reality is that lower-income families and those that lost their job may need to rely on these services to sustain themselves. There will be a need for solutions to help identify locations, what is available, and ways to get access to the food supplies needed to meet the demand.
Currently, there are more opportunities and places of growth as the food industry reshapes itself to adapt to this new way of life.
At Samsung NEXT, where I work, we’ve been developing an AI-powered food API called Whisk to help connect these startups like Everything Food directly with grocery stores.
While I initially joined to work on Samsung NEXT’s other AI products, the current situation has required me to reprioritize our developer relation activities to help keep Whisk at the forefront of this shift. To meet demand in the post-Covid19 world, we need more companies to build new kinds of food services.
My new goal has been to empower the next food startup to disrupt the current status quo as we open up the API to new developers for free to help jump-start the next impactful food startup.