How a mission to cut food waste launched a multimillion-dollar venture

Josh Domingues put purpose before profit when he created the Flashfood app to sell less-than-perfect groceries at discounted prices. A case study by Reza Satchu explores Domingues' successes and failures, and what other social entrepreneurs can learn

By Lane Lambert

Published: Sep 18, 2024 10:38:40 AM IST

Updated: Sep 18, 2024 10:45:44 AM IST

Domingues is a fresh example of the growing number of social entrepreneurs whose credo is “putting purpose before profit Image: Getty Images

On a hectic Friday in October 2016, Josh Domingues wondered if he had made a mistake quitting the security of a well-paying job managing contracts for professional hockey players to start a new venture selling nearly expired groceries at discount prices. After all, a trial run of the 27-year-old entrepreneur’s Flashfood app at a Toronto supermarket hadn’t gone well, ending with confusion among customers and ire from the store manager.

But Domingues, who had launched the app after learning that international food waste was the third-largest contributor to greenhouse gas emissions, remained focused on his mission to reduce waste—and eight years later, his risk has paid off.

The Flashfood app is now being tapped by customers in more than 2,000 supermarkets in the United States and Canada. What’s more, the app has kept 65 million pounds of almost-out-of-date produce, meat, and other food items from being thrown into landfills, and 130 million pounds of greenhouse gas emissions from that food out of the atmosphere.

Domingues is a fresh example of the growing number of social entrepreneurs whose credo is “putting purpose before profit,” as Harvard Business School Senior Lecturer and serial entrepreneur Reza Satchu chronicles in a 2024 case study, “Flashfood: The Magic of Commitment.”

Satchu, a senior lecturer in the Entrepreneurial Management Unit, is founder and managing partner of the investment management company Alignvest Management Corporation and founding chairman of the NEXT Canada network of entrepreneurs and investors. He says many hopeful entrepreneurs can learn important lessons from Domingues’ persistence.

“What's remarkable is not that Josh had the idea,” says Satchu, who taught Domingues as a student in a NEXT Canada program years ago. “It’s that he trusted his judgement to solve a real problem, and he's now got customers all over North America. Josh made the decision to commit to an idea that is not proprietary at all … in a competitive space with razor-thin margins, and yet he made it work.”

‘People need this’

Like many other social entrepreneurs, Domingues’ road to success was not easy. He took a winding path from playing wing for a minor league hockey team in Canada to working in management consulting before trying, failing, and trying again to succeed with the Flashfood app.

Food waste wasn’t on Domingues’ mind until 2016, when his sister, a caterer, told him that she had to throw out $4,000 worth of leftover food from a corporate event. Troubled by the waste, he researched the issue and learned that the world’s wasted food could feed 800 million people. To test the idea of selling less-than-perfect products at a discounted price, he bought $200 worth of “unpretty” food, set up a sales table at a busy Toronto intersection, and sold all items for $1 apiece in 20 minutes. “People need this,” he realized.

“A former executive at one of the big grocery chains in Canada told me that across 39 stores the year before, they threw out something like $110 million worth of food,” Domingues says in the case. “I remember just being struck and thinking, ‘What are you doing?’”

Soon afterward, Domingues began pitching his idea to grocery chains: Customers would use a mobile app to buy food at a discount before it got discarded. Customers could therefore acquire food at cheaper prices and grocery stores could gain profit from food they otherwise would have tossed. Domingues would charge stores a 5 percent service fee.

After a string of rejections, he persuaded the owner of Farm Boy, a high-end Canadian grocery chain, to let him sell aging food for half price from a kiosk inside a store. Domingues hired a tech service firm to design an app, and two weeks later, he launched Flashfood.

“He had no expertise around food. He didn't know how to build a mobile app. He had no resources or capital,” Satchu says. “Yet somehow, he committed, and it was through that commitment that the magic happened.”

Also read: Powering sustainability through partnerships

Was it time to give up?

It took a while for the magic to materialize. The Farm Boy pilot broke down on the third day, as most customers went directly to the in-store kiosk without downloading the app. The resulting congestion of regular shoppers and kiosk customers earned Domingues a lecture from the store manager, and the partners agreed to pause the pilot.

In the ensuing months, Domingues investigated two other possible ways to sell leftover food: collect discards from restaurants, or work with one of Canada’s largest greenhouse farmers to develop direct, farm-to-customer sales. He soon saw that restaurants posed two problems: transportation costs and legal liability, since most of the food would be leftovers from diners’ plates. The farm-to-customer model was appealing, but would take time to expand. After much deliberation, Domingues decided to stick with the grocery app.

“He could scale much faster,” Satchu says of the app. “You can get 100 or 1,000 stores.” He says Domingues also knew it was crucial to be the first such venture to partner with a supermarket chain because “once you're in, it's hard to be replaced [by a competitor].”

As of December 2023, Flashfood was available in more than 2,000 supermarkets, including 700 Loblaws stores in Canada and 300 Stop & Shop supermarkets in New England, New York, and New Jersey. Ahold Delhaize’s Stop & Shop partnered with Flashfood in 2021, and the company says that since then, it has saved a million pounds of food from landfills and has saved shoppers more than $2 million on groceries. As of 2023, privately owned Flashfood had over 100 employees and approximately $15 million in revenue. Marking a new stage in the company’s evolution, Domingues stepped down as CEO earlier this year and now serves as executive chairman.

Lessons in social entrepreneurship

To Satchu, Domingues’ experience offers three significant takeaways for hopeful prospective founders seeking to make a social impact:

There’s no ideal path to success. “People perceive there is this optimal path to becoming a founder, and it's just not true,” he says. “Being a founder is all about maximizing learning and learning is all about making consequential decisions. Have you led a life where you've learned a lot?”
Act on your vision now, not later. “A lot of people go to business school and take a track where they state, ‘I'll make a lot of money, and then I'll focus on social enterprise.’ Right? But you may never actually get to the point where you do the things you want to do, so you need to live a life where hopefully, it's intertwined.”
A sense of mission and purpose are assets. “Magic happens when you commit because that is when people most want to help you. They think you want to make the world a better place, [so] they make a bet on you, and are your first employee, your first customer.”

Satchu stresses the importance for entrepreneurs to explore new ideas, even those that may initially seem far-fetched.

“Someone like Josh is always going to have lots of ideas. He could immediately dismiss those ideas … or he can spend 20 minutes to explore them. It may be a dumb idea, in which case he's wasted 20 minutes of his life. Or it may be the next Flashfood.”

This article was provided with permission from Harvard Business School Working Knowledge.