Sunday, 09 September 2018 06:23

Innovations in the Food Industry Featured

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The foodservice industry continued to undergo dramatic change in the past year as consumer demand for healthy, transparent, and convenient food grew. From new business models to software and hardware, new and established companies are developing products and services that aim to help foodservice professionals improve margins, efficiencies, and environmental sustainability.

Restaurant Innovations

The trend towards locally sourced, plant-forward, seasonal, convenient food continued to grow rapidly. Sweetgreen, a farm-to-table salad chain with 64 locations and $95 million in funding, added 33 locations in 2016. Veggie Grill, a West Coast vegan chain with 28 units, raised $22 million to double in size within three years. Dig Inn launched a training program for cooks to overcome the challenge almost every restaurant is facing: a dearth of skilled cooks. It is also bought an R&D farm to grow some of its own produce, train its chefs, and experiment with organic agriculture and aquaculture.

Last year, restaurants proved that you can make good food affordable and accessible to everyone. Roy Choi and Daniel Patterson launched Locol, their West Coast burger chain, usinghigh-quality ingredients and paying employees a living wage. Its cheeseburger costs just $5, which is possible through a blended patty of 70 percent beef and 30 percent soy and grains. (Blended burgers are among the key strategies in The Culinary Institute of America’s Protein Flip resource. Los Angeles-based Everytable launched to make healthy food accessible by offering variable pricing depending upon the socio-economic status of the neighborhood. In its South LA location, for example, it offers salads and other items for less than $5. When it opens its second location in the more affluent downtown LA, it will offer those same items for $8 to subsidize the lower priced items at its restaurants in lower income neighborhoods. Kimbal Musk also bet on healthy fast food with the launch of Kitchenette, which serves sandwiches, soups, and salads for under $5 in Memphis, Tennessee.

Next-generation delivery-only restaurants like Sprig, Maple, and Munchery raised tens of millions of dollars in 2015. In 2016, however, they faced growing pains as they grappled with the unit economics and logistics of scaling food production and delivery. Sprig halted operations in Chicago. Two-year old Maple made just 2 percent gross margin profit and raised a down round. Munchery was reportedly hemorrhaging money on marketing and food, to the tune of $5 million a month for months, while wasting 16 percent of its meals. To improve margins, it reduced ingredients costs by buying conventional rather than organic ingredients, hired a new CEO and let go of 30 employees. It remains to be seen whether these “Gen 1” companies can grow into profitable, sustainable businesses.

Finally, the meal kit market continued to grow, with over 150 U.S. companies reaching $1.5 billion in sales. Whole Foods Market, The New York Times, and even Martha Stewart launched partnerships with meal kit companies.

Food Waste Innovations

In 2016, the business case for food waste became clear: Restaurants and foodservice providers could save $1.6 billion in food purchasing costs annually by reducing food waste, according to a new report by ReFed, a nonprofit using data and economics to reduce food waste in the United States. The largest savings can be realized through the use of waste tracking and analytics technology to identify and address operational inefficiencies in food purchasing and kitchen preparation. Another area of cost savings is implementing smaller plates and removing trays, which encourages consumers to waste less and can reduce an operator's food purchase costs. Using imperfect produce allows for lower input costs since it can substitute for retail-grade, cosmetically perfect food. Finally, food donation programs are an opportunity for operators to reap benefits from tax credits.

Building on last year’s momentum, innovations to reduce food waste continued to proliferate. LeanPath, a provider of food waste tracking and analytics software and hardware, saw increased adoption from industry leaders like Aramark and Google. With $2.5 million in funding, Spoiler Alert launched a platform to help food businesses create or recover value from otherwise wasted food and unsold inventory by creating and managing food donations and discounted food sales. Imperfect produce also began to go mainstream in 2016 as retailers like Whole Foods Market, Wal-mart, and Hy-Vee began pilot programs to sell imperfect produce.

Of note, the past year also saw growth in the number of food manufacturers launching products with ingredients that would otherwise go to waste. Sir Kensington’s, for example, launched Fabanaise, a vegan mayonnaise made from acquafaba, or chickpea cooking water. Cold-pressed watermelon juice brand WTRMLN WTR, which uses imperfect melons that cannot be sold in a grocery store, secured funding from Beyonce, saw over 300 percent growth in 2016 and expanded to over 15,000 stores. Baldor Specialty Foods, a Northeast produce processor and distributor, diverted 100 percent of its organic processing waste from the landfill through value-added products and partnerships. It sells misshapen produce to MISFIT Juicery, a Washington, D.C.-based cold-pressed juice brand. Baldor also developed a line of soups, sauces and cookies with Haven’s Kitchen, and remaining items are converted into animal feed or processed within an on-site waste-to-water system.

Plant-Based Protein Innovations

Foodservice operators, restaurants, and retailers embraced plant-based protein alternatives to meat protein. While these alternatives account for less than one percent of the meat market, startups are launching new products that look, cook, and taste like beef, in hopes of winning over omnivores.

Impossible Foods finally debuted its highly anticipated Impossible Burger, a plant-based burger that bleeds, at David Chang’s Momofuku Nishi in Manhattan last summer. The company is partnering with high-end restaurants such as Cockscomb and Jardinière in San Francisco, and Crossroads Kitchen in Los Angeles.

Beyond Meat launched Beyond Burger, a pea-based “raw” burger, to much fanfare. Going after omnivores, Whole Foods Market tested the patties in the meat case of a Boulder store. The product sold out in one hour and is now being sold in 51 of its stores. With an eye on expanding into foodservice, the company partnered with Veggie Grill to offer its burger at the West Coast-based chain’s 28 restaurants.

Hampton Creek, maker of plant-based protein products like Just Mayo, fell from grace after Bloomberg reported that the company had been buying back large quantities of its products from stores in order to boost its sales numbers for retailers and investors. The U.S. Securities and Exchange Commission and the Justice Department launched probes into the startup’s possible securities violations and criminal fraud in August.

Corporate Investment Growth

The capital flowing into global food and ag tech startups from venture and angel investors began to slow. In 2015, a series of high-profile valuations, acquisitions, and IPOs, as well as high-profile investors, helped to boost investor confidence in food and agriculture with $9.75 billion invested across 507 deals. This past year, however, saw

a 30 percent decrease in investment, with $3.23 billion investment across 580 deals in 2016. Of note, the total number of deals increased by 10 percent, driven by increased investments in seed-stage startups.

Deal flow may have slowed, but there were still many encouraging signs of progress. Thirty-two new food and agriculture funds launched in 2016. There was also a growth in corporate venture capital funds. One such example is Acre Ventures, a $125 million venture fund launched by Campbell’s. The fund made five investments, including Juicero, Farmers Business Network, Back to the Roots, Spoiler Alert, and Sample6. Tyson Foods also made moves by taking a 5 percent stake in Beyond Meat. This marks the first time a major meat company has invested in a plant-based food company. In addition to providing capital, Tyson will also use its scale to support the startup through its production and distribution capabilities.

While it is encouraging to see continued investment in food, many are concerned that startups continue to be overvalued. For instance, Juicero, a $700 cold-pressed juicing system for the home, raised $120 million from top Silicon Valley investors before even having a product.


Health, environmental sustainability, and convenience continue to present some of the greatest opportunities for growth in the foodservice industry. Operators should continue to embrace new menu techniques, technologies, and business models to help reduce food waste, enhance convenience, and improve access. Operators should improve convenience and accessibility by exploring new formats and partnering with third party mobile ordering and delivery options. Additionally, operators should seek out partnerships with emerging companies that can help them meet consumer demands.


A growing number of startups focused on environmental sustainability, health, and accessibility launched or saw positive growth over the past year. Despite the increase in technologies, services, and business models available to foodservice professionals, however, many startups still have yet to prove their businesses models, relying on venture capital to drive growth. As funding slowed down, a number of alternative dining startups shuttered or compromised environmental sustainability for margins.


  • Consumers are increasingly looking for convenient, affordable, plant-forward food. Chefs and operators should seek out collaborations and investments in emerging companies that could benefit from their infrastructure and experience to serve fast-changing consumer demand.
  • Operators should take advantage of all opportunities to improve their bottom lines by reducing waste, including adopting waste tracking and analytics, adopting smaller plates, going trayless, incorporating imperfect produce into menus, and donating unused food for tax deductions.
  • Despite the significant amount of capital being invested in food and agriculture startups, some argue that companies cannot support the valuations at which companies are raising capital. Many of these startups have yet to demonstrate profitability.

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