Wednesday, February 19, 2025

Startup Brings in $162 Million a Year Helping People Find Food at Huge Discounts

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Startup Brings in $162 Million a Year Helping People Find Food at Huge Discounts

The Genius App

David Niles will go to great lengths, or depths, to save food from going to waste: Sometimes, the 63-year-old goes dumpster diving near his home in Brooklyn, New York.

The far more sanitary digital version, Niles says, is an app called Too Good To Go, where retailers like restaurants and bakeries sell “surprise bags” of leftover food at discounted prices, usually between $3.99 to $9.99 apiece in the U.S. He’s spent nearly $10,000 to pick up almost 2,000 surprise bags on his bicycle over the past four years, he says.

‘You’re probably just going to have to make it work’

Too Good To Go, a Copenhagen-based company founded in 2015, brought in just under $162 million in revenue in U.S. dollars last year, according to documents reviewed by CNBC Make It — primarily by taking a cut of each surprise bag purchase and collecting annual membership fees from retailers.

In the U.S., the company typically takes $1.79 per bag and charges an annual membership fee of $89, a company spokesperson says.

Publicly, Too Good To Go’s mission is to help reduce global food waste, a problem that costs the world $1 trillion per year, the World Bank estimates. The company has yet to enjoy a profitable year, instead reinvesting its cash flow into expanding geographically, adding new retailers to its app, building new support offices and acquiring other startups, says CEO Mette Lykke.

“We do want to run a profitable company,” says Lykke, who notes that her business earned $8 million last year before subtracting one-time costs. “If we really wanted to, we could go more hardcore for profitability. But again, it’s not really why we’re here,” she adds.

Conviction to stay the course

Too Good To Go, which has nearly $158 million in investment funding, isn’t the only for-profit company trying reduce food waste. Venture capitalists have poured more than $1 billion into the niche industry, funding businesses from online grocery delivery service Misfits Market to at-home composting system Mill, according to PitchBook data.

They’re all attempting to reach users who are strapped for cash, care about the environment or both. Retailers don’t often profit hugely from Too Good To Go sales, but some income is better than the $0 they’d get from throwing their extra food away. And at Delish Bakery in Medford, Oregon, for example, owner Susan Prunty says that multiple of her Too Good To Go customers have become full-priced regulars.

Some app users like Niles, the dumpster diver in Brooklyn, worry that Too Good To Go “greenwashes” the issue of food waste, giving users false impressions of environmental responsibility. But if every food retailer in the U.S. used a similar markdown mechanism, they’d save one million tons of food annually, according to calculations by Chicago-based nonprofit ReFED.

“That’s the [environmental] equivalent of about 900,000 cars coming off the road,” says Dana Gunders, ReFED’s president.

A profitable, eco-friendly approach can’t guarantee Too Good To Go’s future success. Retailers could cut out the middleman by launching similar programs themselves, food safety regulatory hurdles vary by country and the company will eventually run out of stores to add to its app, says PitchBook food tech analyst Alex Frederick.

Too Good To Go’s future depends on faith in the long-term potential of its business model and a conviction to stay the course over time, says Lykke.

“I’m very convinced that we have a brilliant model here,” she says. “Having a great idea or concept is fantastic, but it’s really only 10% of getting there. The rest is all about the execution.” 

Conclusion

Too Good To Go’s mission to reduce food waste is a crucial one, and its innovative approach has already made a significant impact. With its impressive revenue and growing user base, the company is well-positioned to continue making a difference in the years to come.

FAQs

Q: How does Too Good To Go make money?
A: Too Good To Go makes money by taking a cut of each surprise bag purchase and collecting annual membership fees from retailers.

Q: How many users does Too Good To Go have?
A: Too Good To Go has 100 million users across 19 countries in Europe, North America, and Australia.

Q: What is the average cost of a surprise bag on Too Good To Go?
A: The average cost of a surprise bag on Too Good To Go is between $3.99 to $9.99 apiece in the U.S.

Q: How does Too Good To Go plan to stay profitable?
A: Too Good To Go plans to stay profitable by continuing to expand geographically, adding new retailers to its app, building new support offices, and acquiring other startups.

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