March 22, 2017 News » Cover Story

Can FoodMaven fix the food industry's huge waste problem? 

click to enlarge FoodMaven's VP of Government Relations Megan Cornish makes a drop at Ivywild School. - GRIFFIN SWARTZELL
  • Griffin Swartzell
  • FoodMaven's VP of Government Relations Megan Cornish makes a drop at Ivywild School.

It's late morning on a sunny March day, and I'm waiting in the Principal's Office for a text message that will herald the arrival of a white Ford Transit van. In that van are a dozen boxes of antibiotic-free, vegetarian-fed, cage-free chicken from a local farm. I've been asked not to reveal the name of the brand, but it's right on the box for the Meat Locker's kitchen staff to see.

This chicken is special — not because of the standards it was raised to, but because it's both fresher and cheaper than it would be had the Meat Locker bought it through a traditional distributor. Instead, it came from FoodMaven, a new Springs-based company dedicated to ending food waste. And it's the first step in what the founders hope will be a revolution in the American food industry.

FoodMaven is an agriculture-tech startup, founded in August 2015 by Dan Lewis, president/chief innovator, and Patrick Bultema, CEO/chairman. Its stated goal: keep food out of landfills. Food companies at every point between the dirt and the dinner table sign contracts with FoodMaven. When extra food shows up at their loading docks — most often produce, meat and dairy, which can't sit in a warehouse for an indefinite amount of time — FoodMaven takes it off their hands, stores it and sells it to commercial and institutional kitchens across Colorado Springs and Denver. In the Springs alone, FoodMaven sells to 120 restaurants, plus school districts, senior living centers, caterers and even the Cheyenne Mountain Zoo.

So far, they've been successful in their mission. Last year, they expanded from two guys looking for capital into a 22-person company — seven people doing the actual warehouse/logistics work, and the remainder managing and expanding operations. They raised $1 million in venture capital through most of 2016 and into 2017, and they're currently moving into their first company-owned warehouse, after borrowing space during formation. They're in the process of raising another $1 million now.

If those numbers don't make the fact clear, FoodMaven is not a charity. It's a for-profit company, complete with financial backing from venture capital investors. Rather than buying the food, they consign, meaning they share profits after the sale instead of putting cash up front.

The finer details of the business require some understanding of how the American food industry works. The problem they're addressing, Bultema explains, is that the food industry assumes total availability — everyone needs everything at all times. The fact that food spoils and most food-crops are seasonal means that the food system has to oversupply every step of the process. The grocery store asks for some percentage more than it expects to sell, to make sure the store never runs out. The distributors ask for more than the grocery stores will need for the same reason, and so on up the chain.

When it gets back to the farms that produce the meat, dairy, grain and produce, they have to fulfill contracts that account for all of that oversupply, plus a little bit extra, just to make sure. And when that "little bit extra" starts down the proverbial stream, it adds up, quickly turning into a real semi truck full of food.

"They don't have a place to put it, and it's not going to go anywhere," Bultema explains. "So now they've got that oversupply, and it's like 'What are we going to do with it?' And it has to be gone, because the next trucks are going to show up in a couple of hours."

Usually, Bultema continues, that extra food gets trucked to a landfill, still fresher than what arrives at the grocery store or the restaurant. The Department of Agriculture estimates that between 30 and 40 percent of the food supply in the U.S. goes to waste. In 2010 alone, the USDA says 133 billion pounds of food — that's 133,000,000,000, with nine zeroes — went to landfills, with an estimated value of $161 billion. While 17.2 million households had trouble feeding everyone at some point that year, all that food rotted.

But when that semi truck full of oversupplied food shows up at the inbound loading dock, that's where FoodMaven intervenes. They've signed contracts with a bevy of suppliers — they won't say how many — from producers to wholesalers to distributors to grocery stores. That truckload of food goes to FoodMaven's warehouses, their trucks, and eventually, their customers.

"[We] create a market and some revenue for what otherwise would have been loss and expense for these food companies," says Bultema. But he says they're not trying to replace big food distributors like Sysco and Shamrock Foods. While they do get a few items pretty consistently — he says they'll have free-range, boneless, skinless chicken breast in stock for at least the next year — most of their supply is seasonal or limited availability. Ideally, his clients shop for what they can from FoodMaven, then fill the rest of their inventory through their usual channels.

click to enlarge Bristol Brewing Co. serves FoodMaven-procured chicken breasts on a focaccia sandwich. - MATTHEW SCHNIPER
  • Matthew Schniper
  • Bristol Brewing Co. serves FoodMaven-procured chicken breasts on a focaccia sandwich.

When FoodMaven consigns food, it goes up on their web marketplace, where the commercial and institutional kitchens contracted to buy from them can see what's available. To keep things moving, everything gets sold at a steep discount — on average, half the distributor's price. Whatever they don't sell goes to food charities (more on that later), pig farms or composting companies — but never a landfill.

Lewis, who graduated from Colorado College in 2014, has been in the food-saving business for a few years. Back in late 2013, he acted as director for Colorado Springs Food Rescue (CSFR) — though technically not a co-founder, he was the organization's first full-time employee. CSFR's model operates on charity, capturing and distributing near-expired groceries and prepared food, with the goal of making sure vulnerable populations have access to healthy food. In 2015 alone, they rescued over 230,000 pounds of food from landfills.

But Lewis knew there was a bigger problem with regard to food waste. He reached out to Bultema, who was then executive director of CC's Innovation program. They started talking, learning about where so much food was going to waste and discussing what could be done to address the issue.

click to enlarge FoodMaven founders Dan Lewis (left) and Patrick Bultema seek to end food waste. - COURTESY FOODMAVEN
  • Courtesy FoodMaven
  • FoodMaven founders Dan Lewis (left) and Patrick Bultema seek to end food waste.

"That [waste], as a farm kid, kills me, because I know how hard it is to make that food," says Bultema, who grew up on his family's farm in California. "We needed to be able to create an economic model that would actually create real incentive other than 'let's do the right thing,' which sometimes gets lost in translation."

Initially, Lewis wanted to expand CSFR's mission. In 2014, he and the rest of CSFR were looking at entering CC's annual Big Idea competition, trying to win up to $25,000 to expand their organization. Food Rescue ultimately tied for third place, winning $5,000. Along with that came offers to accept venture capital and go for-profit.

"The opportunity for this funding was pretty tempting," says CSFR co-founder Shane Lory, now the director of operations. "Part of the constant struggle of being a nonprofit is fundraising enough money to keep yourself alive."

According to Lory, the question came down to a vote on whether the nonprofit's goal was to reduce food waste or to increase health equity by improving access to nutritious food. The board voted for the latter and, to that end, decided to stay a nonprofit.

click to enlarge FoodMaven founders Dan Lewis (left) and Patrick Bultema seek to end food waste. - COURTESY FOODMAVEN
  • Courtesy FoodMaven
  • FoodMaven founders Dan Lewis (left) and Patrick Bultema seek to end food waste.

Lewis and Bultema teamed up to turn the waste-prevention marketplace idea into its own venture-backed for-profit, a decision Bultema feels was ultimately best for FoodMaven.

That doesn't mean the two organizations are rivals. Rather, Lewis and CSFR are in talks to form a partnership, with Maven donating a percentage of its food to CSFR for distribution. CSFR executive director Zac Chapman says that while his organization hasn't received any food from Maven yet, he hasn't noticed a drop in food resources.

"They've managed to delve into a different waste stream than CSFR has," acknowledges Lory.

Along those lines, FoodMaven has been working with Care and Share Food Bank for Southern Colorado. Stacy Poore, Care and Share's chief operating officer, says that FoodMaven started borrowing some of Care and Share's warehouse, refrigerator and freezer space in late summer of 2016, storing food they felt they were more likely to donate, according Bultema. Starting in September, FoodMaven began making good on that promise. Between then and the end of January 2017, they donated 40,000 meals to Care and Share. They've also partnered with Marian House, Urban Peak and other charity organizations in the Springs and Denver.

As profits increase, FoodMaven intends to continue maintaining a charitable arm, planning to donate around 25 percent of what they take on to charity.

That said, there are concerns around the ethics of what FoodMaven is doing. Turner Wyatt, executive director for Denver Food Rescue, a sister organization to CSFR, has reservations about FoodMaven's model.

"I still believe that there is a lot out there for them to do," he says. "It could be a win-win-win, but if the people who they're donating to were the ones who were previously doing the rescue, then they're just taking a slice of the pie and giving what's left back after taking a profit."

click to enlarge Care and Share Food Bank has allowed FoodMaven to use refrigerated storage space; in turn, they've received donations from FoodMaven. - MATTHEW SCHNIPER
  • Matthew Schniper
  • Care and Share Food Bank has allowed FoodMaven to use refrigerated storage space; in turn, they've received donations from FoodMaven.

Wyatt's concern boils down to a question of added value. In Colorado Springs, FoodMaven has donated enough food to more than make up for any regular food donations they've disrupted. Will FoodMaven continue to do so as they expand?

There's another angle to the value question that Poore notes: quality and variety of food. She says Care and Share often lacks supplies of protein-rich foods.

"The reason protein is always scarce is that it's [more] expensive..." she says. "Any time we receive that type of food, it's greatly appreciated." FoodMaven's access to quality meats and dairy can help address that.

Still, whatever the impact on food charities, FoodMaven is having a positive impact on the environment, estimating it will divert almost 10.5 million pounds of food between July 2017 and June 2018, and that's just in Colorado Springs. By doing that, they're also helping fight global warming. When food rots in a landfill, it releases methane, a greenhouse gas that the Environmental Protection Agency says warms the planet by 23 times as much as carbon dioxide. The estimated 604 tons of methane FoodMaven plans to keep out of the atmosphere by June 2018 equates to almost 14,000 tons of CO2. That's the equivalent of keeping more than 2,700 cars off the road for a year.

From the business end, the response has been good.

"We've been on a pace of doubling [revenues] month over month," says Bultema. He says the company could go cash-positive this year, though they plan instead to keep seeking investments and expanding aggressively. As noted, they've associated with more than 120 restaurants in the Colorado Springs area alone, including the Poor Richard's complex, Wild Goose Meeting House and the Blue Star Group, which includes the Old School Bakery and Nosh.

"We're really excited about what they're doing," says Autumn Londo, Blue Star's general manager. "When FoodMaven first got brought to us, I thought it was too good to be true. ... I thought there was no way I could get good chicken at this price." At the time, she and her staff were unfamiliar with the company's model. But they decided to order a box and cook it up to see. The results were good.

Now, Londo and her team order from FoodMaven to supplement what they get through other sources. As of now, though, FoodMaven doesn't move enough food for the Blue Star to build a menu with them as a supplier. Still, she says FoodMaven allows her chefs to make small orders for daily specials.

"FoodMaven allows us to have more fun with our menu," she says. "It gives my chefs the ability to play."

Poor Richard's Restaurant general manager Terri Loughlin wasn't at all familiar with FoodMavent's business model when we spoke, but she was happy to buy for the savings.

"Their prices are really low, so if there are things [we're] going to be using right away, it's financially a plus for us," she says. Still, they're not making a massive difference in the Poor Richard's budget.

"It's probably less than 1 percent of our entire food cost. We're saving $10 here, $10 there," she says.

Going forward, Bultema and Lewis have big plans — namely, going nationwide. Bultema says they hope to be in somewhere between 50 and 100 cities in the next five years. In addition to the $1 million they're raising now, they've applied for grant money from the Colorado Department of Public Health and Environment. They also intend to raise $5 million to $7 million this summer and another $50 million to $60 million in 2018.

"Our model is based on a pretty aggressive scaling endeavor," says Lewis. "We think we'll be able to, at that point, raise that level of capital, having proven the model in Colorado and potentially some other states. To stay ahead of competition, we're on an aggressive timeline."

While concerns exist, Bultema and Lewis' good intentions read authentic. They're addressing a problem that they don't see anyone doing anything about, and they're doing it in a way that makes money.

Lewis says, "I get a kick out of subverting the assumption that aggressive-growth, for-profit businesses must be evil."

However FoodMaven grows going forward, that chicken their driver delivered to the Ivywild School has since made it into many dishes and many bellies. But do diners have any idea about the unique story and business model behind what arrived on some of their plates?

"Our customers have not noticed the change," says Old School Bakery's retail manager, Margaret O'Leary. "Quality has still been high."


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