About a third of the world’s food supply never gets eaten. That means the water, labor, energy, and fertilizer that went into growing, processing, and distributing the food is wasted.

On the other end of the supply chain are cash-strapped consumers, who have been further distressed in recent years by factors like the Covid-19 pandemic and inflation.

Spoiler Alert, a company founded by two MIT alumni, is helping companies bridge the gap between food waste and food insecurity with a platform connecting major food and beverage brands with discount grocers, retailers, and nonprofits. The platform helps brands discount or donate excess and short-dated inventory days, weeks, and months before it expires.

“There is a tremendous amount of underutilized data that exists in the manufacturing and distribution space that results in good food going to waste,” says Ricky Ashenfelter MBA ’15, who co-founded the company with Emily Malina MBA ’15.

Spoiler Alert helps brands manage distressed inventory data, create offers for potential buyers, and review and accept bids. The platform is designed to work with companies’ existing inventory and fulfillment systems, using automation and pricing intelligence to further streamline sales.

“At a high level, we’re a waste-prevention software built for sales and supply-chain teams,” Ashenfelter says. “You can think of it as a private [business-to-business] eBay of sorts.”

Spoiler Alert is working with global companies like Nestle, Kraft Heinz, and Danone, as well as discount grocers like the United Grocery Outlet and Misfits Market. Those brands are already using the platform to reduce food waste and get more food on people’s tables.

“Project Drawdown [a nonprofit working on climate solutions] has identified food waste as the number one priority to address the global climate crisis, so these types of corporate initiatives can be really powerful from an environmental standpoint,” Ashenfelter says, noting the nonprofit estimates food waste accounts for 8 percent of global greenhouse gas emissions. “Contrast that with growing levels of food insecurity and folks not being able to access affordable nutrition, and you start to see how tackling supply-chain inefficiency can have a dramatic impact from both an environmental and a social lens. That’s what motivates us.”

Untapped data for change

Ashenfelter came to MIT’s Sloan School of Management after several years in sustainability software and management consulting within the retail and consumer products industries.

“I was really attracted to transitioning into something much more entrepreneurial, and to leverage not only Sloan’s focus on entrepreneurship, but also the broader MIT ecosystem’s focus on technology, entrepreneurship, clean tech innovation, and other themes along that front,” he says.

Ashenfelter met Malina at one of Sloan’s admitted students events in 2013, and the founders soon set out to use data to decrease food waste.

“For us, the idea was clear: How do we better leverage data to manage excess and short-dated inventory?” Ashenfelter says. “How we go about that has evolved over the last six years, but it’s all rooted in solving an enormous climate problem, solving a major food insecurity problem, and from a capitalistic standpoint, helping businesses cut costs and generate revenue from otherwise wasted products.”

The founders spent many hours in the Martin Trust Center for MIT Entrepreneurship with support from the Sloan Sustainability Initiative, and used Spoiler Alert as a case study in nearly every class they took, thinking through product development, sales, marketing, pricing, and more through their coursework.

“We brought our idea into just about every action learning class that we could at Sloan and MIT,” Ashenfelter says.

They also participated in the MIT $100K Entrepreneurship Competition and received support from the Venture Mentoring Service and the IDEAS Global Challenge program.

Upon graduation, the founders initially began building a platform to facilitate donations of excess inventory, but soon learned big companies’ processes for discounting that inventory were also highly manual. Today, more than 90 percent of Spoiler Alert’s transaction volume is discounted, with the remainder donated.

Different teams within an organization can upload excess inventory reports to Spoiler Alert’s system, eliminating the need to manually aggregate datasets and preparing what the industry refers to as “blowout lists” to sell. Spoiler Alert uses machine-learning-based tools to help both parties with pricing and negotiations to close deals more quickly.

“Companies are taking pretty manual and slow approaches to deciding [what to do with excess inventory],” Ashenfelter says. “And when you have slow decision-making, you’re losing days or even weeks of shelf life on that product. That can be the difference between selling product versus donating, and donating versus dumping.”

Once a deal has been made, Spoiler Alert automatically generates the forms and workflows needed by fulfillment teams to get the product out the door. The relationships companies build on the platform are also a major driver for cutting down waste.

“We’re providing suppliers with the ability to control where their discounted and donated product ends up,” Ashenfelter says. “That’s really powerful because it allows these CPG brands to ensure that this product is, in many cases, getting to affordable nutrition outlets in underserved communities.”

Ashenfelter says the majority of inventory goes to regional and national discount grocers, supplemented with extensive purchasing from local and nonprofit grocery chains.

“Everything we do is oriented around helping sell as much product as possible to a reputable set of buyers at the most fair, equitable prices possible,” Ashenfelter says.

Scaling for impact

The pandemic has disrupted many aspects of the food supply chains. But Ashenfelter says it has also accelerated the adoption of digital solutions that can better manage such volatility.

When Campbell began using Spoiler Alert’s system in 2019, for instance, it achieved a 36 percent increase in discount sales and a 27 percent increase in donations over the first five months.

Ashenfelter says the results have proven that companies’ sustainability targets can go hand in hand with initiatives that boost their bottom lines. In fact, because Spoiler Alert focuses so much on the untapped revenue associated with food waste, many customers don’t even realize Spoiler Alert is a sustainability company until after they’ve signed on.

“What’s neat about this program is that it becomes an incredibly powerful case study internally for how sustainability and operational outcomes aren’t in conflict and can drive both business results as well as overall environmental impact,” Ashenfelter says.

Going forward, Spoiler Alert will continue building out algorithmic solutions that could further cut down on waste internationally and across a wider array of products.

“At every step in our process, we’re collecting a tremendous amount of data in terms of what is and isn’t selling, at what price point, to which buyers, out of which geographies, and with how much remaining shelf life,” Ashenfelter explains. “We are only starting to scratch the surface in terms of bringing our recommendations engine to life for our suppliers and buyers. Ultimately our goal is to power the waste-free economy, and rooted in that is making better decisions faster, in collaboration with a growing ecosystem of supply chain partners, and with as little manual intervention as possible.”