Kelley faculty member develops app to address food waste
Jan. 11, 2017
To see the business opportunity that IU startup professor Gerry Hays seeks to capitalize on, just take a short stroll in your local grocer's deli around 8 or 9 p.m.
It is well past dinnertime, yet many shelves remain stocked with such items as rotisserie chicken, sub sandwiches, or penne pasta and meatballs that should have reached dinner tables hours ago. And it's happening nationwide as part of what the U.S. Department of Agriculture estimates to be more than $160 billion worth of food waste that occurs annually in U.S. supermarkets.
"I've been in about 500 different grocery locations around the U.S. and observed the same chronic issues," Hays said. "They make a lot of good, restaurant-quality food, but they throw a lot of it away because they're waiting for customers to walk in the stores. But consumers aren't walking into the store anymore. They're taking delivery from outside the store, which really hurts their business model."
Enter DinnerCall, backed in part by the Innovate Indiana Fund, a $10 million venture capital fund that provides seed or early-stage support for high-potential companies launched by graduates of any IU program, as well as current IU faculty, staff, researchers or students.
Founded by Hays in 2015, DinnerCall is a downloadable app for iOS or Android mobile phones that places the user's local supermarket deli online -- on equal footing with casual dining and some fast-food restaurants. In turn, delis can fill customized orders that are picked up curbside -- rather than force customers to park, walk in for their order, then stand in a checkout line.
As a public-benefit corporation, DinnerCall also directs part of its proceeds toward causes that promote the return of evening family gatherings around the dinner table.
"DinnerCall can empower families to turn away from fast food, takeout and alternative meal kit options, and opt for traditional meals from their favorite grocery store," said Hays, who has taught at the Kelley School of Business since 2004.
Throughout the past year, DinnerCall made pilot runs in three small markets: two in Tennessee and one in Indiana. More recently, an improved version of DinnerCall debuted in regional chain of 22 stores throughout Indiana and Michigan.
Meanwhile, consumers are not waiting patiently for meal apps to arrive. Within the past year alone, digital revenue at Panera Bread has grown from 12 percent of total sales in the third quarter of 2015 to 18 percent by the second quarter of 2016.
"They have estimated that by 2020, more than 60 percent of their annual sales will happen over a phone -- through pre-orders, not people waiting in line," Hays said. "The consumers want it quick and easy. They don't want to walk into a grocery store at 5 o'clock in the afternoon and assemble a meal, especially with 10 other people trying to do the same thing."
Hays said that a typical supermarket offers an estimated $3 million in "dinner spend" opportunities each year, yet often relies on merchandising strategies that date to the 1960s. For DinnerCall to realize success at a particular store, Hays said it must sell at least 20 to 25 meals a day over 20 days of a 30-day month.
At least one early adopter said DinnerCall allows his store to close dinner time sales before cooking for the day even begins.
"This technology allows us to better meet the dinnertime demand by offering our customers more family-style options we already know they love, in a convenient and affordable way," said Judson Naifeh, CEO of Naifeh's Food Store in Millington, Tenn.
Investors such as the Innovate Indiana Fund feel confident that DinnerCall can meet that challenge.
"DinnerCall offers an innovative approach to a fast-growth opportunity with a very broad reach. Almost everyone needs to make a decision on dinner time options, but today's extremely busy lifestyles make convenience a necessary feature," said Ken Green, the fund's managing director.
"DinnerCall allows grocers to compete on an equal footing with fast food or restaurants. The technology is field tested and ready to go on multiple mobile platforms, plus you have an experienced, savvy and successful entrepreneur at the helm."
Creation of the new app aligns with priorities outlined in the university’s Bicentennial Strategic Plan, including celebrating a vibrant community of scholars and catalyzing research.