Misfits Market Founder and CEO Abhi Ramesh joins Yahoo Finance Live to discuss food waste, how the company is looking to bridge the gap between affordability and sustainability, supply chain woes, and the outlook for inflation.
BRIAN CHEUNG: Well, according to the American Farm Bureau, about 1/3 of food produced globally never gets eaten. Instead, an estimated $400 billion per year ends up in the trash. Our next guest hopes to change that by grabbing rejected produce before it hits the dumpster and sending it to your kitchen.
Let's bring in Misfits Market founder and CEO, Abhi Ramesh, as well as Yahoo Finance's Brooke DiPalma for this conversation. Great to have you on the program, Abhi. I just want to ask-- kind of, tell us about your business model. I mean, some people might say, you're just kind of taking the uglier produce and then delivering it to houses that can use it for their cooking. What does that model look like right now? What are you seeing the demand for like-- for that in the post-pandemic economy?
ABHI RAMESH: Absolutely. So in a nutshell, what we're doing is, we're building an affordable grocery store online, using food waste and food inefficiency to power that affordability. And you pointed out that statistic a second ago here. 1/3 of the food that we produce and grow here in the US goes to waste at the farm level, at the store level and the supply chain. And that's a massive amount of food. It equates to about $2,000 per year per household in the US.
And we are building a platform that can take a big chunk of that food-- that food waste and reroute it directly to folks' doorstep because a lot of it isn't-- there's nothing wrong with the food. It's apples that are slightly misshapen. It's kale that may have some discoloring. So that's ultimately we're trying to do. We're trying to bridge the gap between affordability and sustainability, using inefficiencies in the supply chain.
BROOKE DIPALMA: And Abhi, I want to touch a bit on your audience here. Ideally, it's for three people, the grocery shipment. But for many people that are part of a single family household or there's just themselves that they're looking to serve each night, how exactly do you hope to reach a broad audience with that in mind?
ABHI RAMESH: Well, totally. We have-- we've built a lot of customization in the platform today. So if you look at where we started about four years ago, it was just produce, those fixed box sizes. Today, we offer about 700 different grocery items. We offer fresh produce. We have meat and seafood, dairy, deli, bakery, grocery items. And our boxes are fully customizable. So you could shop for one person. And we even have customers that shop for families of eight to 10 on the platform as well.
So the hope is that as we've expanded our categories and our assortment and built a lot of customization in the platform around portion sizes and box sizes, that this is something that can appeal to every single household. Our hope is that, again, affordability, sustainability, and accessibility are values that every household cares tremendously about, especially in today's age of when you look at the inflation report and what the CPI read last week. Value is a really, really critical value proposition that consumers are looking for.
AKIKO FUJITA: Well, and Abhi, to Brooke's point, I will say that I have ordered Misfits before, but split it with my sister's family because you've got a big box, right? And it actually works out perfectly. But your point on inflation, what's the cost benefit for those who are ordering this? I mean, we're talking about this in the context of food waste. Obviously, that's sort of what got this all started. But is it actually cheaper to be ordering from Misfits right now? What does that cost look like?
ABHI RAMESH: It is. So our groceries are 30% to 50% cheaper than what you'd find at the grocery store. And that is a critical value proposition for us because ultimately, when we started four years ago-- and these value props are still here today-- the mission is just as much about sustainability and food waste as it is about affordability and value.
And so by rescuing all of this food from the food supply chain, by tackling inefficiency in the food supply chain, we're also able to deliver groceries to your doorstep at 30%, 40%, 50% cheaper than the grocery store. And again, given what's going on with food inflation in every part of the supply chain-- you know, I just read an article this morning about a chickpea shortage that is causing the price of chickpeas to skyrocket. Every household cares tremendously about saving money on groceries.
BROOKE DIPALMA: And to dive into that a bit deeper, one of the points made in June is that the price of eggs specifically jumped 14% year over year. I know in the beginning of 2022, more than one in five orders included a cold pack for items like dairy, like eggs. Are you noticing any trends of consumers flocking to your site for items like eggs, like meat and dairy?
ABHI RAMESH: Definitely. So a couple of things we're noticing. One is basket sizes have generally gotten a lot larger over the past couple of years. And people are ordering significantly more. I think the idea being if we're going to get a delivery from us, they might as well get their entire grocery shop.
Two, we're definitely seeing a pretty big jump in staples-- milk, eggs, your staple meat and seafood items, your staple produce and grocery items. We're definitely seeing a big jump in those items, I think especially because those are where we generally have the better deals. And customers are really price conscious in today's day and age.
And then the third piece we're seeing is, we're seeing customers trade to a lot of-- trade down to value options. So we introduced a private label recently called Odds and Ends, where we go to the supply chain and we find unique inefficiencies. We do our own private brand for certain products. We're seeing a huge uptake in those items as well, just because they are really compelling value. So those are generally trends we're seeing today.
BRIAN CHEUNG: If you're offering a 30% to 50% discount, to rewind here, it implies that you're cutting out some people in the middle. So are you working directly with the farmers and the producers themselves? What's the value proposition for those partners in your business model?
ABHI RAMESH: This is also a very critical part of what we do differently. We have built our own what we call food value supply chain from scratch. We own our own fulfillment centers. We do our own inbound logistics. We work directly with producers, farmers, meat and seafood manufacturers upstream. So we're not working with middlemen in the process.
By doing so, to your point, we've been able to eliminate a ton of the costs, the logistics cost that sort of build up along the way in the food supply chain. And we're able to pass on those savings to the consumer. So, again, inflation's impacting every single part of the food supply chain. But because we control so much of ours, we're able to still keep prices very competitive.
BRIAN CHEUNG: All right, Abhi Ramesh, Misfits Market founder and CEO, thanks for joining us. Thank you to Brooke DiPalma as well for joining for that conversation.