Announcing our Investment in Farmer’s Fridge

We live in the most obese nation in the world. 38% of American adults (aged 15 and over) are obese, and that rate is expected to increase to 47% by 2030. It’s a costly problem: an obese person annually spends an incremental $2,741 on medical costs, and on a national level obesity drives $200 billion or ~20% of total US healthcare costs. We eat more than we used to — about 24% more calories than in 1961 — but that’s only part of the story.

For decades, innovation in food processing and artificial ingredients has lowered costs and increased shelf life, enabling the distribution of massive amounts of packaged food. Research shows that 58% of the calories Americans eat come from these “ultra-processed” foods such as soft drinks, packaged snacks, mass-produced breads, reconstituted meat products, and instant noodles, while only 30% comes from minimally-processed food such as fruits and vegetables, grains, meats, and eggs. These ultra-processed foods have higher levels of sugar, fats (including saturated and trans fats), sodium, and lower levels of protein, fiber, and other micronutrients; consuming so much of them is a major driver of obesity and nutritional imbalance.

Vending machines are emblematic of the ubiquity of unhealthy food. America’s vending industry earned $22 billion in 2017, and operates over 2 million vending machines throughout the country. Well over 90% of the sales from these machines come from sodas and other sugary beverages, candy, packaged snacks and pastries — exactly the foods that increase the risk of obesity.

US farms grow as much fresh produce as they ever have, but the cost and complexity of creating a safe and agile supply chain for perishable food makes centralized models expensive and broad distribution entirely infeasible — about 33 cents of each dollar spent on food goes toward processing, packaging, and transportation, and fresh produce often spends up to 50% of its shelf life in transit between supplier and retailer. If you’ve ever tried to get fresh food at a highway rest stop, a secluded office park, a modest airport terminal, or one of the 24% of US ZIP codes that qualify as food deserts, you’ve likely experienced this problem first-hand.

What if we could change the 2 million vending machines to serve healthy, freshly prepared food — essentially creating the most convenient and nutritious restaurant in the world? To do so would require a new type of supply chain that changes the cost equation and enables broad, just-in-time distribution of fresh produce. For the first time, this is possible — leveraging emerging technologies, particularly advances in data science, compute, and engineering, to provide a convenient, fresh food experience to anyone, at an affordable price.

This vision is exactly what drives Farmer’s Fridge, serving restaurant-quality fresh and healthy salads, bowls, and sandwiches out of more than 180 automated smart Fridges across the Midwest (for now). While the experience at the Fridge is seamless, the back end is massively complex: Farmer’s Fridge collects millions of data points and uses them to drive a continuous optimization both of supply and demand. On the supply side, the data is used to predict consumption and adjust the supply chain daily, driving operational improvements from kitchen to delivery and decreasing waste. On the demand side, Farmer’s Fridge receives real-time feedback to iterate on new menu items in days vs. years and learn what type of food to prepare, for each day and each person.

The learnings that Farmer’s Fridge leverages are not one-time; using a robust data infrastructure, machine learning, and automation, the team can constantly experiment and drive agile development of both hardware and software. In a world where less than 5% of vending machines have systems to track inventory, the Farmer’s Fridge team is light years ahead of the pack and makes full use of technology innovation and decreasing costs in IoT and hardware.

The impact of this approach, while it may seem subtle, unlocks a paradigm shift in the business model of fresh food. By accurately matching supply to demand, Farmer’s Fridge can deliver fresh food to each Fridge daily, and economically serve the millions of locations with a desperate need for healthy food that might have a vending machine (or two) but don’t have enough traffic to support the overhead of a restaurant.

We’re excited to partner with Luke and the Farmer’s Fridge team, and lead this $30 million round alongside new and old friends at Finistere Ventures, Cleveland Avenue, Great Point Ventures, Dovi Frances, and others. We share the team’s passion for driving transformative change in an underserved market with data, compute, and engineering, and their vision to make restaurant-quality, fresh, healthy food as accessible as a candy bar.