Food waste apps do battle to turn leftovers into big business

Food waste costs businesses in the UK around £20bn annually

Elsa Bernadotte is a co-founder of Karma, a food waste app with 80,000 users in London

The best dish that Elsa Bernadotte ever picked up on Karma, a food waste app she co-founded in her native Sweden in 2016, couldn’t be more Swedish.

“It’s a typical dish of meatballs with mashed potatoes and a special sauce, from one of my favourite restaurants in Stockholm,” she says. “But it’s very popular – you need to be on your toes.”

Bernadotte hasn’t had time to be waiting for meatballs in Stockholm much lately. Like many other entrepreneurs, she is spending a lot of time in London, masterminding the expansion of Karma in the UK.

Since it launched in London in February 2018, 80,000 users have signed up to click and collect surplus food from delis and restaurants for half price. On any day, users can browse nearby restaurants and cafes for surplus salads, pastries and full meals to buy and collect before closing.

All that waste has been good for business: Karma is working with 600 independent retailers in London and makes money by taking a cut of sales. Food waste costs businesses in the UK around £20bn annually, according to Wrap, the food waste charity – the equivalent of more than £300 per citizen.

In September, 90 organisations signed a commitment to reduce food waste through the food chain, from field to fork, by working with suppliers and engaging with customers alike. Supermarkets are increasingly seeing apps as part of the solution.

In November last year, Karma teamed up with appliance manufacturer Electrolux to test out a smart refrigerator for grocery stores. In a trial in Stockholm, users signed up to buy reduced-price chilled goods that would have otherwise gone to waste, unlocking a connected fridge at the entrance to a supermarket with a QR code.

Karma has raised €18m (£16m) from investors to expand the number of retailers it works with in London and is planning a test launch in Paris in 2019. But Bernadotte says the app works just as well in small towns with just one or two retailers as it does in big cities. She says: “It’s about matching supply and demand.”

It’s also about beating the competition. The number of food waste apps on the market has multiplied in the last decade, fuelled by environmental pressure from consumers and industry bodies. Winnow, which launched in London is 2013, provides chefs in commercial kitchens a set of scales to weigh food and measure how much is thrown away. The app can then assess the value of what is being lost, with the idea that restaurants adapt their menus.

Other apps are based on Bernadotte’s notion of matching supply and demand. Tessa Cook co-founded Olio in the UK in 2015. The app now connects supply and demand for surplus food within communities in 32 countries, with 75 per cent of food listed picked up within 24 hours.

Olio currently makes money by charging business for its Food Waste Heroes Programme, in which a group of volunteers rescue unsold food from businesses and add it to the app. But its core business is connecting people within communities who may only need one red onion, for example, and have another two to give away. Olio attracted $6m (£4.7m) in Series A funding in July led by Octopus Ventures, which was attracted by the value of connecting people through the app.

Karma’s major competition comes Too Good To Go, an app founded in Copenhagen in 2016. It has raised a total of €16m to expand in Europe. Too Good To Go founder Mette Lykke knows a thing or two about seeing a gap in the market and scaling a business. She previously co-founded Endomondo, an app for tracking and sharing workouts. It sold to Under Armour for $85m in 2015.

“The reality is that it’s standard practice for food businesses to throw away perfectly edible food,” she says. “We give them the flexibility to offer up anything that’s still good to eat and sell it to consumers through the app at a discounted price. It’s a win for retailers, because they reduce waste, acquire customers and increase revenue; it’s a win for consumers who get great food for a reduced price – and it’s obviously a win for the environment.”

In France, Too Good To Go is campaigning for Carrefour, the French retail company, to change its food labels from “best before” to “best before, not bad after”. The campaign comes after Tesco scrapped “best before” labels in the UK in October 2018 on more than 100 products. In its native Denmark, Too Good To Go is also working with the country’s minister for education to create webinars to educate children about how to reduce waste at home.

But its main business is comes from taking a cut of surplus food sales from restaurants and cafes – with a plan to save 20 million meals by the end of 2019. Bernadotte says the main difference between the apps is that Karma users know exactly what food they are picking up, which can help with allergies and dietary requirements. Many of the meals on Too Good To Go are listed as “the magic bag”, a mixed bag of any surplus food that a restaurant might otherwise throw away.

Harriet Jenkins is chief operating officer for Detox Kitchen, a health-food home delivery service that has two delis in London. Detox Kitchen switched from using Too Good To Go to Karma after it was contacted by the latter app when it entered the London market in 2018. “Karma was working with a good number of stores and slightly bigger numbers, so we thought we’d experiment with them,” Jenkins says.

Detox Kitchen had long been interested in reducing food waste in its kitchens, but had found it difficult to strike deals with charities because the delis couldn’t guarantee a set amount of waste to make a worthwhile pickup at the end of the day. Through Karma, they could list as much or as little food for half price to be picked up by customers. In the first week of December last year, Detox Kitchen sold 100 units through Karma, raising £230.

“It’s not a huge boost to revenue, but it’s not about making money – it’s about not losing money by throwing this stuff away,” Jenkins says. “Anything that is raising the profile of our brand is good for us.”

With 700 retailers in London, Karma hasn’t even begun to test the potential of the model, according to Bernadotte. “We started off with restaurants and big hotel chains, and now we’re ramping up with grocery stores, supermarkets and school kitchens,” she says. “I haven’t found anyone who doesn’t have any food waste.”