Can discount grocery apps help fight hunger? New research shows promise

Approximately 30-40% of the food in the United States goes uneaten every year, according to the USDA. This amounts to 135 billion pounds of wasted food, worth $161 billion. Meanwhile, more than 48 million people — 13% of the population — are food insecure, meaning they don’t get enough daily calories or nutrients necessary to stay healthy.

Sandeep Srinivas (right), a PhD student in business administration at Gies College of Business at the University of Illinois Urbana-Champaign, is writing his dissertation on the impact of technology on the food supply chain, and when he learned about this discrepancy between food supply and demand, he wondered if there was anyone working on the problem.

He learned there were food banks that took donations of unsold food from supermarkets and used it to feed the food-insecure population. Most of the donated food were boxed and canned nonperishable items, not the fresh dairy, meat, and produce that’s essential to a healthy diet.

He also learned that there were a number of businesses, known as foodtech platforms, that are trying to reduce food waste by selling surplus food from various points in the food supply chain at a discount. Imperfect Foods, for instance, distributes food that’s considered too “ugly” for supermarket shelves, and Too Good to Go sells restaurant leftovers as takeout. Srinivas was particularly interested in Flashfood, a Toronto-based app that connects supermarkets that have extra merchandise with customers who want to buy it for less than the market rate.

“What this platform is essentially trying to do is provide a midway point,” Srinivas explains. “It’s not exclusively placing the burden [of feeding people] on the retailers or the food banks. It’s bringing the cost down and passing that on to consumers.”

Was it possible, Srinivas wondered, that, without knowing it, these foodtech platforms were also helping to redistribute the food supply and feed the food insecure population?

A marketplace solution between food banks and supermarkets

With his academic advisors Gautam Pant and Ujjal Mukherjee, Srinivas set out to measure the impact of Flashfood on food insecurity in local populations. This study is especially important now, given the uncertainty surrounding government aid programs. Srinivas, Pant, and Mukherjee recently presented their findings in a new paper, “From Waste to Welfare: The Effect of Foodtech Platforms on Food Insecurity.”

Srinivas began by using the Map the Meal Gap dataset from Feeding America, which measures the percentage of the food insecure population at a county level, and data from the Flashfood website that showed when the app expanded into different counties. He analyzed the data using a difference-in-differences approach that compared the levels of food insecurity in counties where Flashfood was available and demographically similar counties where it wasn’t both before and after Flashfood launched.

He discovered that, on average, one Flashfood store reduces a county-level food insecurity rate by 0.090 percentage points. This translates into approximately 860 people per county or 146,000 people across all the counties where Flashfood operates. The impact of Flashfood’s entry into a community was strongest in more vulnerable areas with higher poverty levels.

“The results that this for-profit platform is able to cause such a positive effect was actually a little bit surprising,” Srinivas says, “although it was not totally unexpected because nobody else had looked at for-profit platforms in the context of food insecurity.”

He was also curious how the for-profit platforms affected the nonprofit food banks. Were people abandoning the food banks now that Flashfood made supermarket groceries more affordable? Or were they using both?

He discovered that Flashfood and the food banks were, in fact, complementing each other, largely because they offered different types of food. People continued to get canned and nonperishable pantry items through the food banks. But through Flashfood, they could supplement that food with fresh produce, meat, and dairy.

This makes perfect sense to Srinivas: “Not everyone wants to rely on canned products or frozen food or carbs.”

Srinivas shared his findings with Nick Bertram, then the Flashfood CEO.  “This is something they didn’t know how to test,” says Srinivas, “so they were very excited when we showed them those results.”

Implications for policy, platforms, and partnerships

Although Flashfood was originally developed as an environmentally conscious solution to the problem of food waste and its founders never considered that affordability might also be an attraction for customers, Bertram and his team were pleased that it had the additional benefit of reducing food insecurity, especially in more vulnerable areas.

Mukherjee, an associate professor of business administration at Gies Business, points out that Flashfood could use Srinivas’ data to focus its expansion efforts. But the paper’s findings have potential to make an impact beyond this one foodtech platform. 

“It can be used by the government because the government can actually use Flashfood to supplement or complement their efforts to reduce food insecurity,” Mukherjee says. “It can provide infrastructure to connect this platform with the food bank platforms to encourage complementarity. It can build informational infrastructure like broadband and WiFi access for people to use this platform in an efficient manner. And the retailers can also, from this research, quantify the effects of subscribing to the platform. So it’s very useful from a business and social perspective.”

The paper has already received acclaim: it won the Doctoral Research Showcase Award at the Decision Sciences Institute Conference in November. Srinivas, Pant, and Mukherjee plan to continue researching the effects of technology on the food supply chain, including how blockchain can be used to reduce food contamination and recalls.

“This is a good way to meet the objective of reducing hunger in the U.S. using all possible mechanisms,” Srivinas says.