The U.S. Department of Agriculture (USDA) estimates that each year 30 to 40 percent of American food purchases end up in the trash, with restaurants contributing nearly 60,327,785 metric tons (133 billion pounds). Matthew Holtzman hopes to shift the way Americans treat food waste via goMkt, a digital marketplace he recently launched in New York City. Through an iOS app, goMkt enables customers to purchase unsold food items from food retail locations as takeout, saving up to 75 percent off the original price. Consumers can download the app (currently available in the Apple Store) and use goMkt to purchase food from local retailers while saving money and protecting the environment.
While goMkt currently connects businesses to consumers, Holtzman plans to launch a business-to-business market platform in the coming months to help larger food retailers manage their inventory and reduce their waste, as well.
Food Tank had the opportunity to speak with Matthew Holtzman about goMkt’s business model, how he sees private sector startups contributing to food system change, and how the company plans to tackle food waste.
Food Tank (FT): How would you describe the core business model of goMkt?
Matthew Holtzman (MH): The business model for our business-to-consumer (B2C) product is fairly straightforward: We’re creating a two-sided marketplace where food businesses and food consumers can transact surplus food, taking a straight margin on sales and offering tax deductions, donations, and prevention analytics as ancillary services. Clients using this product include small restaurants, cafes, and bakeries, among others.
Our second product, a business-to-business (B2B) marketplace, will offer a multi-channel, end-to-end platform to manage larger volumes of food and organic waste streams for our clients. We will prioritize each channel according to its potential for recovering revenue and non-cash benefits, and we will offer comprehensive prevention, recovery, and recycling services. Clients using this product include supermarket groups, wholesalers, and manufacturers, among others.
FT: What is the role of the private sector in combating food waste?
MH: The issue of food waste presents unique challenges to the private sector, in particular, small food businesses. Such businesses typically lose up to 10 percent of their inventory, or 43 billion pounds annually. These losses can occur for a variety of reasons, including, confusing best-by dates, arbitrary freshness cutoff points, cosmetic standards, and confusion regarding donation liabilities, among other things.While larger restaurants and supermarkets might be eligible for pickups or returns by a third party, most small food businesses do not meet the volume thresholds required for pickups by nonprofits (about 100 pounds in NY), leaving them in limbo.
Private sector businesses should be at the forefront of combating these issues because they are well-positioned to experiment and innovate rapidly, and also stand to benefit the most from the increased productivity and returns that these investments generate. It’s also important to note that promoting social responsibility programs resonates with customers and can also help them make informed decisions about their own behavior. In an era where 70 percent of millennials are willing to pay more for products that impact social issues they care about, private sector companies would do well to lead this charge.
Let me share a short anecdote from the front lines: I recently visited a national pizza chain in Virginia and selected a personal pizza from a warming plate. As I approached the cashier, I decided to opt for a different pizza, so I asked her if I could put the pizza back. The cashier dutifully informed me that restaurant policy prohibited this and promptly threw the item in the trash.
There are countless examples of required waste, but I like something that Doug Rauch said regarding perishables which I feel does a great job of encapsulating this problem in America. He said, “The reality as a regional grocery manager is, if you see a store that has really low waste in its perishables, you are worried. If a store has low waste numbers, it can be a sign that they aren’t fully in stock and that the customer experience is suffering.”
This is part of a paradigm that considers food waste to be a built-in cost of doing business in America, and I think it’s time to retire these misguided policies.
FT: How does the role of the private sector differ from those of other stakeholders?
MH: In my view, governments can play a critical role in identifying and combating this problem by incentivizing private sector solutions. While it’s clear that legislation can’t win hearts and minds in isolation, they can certainly steer the narrative in a positive direction and support innovation. Notable examples include the French legislation that passed in 2015 requiring supermarkets to donate surplus inventory to charities, as well as New York City Council legislation that initiated a curbside organics pilot program in 2013, and follow-up legislation this year requiring notifications to recipients and a web catalog.
FT: From whom and how did you obtain financing for goMkt?
MH: I’ve largely bootstrapped our development with funds saved from my time working at AppNexus, but we’ve also reached out to friends and family for some funding, and we’ll likely use a crowdfunding platform such as Kickstarter or Indiegogo to defray our costs as we launch a referral program and look to develop the B2B product.
FT: What challenges have you encountered in starting goMkt and how have you overcome those challenges?
MH: While it might sound counterintuitive, our B2C effort is actually more complicated than our B2B product, but we chose to prioritize it because small food businesses have very limited channels for managing surplus inventory—something like 85 percent of the food that can’t be sold at these businesses goes to a landfill. We love a good challenge, and we couldn’t resist!
In terms of other challenges, margins in the industry are quite thin, and many retailers still operate under the premise that food waste is an acceptable cost of doing business. New York is a difficult market for any tech product because there are so many other startups competing for retailer attention at any given time, and it can be rather difficult to cut through the noise. Add to this the fact that New Yorkers have very high expectations for services and products they consume, and you’ve got an interesting cauldron of opportunity!
We’ve managed to overcome many of these obstacles by underscoring how our platform is good for the retailers’ bottom line in terms of reducing waste, driving traffic to stores, and recovering tax benefits, but also serves a broader purpose of shifting the narrative around waste, fighting climate change, and getting food into people’s bellies rather than landfills.
FT: Where would you like to see goMkt in next five years?
MH: Five years is an eternity in startup time, so I won’t speculate too much, but I’d like to see goMkt scale up to the point where we’re a hub for food businesses of all sizes to come together, trade, identify new business channels, and participate in our sustainability and social endeavors. When this happens, I’ll feel as though we’ve made a dent in the problem.
FT: What is goMkt most excited for this year?
MH: We’re very excited to continue refining the B2C offering, and we’re looking forward to collecting as much positive and constructive feedback as humanly possible to develop new features. In addition, it’s going to be a lot of fun to begin to map out the B2B platform and all of the different players and experts in this ecosystem!
There are some other exciting features in the works that I can’t talk about just yet, but we look forward to rolling them out over the next three to five months, and we’ll publish them on our website, gomkt.com.