Misfit Produce Profitable During Pandemic

An online grocery subscription service has experienced 400% growth during the COVID-19 pandemic shipping “misfit” produce to consumers in many states in the U.S.

To accommodate this growth, Misfits Market, based in Delanco, N.J., is building a new, state-of-the-art warehouse near its headquarters that will allow the food-waste-fighting brand to more than double its order capacity across the East Coast, throughout the South, and into the Midwest.

Additionally, the company recently announced its $85 million Series B funding led by Valor Equity Partners with participation from additional investors including Greenoaks Capital, Third Kind Venture Capital and Sound Ventures.

“The Valor team is incredibly excited to partner with Misfits Market on its journey to build the affordable online grocer of the future,” Jonathan Shulkin, partner at Valor Equity Partners who will be joining the Misfits Market board of directors, said in a statement. “Food waste and food access are both extraordinarily important problems, especially in today's macro environment, and Misfits has built a unique, tech-forward approach to solving both."

In addition to expanded delivery of its core subscription box, the brand is set to grow its online grocery store platform where customers can shop deeply discounted shelf-stable items and specialty produce to add to their weekly box. This Marketplace expansion, along with rolling out a feature that allows all subscribers to fully customize their box of produce by the end of the summer, is part of the brand’s digital innovation roadmap. More milestones in the works include a redesigned website and an app.

Waste360 recently sat down with Abhi Ramesh, founder and CEO of Misfits Market, to discuss the company’s subscription service and rapid growth during the pandemic.

Waste360: How did the idea for Misfits Market come about?

Abhi Ramesh: The idea of Misfits Market started when I was working in finance and realized the amount of waste that results from inefficiencies in the food system.

While apple picking at a farm in Pennsylvania a couple of years ago, I noticed perfectly good apples being culled because they were a little misshapen or had some spots on them. I spoke with the farmer and he showed me how much produce was destined to be thrown out because it didn’t meet grocery stores’ aesthetic standards, like being a bit too big or too small.

This experience inspired me to build a business that took these inefficiencies and turned them into opportunities to fight waste and give more people access to nutritious foods.

Waste360: What is the company’s mission?

Abhi Ramesh: The mission of Misfits Market is two-fold. One part is to reduce food waste, but the other part is to increase access to healthy, high-quality foods. Across the U.S., millions of people have limited access to affordable fresh food.

We help farmers find a good home for all their excess and “ugly” fruits and veggies and we’re able to deliver these savings to customers’ doorsteps across 26 states and DC at up to 40% off retail prices. But we’re not just limited to produce.

We also work with high-quality packaged food brands to rescue their excess or short-coded shelf-stable items -- everything from coffee and chocolate to grains and oils -- and offer them at a deep discount to our customers. We’re building a full grocery platform where we fight food waste by offering subscribers better deals on food they love than they’d find at the grocery store.

Waste360: How are you breaking the cycle of food waste?

Abhi Ramesh: The problem of food waste is vast -- it contributes to about 8% of global methane emissions annually. When food rots in a landfill, it produces methane, a greenhouse gas that’s up to 30 times more potent than carbon dioxide. If it were a country, food waste would be third in line behind the U.S. and China in terms of total greenhouse gas emissions. It’s critical that this is limited by diverting edible food from landfills whenever possible.

We prevent this waste by tackling the problem at the farm level. A recent study found that a staggering 33% of produce grown in the US is left on the field at harvest, chiefly because it doesn’t meet grocery store standards for perfection. Because we have close relationships with our growers, they call us first when they can't sell produce that's too big, small, or misshapen—or even regular-looking veggies that are surplus.

At Misfits Market, sustainability is more than just breaking the cycle of food waste. It starts by supporting organic growers who, in the midst of a challenging climate economically and environmentally, wouldn’t have earned revenue for their hard work because the food would have been rejected by grocery stores. By choosing organic, Misfits Market customers help farmers better their soil and support the production of healthier food for generations to come.

Waste360: How does the subscription box work?

Abhi Ramesh: You start by choosing a box size. We offer a small starter box (the Mischief) or a larger one (the Madness) with a wider variety of rescued fruits and veggies. This will be your base box you add to week to week. Then you add on discounted pantry provisions and specialty produce.

Subscribers get full access to shop weekly deals on extra-special produce, cooking staples, dry goods, and more -- all at 25-50% off grocery store prices. We partner with brands like Bob’s Red Mill, Taza Chocolate, Elmhurst, Teatulia, and Peace Coffee to rescue quality staples, then pass savings on to consumers.

Subscribers are able to choose weekly or bi-weekly subscriptions with the option to skip weeks or pause subscription as desired.

Waste360: Do people pick what kind of produce they want to receive or is it what’s available at that time?

Abhi Ramesh: By the end of the summer, all customers will be able to customize their produce selection. Each week you can let us know what you like (and what you’d like to avoid) from different groups: greens, root veggies, fruit. That sort of thing.

Waste360: Where do you get the “misfit” produce?

Abhi Ramesh: All of our produce is sourced from a variety of hand-picked certified organic farms and partners, generally from across the Americas.

We work hard to ensure that all farms we work with comply with USDA regulations for organic farms. This means avoiding synthetic fertilizers and pesticides as well as prohibiting the use of genetic engineering. We want to ensure that our partners are relying on more natural substances whenever possible.

Waste360: What makes the produce a “misfit”?

Abhi Ramesh: Misfit or “ugly” produce can take many forms. A superficial blemish like scarring or discoloration can cause a piece of produce to be rejected outright from grocery stores.

In fact, each type of produce that’s grown or imported to the U.S. has a grading guide (some in excess of 30 pages) that lists every possible scar, dimple, or other surface flaw that might make it unsuitable for stores.

Because supermarkets prize uniformity, anything that’s too big or too small for grocery displays or a little misshapen is also likely to get rejected. Often, our produce is simply excess supply for which the growers have no outlet. It may even look exactly like what you’d find in the supermarket.

Regardless of its appearance, all Misfits Market produce is always high-quality organic food that’s just as nutritious and sometimes even more delicious than what you’d find in stores!

For the Marketplace items, an item could be a misfit due to old packing, labeling mishaps or quickly approaching “best-by” dates.

Waste360: How much produce do you receive and ship each month?

Abhi Ramesh: Since our founding in September 2018, we have shipped over 3 million boxes and saved over 40 million pounds of produce. On a month to month basis, we ship 100+ of types of produce and 200+ types of Marketplace items.

Waste360: How has COVID-19 affected your business?

Abhi Ramesh: In the past few months, Misfits Market has seen 400% new customer growth due to increased demand. Our founding mission to create food access from the inefficiencies of the food system remains unchanged, it’s just that COVID-19 has amplified its urgency.

The economic realities many Americans are facing calls for a more affordable way to get fresh, healthy food on the table safely. Misfits Market has become an essential service for many and we pride ourselves on being able to deliver on that.