How one online grocer is saving customers 20% on food costs: 'All the ... resources that go into growing food and manufacturing food, it's just inefficient'

Corey Farrell didn't know what he was getting into.

He had just left his previous job and was looking to join a company that was driven by making a real impact.

"As I was interviewing, this idea that one-third of the food in the U.S. goes to waste seemed to me like a really big problem that we needed to try to solve," he told The Cool Down. "That's when the light bulb went off for me."

What that lightbulb illuminated was not just the problem, but also a potential solution. Enter Misfits Market.

Launched in 2018, the company started with the simple task of keeping perfectly good produce from ending up in a landfill just because it doesn't look photoshoot fresh. Here's an ugly truth: More than 20 billion pounds of food goes to waste on farms in the United States every year simply because of cosmetic imperfections.

What started as four people in Philadelphia taking funny-looking produce and keeping it from going in the trash has turned into a full-fledged online grocery store, with virtual aisles packed with rescued foods: vegetables that are just a bit oddly shaped, fruits that aren't quite the right size, packaged goods that are perfectly good but might be produced in excess.

🗣️ Which of these groups has the biggest role to play in reducing food waste?

🔘 Grocery stores 🛒

🔘 Restaurants 🍝

🔘 Individuals 🗑️

🔘 The government 👩‍⚖️

🗳️ Click your choice to see results and speak your mind

Customers sign up for free and curate a shopping list based on their needs. Each week, a box will show up at their front door filled with a curated selection of goods that were deemed too "ugly" for the grocery store shelves but will taste every bit as good — and for less.

The Cool Down spoke to Misfits Market's chief operating officer, Corey Farrell, about how the company is tracking toward becoming a "green unicorn" with $1 billion in profit.

💸 Save more, waste less

"When we're able to rescue food from waste, we're able to, in most cases, offer close to a 20% discount relative to what you might find at a traditional grocery store," Farrell told us.

💡 The problem(s) they're solving

"The food grown in a field that doesn't get harvested decays and emits greenhouse gas, and when you think about all the effort and cost and money and water and resources that go into growing food and manufacturing food, it's just inefficient," Farrell said. "We're producing a whole lot of food that could go to families that are in need, that is negatively impacting the environment and is wasting a lot of resources across the country — and we really want to tackle that problem."

🥕 Fresh produce for all

Misfits Market delivers to 98% of ZIP codes in the United States, making it a great resource for those who don't live within a reasonable distance of a grocer or have access to fresh (often organic) produce. "About one-third of our customer base is in rural locations, where access to large retail grocery stores is limited," Farrell said.

🚀 Doing good is good business

The company is on track to hit $1 billion in sales, approaching "green unicorn" status, and aiming to reach profitability by early 2024. That's in part driven by the acquisition of Imperfect Foods, which brought its online grocery experience under the Misfits Market banner in 2022.

"We've made a lot of progress on profitability," Farrell explained of life after the merger. "You can imagine how important scale is to online grocery delivery, and putting two companies together has allowed us to increase our scale and improve profitability considerably."

💰 Sustainability can save companies money

"When I think about sustainability and business, I think there are sustainability initiatives that directly reduce costs of businesses. … The areas that we are investing in are direct cost reductions right now. We are saving food that farmers are unable to sell to somebody else, and so we're able to procure that at a lower cost and we're able to pass that on to the consumer. … Instead of sending items to the landfill, we're recycling it, we're composting it, we're finding ways to donate it."

🎯 Making an impact

"Any given week, we're rescuing about 500,000 pounds of food from going to waste," Farrell said. The company says it has saved over 180 million pounds of food from lesser outcomes, including ending up in a landfill. The company has donated more than 22 million pounds of food and collected nearly 10 million pounds of packaging along the way.

The plan is for Misfits Market to keep growing, finding ways to cut down on the inefficiencies of the food supply chain that leaves waste in its wake. That includes growing the company's private label brand, Odds and Ends, which upcycles food that would otherwise get tossed and turns it into something delicious.

📦 Reducing packaging

To reduce the impact of shipping and packing materials, Misfits Market also offers a packaging return program in some locations. "There are silver liners and gel packs that we use to make sure the food that we deliver to customers is fresh, and where we deliver with our first-party delivery vehicles, we're able to actually pick those products up from customers now."

While berries and some fruit are still packaged in plastic clamshells, much of the produce arrives unwrapped in a recyclable corrugated box.

🥨 Favorite Misfits item

"Upcycled chocolate-covered pretzels. Broken pretzel pieces will be a manufacturing byproduct that is considered waste," he explained. "We take broken pretzel pieces that are outside of tolerance when pretzel manufacturers make their bags and we dip them in chocolate."