Illustration by Chris Gash

Last spring, as the number of air travelers plummeted, airlines and their meal suppliers were left holding the bag—an enormous snack bag filled with individually wrapped cookies, salted pretzels, and cheese platters, with no flyers to feed them to. In fact millions of pounds of food that had been prepared for customers in the catering, hotel, travel, and restaurant industries got stuck in the supply chain when the world seized up. That’s when Philip Behn (MBA 2005), CEO of Imperfect Foods, jumped into recovery mode. An online grocery delivery service with a mission to reduce waste, Imperfect Foods acquired a fraction of the airlines’ canceled orders. In April, Imperfect customers who usually purchased produce and staples could add on a single-serving cheese platter for $2.99—a snack that would have fetched several times that amount when purchased at cruising altitude. Imperfect Foods sold 40,000 of them.

The company was founded with the goal of narrowing the yawning gap between supply and demand in the American food industry. The space is defined by two data points that, taken together, make little sense: Many Americans don’t have enough to eat—estimates put the figure at 37 million before the pandemic and some researchers suggest it could rise to 54 million before 2020 is out. And yet 133 billion pounds of food go to waste every year, according to the USDA. That’s $162 billion straight into the landfill, to say nothing of the environmental impacts.

Seeing an opportunity in the vast amount of waste within the food system, Imperfect Foods began purchasing “number twos” directly from farmers in California’s Central Valley in 2015. Those are the slightly lumpy tomatoes or twisted carrots that don’t meet the beauty standards set by the grocery industry, Behn says. “We know that nature doesn’t produce perfectly homogenous output,” he says. “The variability is normal, and it’s actually endearing.” It’s also less costly. Imperfect fruit and vegetables cost about 30 percent less than “firsts” at the grocery store.

As the concept caught on and the company grew, expanding to cover the West Coast, the Northeast, Texas, and the Midwest so far. Behn says it became critical that the service also expand its offerings to include the full range of products that shoppers put in their cart each week. But offering meat, dairy, and pantry items without sacrificing the company’s commitment to reducing waste turned out to be “easier said than done,” Behn says. “In the food manufacturing world, a lot of the waste is kept private. Major foodmakers won’t tell you how much they waste in the manufacturing process.”

Instead the Imperfect team visited mainstream retailers, looked at the private-label products on the shelves, and did the necessary sleuthing to figure out where they were made. “Then we went to the manufacturer and said, ‘We see that you make chocolate-covered pretzels for this retailer. Can we buy whatever you don’t sell?’” Behn recalls. As much as 15 percent of manufactured goods go to waste in the production process, he says, because items come out too thick, too thin, or otherwise not perfect. “So we put our own private label on them and now we sell broken pretzel bits.”

The same goes for other imperfect goods, including eggs and cuts of meat that aren’t uniformly sized. Instead of the long rectangular piece of salmon you’d find in an upscale market, for example, “we’ll sell you a triangle cut from the same fish,” Behn says. “There’s no compromise on freshness, origin, or taste.”

This willingness to rethink conventions has helped the company identify efficiencies up and down the supply chain, he points out. Purchasing directly from producers instead of relying on a middleman lowers the cost of sourcing, for instance. Relying on its own fleet of trucks enables the company to pick up produce just before shipping, avoiding the cost and delay of warehousing. It means that crooked carrots—which Behn says hold more moisture than the pin-straight variety—can get to a customer in days instead of the industry-standard weeks. The company has also structured its inbound logistics around the goal of driving fewer miles. “Those things have enabled us to lower the cost, reduce the time that things stay in our supply chain, and lower the carbon footprint,” Behn says.

Business more than doubled in the early weeks of the COVID-19 pandemic, when many consumers were looking to avoid grocery stores. Then volumes doubled again a month later. In May the company raised $72 million in Series C funding, which will go toward additional vans and new production lines to keep up with demand and geographic expansion. But beyond the short-term phenomenon, Behn believes there is no going back, because the supermarket concept is 50 or 60 years old and is overdue for disruption. “Consumers are craving a new experience and a better digital experience buying food,” he says. “They expect to interact with brands they can love and that care about waste, not brands that they can tolerate. We think we’re pushing on an open door.”

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