Latest / Restaurant Business with Fexingo: Food Service, Hospitality, and Independent Operators / How Surplus Food Apps Turn Waste into Restaurant Revenue
Transcript
- Lucas: You know, industry estimates say US restaurants throw away about $25 billion worth of food every year. That's roughly 4 to 10 percent of all food they purchase, depending on the concept. Luna: That's a staggering number. And it's not just the cost of the ingredients—there's also disposal fees, not to mention the environmental impact. Lucas: Right. So over the past few years, a handful of apps have emerged that let restaurants sell that surplus food at a steep discount rather than tossing it. The biggest one in the US is called Too Good To Go—it started in Europe but has been expanding stateside since 2020. Luna: I've seen the app. You buy a 'surprise bag' of leftover food for about a third of the retail price. What's in it is a surprise, but you pick up during a designated window. Lucas: Exactly. The restaurant gets some revenue from what would have been a total loss, and the customer gets a deal. But the real question for operators is whether it's worth the hassle—training staff to bag leftovers, managing pickup times, and worrying about cannibalizing full-price sales. Luna: Does the data show cannibalization? I've read that most users are new customers who probably wouldn't have visited otherwise. Lucas: That's what Too Good To Go's internal studies claim—something like 80 percent of their users are first-time visitors to the restaurants they buy from. So it doubles as a customer acquisition channel. Luna: That makes sense. If you're a budget-conscious consumer looking for a deal, you might discover a place you'd never tried before. Lucas: Let me give you a concrete example. I spoke with a Moe's Southwest Grill franchisee in Denver. He started using Too Good To Go about six months ago. In that time, he recovered just over $8,000 in revenue from surplus food that would have gone in the trash. Luna: Eight thousand dollars from what was essentially garbage. That's meaningful for an independent operator. Lucas: He also told me his disposal costs dropped because he was throwing away less. And he attracted a handful of regulars who first came through the app. So the net benefit is more than just the direct revenue. Luna: Are there downsides? I imagine some restaurants worry about brand perception—selling 'leftovers' might seem cheap. Lucas: That's a concern, but the app markets it as fighting food waste, which is a positive message. And the bags are usually prepared fresh that day, not old scraps. Many restaurants frame it as sustainability. Lucas: The operational side takes some adjustment. You need a dedicated staff member to prepare the bags at a set time, and you have to accurately predict how much surplus you'll have. But for places with predictable volume, it's manageable. Luna: I've seen some bakeries and coffee shops use it heavily. They have daily leftovers that are still good but can't be sold the next day. Lucas: Yeah, bakeries are a sweet spot. So are fast-casual chains with standardized prep. Full-service restaurants with variable menus might find it trickier. Luna: This feels like a win-win if the economics hold. But you mentioned a potential cannibalization risk—even if most users are new, some might be regulars switching to the discount bag. Lucas: That's possible, but with a third of the price, the margin is thin. The real value is incremental revenue from otherwise wasted product. Even if 20 percent of bags go to existing customers, you're still better off than throwing it away. Luna: I think this is one of those ideas that makes you wonder why it took so long. And it's a reminder that sometimes the best revenue opportunities come from fixing a problem you already have. Lucas: That's a good way to put it. You know, if these conversations have moved your work forward in some small way—whether it's a new angle on waste, or a fresh look at margins—one thing that helps keep this show ad-free is listener support. People who find value in what we do can throw a few bucks into the digital tip jar over at buy me a coffee dot com slash fexingo. Luna: It really does make a difference. We don't run ads, so it's listeners like you who make this possible. And it's entirely optional—no pressure. Lucas: Speaking of making a difference, let's get back to those surplus apps. There's another player called Flashfood, but it's more focused on grocery store surplus—produce and dairy nearing expiration. Restaurants are a different beast. Luna: Right. Different inventory, different shelf life. But the principle is the same: find a home for food before it spoils. Lucas: Exactly. And as grocery prices stay high, consumers are more willing to buy discounted surplus. That demand side is crucial. Without enough users on the app, restaurants won't bother. Luna: Has Too Good To Go reached critical mass in enough cities? I know it's in New York, LA, Chicago, but my mid-size city doesn't have it yet. Lucas: They're expanding steadily. As of mid-2026, they're in about 30 US markets. But it's still early. For an independent operator in a smaller city, it might not be available. Luna: So what can that operator do in the meantime? They could partner with a local food bank or use a simpler approach like a 'mystery bag' promo on social media. Lucas: Sure, but that takes marketing effort. The beauty of a platform like Too Good To Go is the built-in user base. Without that, you're starting from scratch. Luna: I wonder if these apps will eventually become standard practice, like accepting credit cards. Lucas: It's possible, but the economics have to work for the platform too. Too Good To Go takes a cut—typically around $1.50 per bag. That's fine for the restaurant if the bag sells for $4 to $6, but the platform needs volume to be profitable. Luna: So there's a chicken and egg problem: you need enough restaurants to attract users, and enough users to keep restaurants interested. Lucas: Right. But in dense urban areas, it's working. I think the next frontier is getting chain adoption at scale. If a big fast-food player integrates this across hundreds of locations, the model really takes off. Luna: That would be a game-changer for food waste. But chains are cautious about brand consistency and liability. Lucas: Sure. But the environmental and financial pressures are mounting. With landfill costs rising and consumers caring more about sustainability, it might be a matter of when, not if. Luna: So as we look ahead, what do you see as the biggest hurdle for these apps? Lucas: I think it's reliability. Restaurants have to consistently have surplus at the same pickup time. If they promise bags but don't have them, users get frustrated. Some places cancel too often, and that undermines trust. Luna: True. It requires discipline in forecasting. For a busy lunch spot, that's harder than a bakery with predictable day-old stock. Lucas: Exactly. So the early adopters tend to be concepts with consistent volume. But as the technology improves—maybe integrating with POS systems to predict surplus—we'll see wider adoption. Luna: That integration would be key. Imagine a system that automatically lists surplus bags when inventory hits a certain threshold. Lucas: Some are already working on that. It's a matter of time. For now, it's a low-effort revenue stream for restaurants that can handle the operational side. And for listeners running a restaurant, it's worth a trial. Luna: Agreed. If you're throwing away food anyway, what do you have to lose? Lucas: Exactly. And sometimes a small change in how you handle waste can add a surprising line to your bottom line.