An exploration of the different stakeholders and business model of famous food waste reduction app ‘Too Good To Go’
Ever walked into your local student dominated Albert Heijn and seen multiple fruits, vegetables and even full-made meals having a reduction sticker on them? Ever wondered what happened to these products if they don’t get sold by the end of the day? Well, I can burst your bubble, over 2.5 million tons of such products are thrown away annually in the Netherlands only (Toogoodtogo.nl/aboutus, 2019). As can be seen in the picture below (figure 1), households are the biggest spillers, followed by manufacturers, hospitality and retailers. This is very unfortunate because these products are foods that are on, or past, their expiration date, but are absolutely still fit for consumption. It would therefore be a pity for them to end up in the bin.
Figure 1: Distribution of spillage across the value chain (mst.dk/toogoodtogo, p.5)
Too good to go: the business model and market
In regards to the large food spillage annually, that adds up to one third of all food being produced going to waste, the app Too Good To Go was brought into life (toogoodtogo.nl/aboutus, 2019). Established in 2015 in Denmark, Chris Wilson and Jamie Crummie created the app in order to reduce food spillage and CO2 production in Denmark. By having a 20% subscription rate of Danish citizens, Too Good to Go felt secure enough to spread their innovative idea to non-European countries and other European countries like the Netherlands (Toogoodtogo.nl, 2019). This proved to be increasingly successful as the app is based on a very simple, though effectively smart business model.
Since its launch in the Netherlands in January 2018, over 200.000 meals were saved through Too Good To Go (Boskma, 2019; Figure 2). When comparing the Dutch market to the Danish one, several differences can be found. Due to the large amount of plastic packed vegetables for example, in all shapes, mixes and sizes, in the Netherlands, products are barely preservable (Keyzer, 2019). In the Danish market, they are presented in crates. Therefore, ease of use stands central to the Dutch consumer market. Moreover, in the Danish market many initiatives already existed that battled food waste, many of them being subsidized by the government. In the Netherlands, on the contrary, little initiatives are up and running, besides Kromkommer and Instock, who never made the so called ‘frontpage’ due to little consumer interest (Keyzer, 2019).
So, back to the app, how does it function and what principles is it based on (Figure 3)? Too good to go makes sure that local horeca and retail owners are connected to local citizens, who are up for purchasing past-date food (Posthumus, 2019). Local shops can every day indicate whether they have left-over food and place it on the Too Good To Go platform. Consumers in return, can purchase these products in a ‘Magic Box’. On beforehand, they do not know what will be in the actual box (Boskma, 2019). By following this business model, consumers are helped by getting high quality food for a reduced price, whereas local shops receive more revenue (Loritz, 2019).
Figure 2: Screenshot of the Dutch Too Good To Go Instagram account disclosing that 200.000 meals were saved
Figure 3: Outlook of the app design
Value creation and the three perspectives
When elaborating on the business model we see that the value proposition for the consumer, or end user, is based on the previously spoken about reduced price. Here, the final selling price, which is between €3 and €5, is based on one third of the original price. Another value proposition, which will mainly speak to environmentally conscious consumers, is that by purchasing a Magic Box a certain amount of CO2 is reduced (Boska, 2019). Therefore, environmental conscious, and even non-environmental conscious consumers are targeted and persuaded into buying high quality food against a reduced price. Overall, we see that the largest consumer base is presented by millenials, who are overall more aware and involved with the environment (Smith & Brower, 2012). As Too Good to Go connects with their consumers via the app and social media to stay in contact and provide a communication stream, they do well as again, millenials are the most frequent users of social media (Statista.com, 2019; Figure 4).
However, not only the value propositions for the end consumer are very clear, also the suppliers (the restaurants, local bakeries and so on) profit from their Too Good To Go presence. Products that would be disregarded to the bin, now are given a new life. Therefore, money that is invested in stock purchase or the production process is now being turned in revenue by reselling via Too Good To Go. Moreover, reducing food spillage is often on the bottom of the priority list (Keyzer, 2019). However, in many cases the wish to reduce waste is there but setting up a seperate incentive to resell stock is very money and time intensive. Too Good To Go gives a helping hand here. The app and its functions are very much adaptable in the business operations and easy in use (Keyzer, 2019). Besides gaining more revenue, compared to not using Too Good To Go, Too Good To Go can be a platform for end users to find and meet suppliers. Therefore, Too Good To Go functions as a marketing platform for suppliers that by being part of the app, can attract new consumers (Wang, Kim & Malthouse, 2016).
Lastly, we may view the platform perspective of Too Good To Go. The value creation process of Too Good To Go as a platform is mainly based on the making profits and reducing food waste. By its large customer base, the latter is no concern anymore. There is however room for growth and To Good To Go suspects to be self-sustainable in a few years. The first value proposition however, is not being met yet. Too Good To Go is still in its developmental phase in the Netherlands gaining more users by the day (Posthumus, 2019). At this very moment the cost structure is based on a percentage of the revenue each supplier makes, and differ across companies (Keyzer, 2019). By gaining more customers, and at the same time enlisting more suppliers to the app, Too Good To Go will become profitable on the longer term.
Figure 4: Distribution of Instagram users categorized by age groups (Statista.com, 2019)
Efficiency of the model
As can be stated, the model proves to be very efficient so far. The success of Too Good To Go lies mainly in the price reduction of the food that is being offered. The prices range from €3 to €5 respectively, leaving customers to buy quicker. From day one, Too Good To Go had little to no marketing budget but mainly grew by their online presence and positive WOM (Keyzer, 2019). Moreover, the app offers easy use, indicates distance from your current location to the supplier, and leaves you saving favourite restaurants to keep up to date to the latest offers. Also, the app offers not only restaurant food, you are also able to purchase your groceries from the supermarket or local bakery (Posthumus, 2019). Overall this seems very favourable. However, the efficiency of Too Good To Go’s model suffered some damage in the past. Before, no payment with IDeal was offered. Only payment with PayPal or creditcard was possible. As a relatively low percentage of Dutch consumers do have PayPal accounts or creditcards, some potential customers were not able to purchase from the platform. Too Good To Go fortunately made payment via iDeal possible in December 2018 (Keyzer, 2019). Another flaw in the efficiency of the model is the coverage / spread as well as the restaurant offerings on the platform. At this moment, Too Good To Go is very much present in cities, but lack presence in more rural areas. Also, it is very hard to keep up with the demand of the customers (Keyzer, 2019). Too Good To Go is rapidly growing and needs to close new deals with suppliers every day to stay up with the demand. This will prove to be tough, but by the success that Too Good To Go had so far, I expect that it will become as successful as in the Danish market.
Boskma, I. (2019). Too Good To Go gaat samenwerken met Albert Heijn en Jumbo. Retrieved from https://www.dutchcowboys.nl/nieuws/too-good-to-go-gaat-samenwerken-met-albert-heijn-en-jumbo
Keyzer, T. (2019). Deze app tegen voedselverspilling trok binnen 1 jaar 300 duizend gebruikers. Retrieved from https://www.businessinsider.nl/too-good-to-go-joost-rietveld/
Loritz, M. (2019). Copenhagen-based app Too Good To Go raises a further €6 million to eliminate food waste | EU-Startups. Retrieved from https://www.eu-startups.com/2019/02/copenhagen-based-app-too-good-to-go-raises-a-further-e6-million-to-eliminate-food-waste/
mst.dk (2019). Retrieved from https://mst.dk/media/91627/stian-olesen-too_good_to_go.pdf
Posthuma, W. (2019). Too Good To Go: ‘200.000 maaltijden gered van de vuilnisbak’. Retrieved from https://www.missethoreca.nl/restaurant/nieuws/2019/01/too-good-to-go-200-000-maaltijden-gered-van-de-vuilnisbak-101315444?vakmedianet-approve-cookies=1&_ga=2.235803906.261607741.1552232949-1156442447.1552232949
Smith, K., & Brower, T. (2012). Longitudinal study of green marketing strategies that influence Millennials. Journal Of Strategic Marketing, 20(6), 535-551. doi: 10.1080/0965254x.2012.711345
Statista.com (2019). Global Instagram user age & gender distribution 2019 | Statistic. Retrieved from https://www.statista.com/statistics/248769/age-distribution-of-worldwide-instagram-users/
Too Good To Go (2019). Retrieved from https://toogoodtogo.nl/nl
Wang, B., Kim, S., & Malthouse, E. (2016). Branded apps and mobile platforms as new tools for advertising, 2, 1-39.