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Daily news and analysis about the food tech revolution

Shelf Engine

The Food & Retail AI Rollup Continues as Crisp Buys Shelf Engine

Crisp, a New York-based retail data company, has acquired Seattle-based startup Shelf Engine. Founded in 2016 by Stefan Kalb and Bede Jordan, Shelf Engine specializes in using machine learning to optimize ordering processes for perishable goods, with the goal of reducing costs and minimizing food waste. The platform is now in use across more than 7,000 stores. Terms of the acquisition were not disclosed.

Shelf Engine was one of the earliest adopters of AI technology in food retail aimed at reducing waste and optimizing fresh food ordering. Kalb, who launched a food distribution business at 23 and holds degrees in actuarial science and economics, developed the idea during a 2014 ski trip with his friend and engineer Bede Jordan, a former Microsoft HoloLens developer. The pair questioned why food industry processes and systems remained outdated:

“Could we create a platform that enables retailers to buy food and eliminate significant waste? Could we create a platform that eliminates redundant busywork between vendors and retailers? Could we create a more perfect marketplace?”

These questions led Kalb and Jordan to develop a product designed to drive the food industry towards greater efficiency through technology.

Kalb reflected on the deal on LinkedIn:

“What started as a side project with my good friend Bede turned into a platform that’s now in over 7,000 stores across the U.S., helping reduce millions of pounds of food waste. It’s been eight years of wild highs, humbling challenges, and so much growth.”

Crisp plans to integrate Shelf Engine’s advanced algorithms into its commerce platform. The company believes the integration will help its retailer customers optimize in-stock inventory, improve shelf management, and drive revenue in an increasingly margin-sensitive retail environment.​

“Joining forces with Crisp allows us to scale our proven technology and deliver greater value to retailers and their supplier partners,” said Kalb. “Together, we will set a new standard in forecasting and inventory management, helping our customers thrive even in challenging market conditions.”​

This news is yet another in a series of acquisition announcements for early pioneers who are building technology leveraging AI to optimize different parts of the food value chain. Earlier this month AI Palette was gobbled up by trend forecaster Global Data, and before that Spoonshot was acquired by Target. Like other buyers in these deals, Crisp provides predictive intelligence software and services and is buying Shelf Engine to improve their AI insights capabilities.

Unlike these previous deals, Crisp and Shelf Engine focus more on retail and supply chain commerce optimization, which is one of the areas that is seeing the greatest leaps forward in productivity and cost-reduction. My guess is Afresh, which is similar to Shelf Engine and remains independent following its $115 million in series B funding in 2022, may also be one of the next companies gobbled up as bigger software and supply chain players look to add AI capabilities to their products.

Food Tech Founders Navigate Turbulence of SVB Collapse & Subsequent Fed Intervention

If you’ve ever traveled overseas when big news happens at home, it can feel disorienting.

I felt that to a certain degree last week when The Spoon team was in Europe to attend the HIP conference in Spain and to travel to the Basque Culinary Center. Like many of you, I was trying to keep on top of the news about SVB’s collapse and wondering whether the bank’s collapse would lead to a 2008-like contagion, but all the while doing so from a different time zone and a foreign country.

But that feeling of discombobulation was no doubt minor compared to what many food tech founders felt as they tried to figure out what all this meant to their companies. Many were directly impacted by having the bulk of their funds sitting in SVB accounts, and I watched updates on Twitter, Linkedin, and other social channels as founders communicated in real-time as they navigated the impending financial crisis.

One of those companies was Omsom, a fast-growing CPG brand founded by sisters Vanessa and Kim Pham to deliver Asian flavor mixes to consumers via DTC channels. The company published an open letter via Instagram late last week to explain how they were processing the crisis and to appeal for help from their customers.

“Silicon Valley Bank collapsed yesterday in the second largest bank failure in American history — and they were our bank,” they wrote. “This is an open letter from our founders on what happens next + how you can help 🙏🏽.”

Like many founders, they were filled with trepidation about the coming week before the Fed, US Treasury, and the FDIC announced their plans for dealing with the crisis.

Shiru’s Jasmin Hume of Shiru not only felt the confusion a founder must feel when hit with this kind of news but, like me, was trying to navigate the news while traveling overseas. She documented how she was dealing with the crisis while traveling in Japan en route to Spain on her Linkedin:

The past few days have been exhausting learning and responding to SVB’s collapse while in Japan on business. The next few days won’t be any easier, and thinking about them sort of takes my breath away:

Today I’m flying to Spain where I have an 18 hour stop to pick up my 10 month old son who’s been there with family. During the stop I need to work with my team to navigate and act on anything affecting Shiru given whatever SVB updates are on Monday. Monday we’re also announcing a huge, regularly scheduled, milestone for Shiru (more on that soon!). On Tuesday I fly to SF with my son (something like 4 flights, around 30 h traveling combined over the next 2 days across 17 time zones – half of that with a baby). Then back in the office in Alameda Wednesday for 5 on site visits and tastings with investors/partners followed by a speaking engagement at Future Food-Tech Thursday and more conference stuff Friday. All this while helping a very jet-lagged baby re-adjust to his home in Oakland.

Stateside, many future food startup founders were trying to navigate the crisis while also trying to showcase their products at one of the food industry’s biggest confabs, Natural Products Expo West. One such founder was Darko Mandich of Melibio, a company that makes a honey alternative via precision fermentation. Mandich was working at the booth when he started getting a barrage of text messages from associates about the SVB crisis.

“From three different investors, I received text messages that were going around,” Mandich said in an interview with Food Dive. “‘Have you seen the news?’ ‘Are you guys exposed to SVB?’ ‘Darko, you might need to react on this.'”

“And I was like, ‘What’s happening?'” Mandich continued. “Then I checked out the news, and I was really shocked.”

Many of the founders impacted by the crisis expressed relief once the Fed, the Treasury, and the FDIC issued a joint statement on Sunday outlining how they would assure all depositor funds in SVB and another financial institution, Signature Bank, would access to all of their deposits on Monday, March 13th.

Omsom updated their Instagram message upon news of the US government’s intervention: as of 6:15p ET, a statement was released by the Treasury, Federal Reserve, and FDIC saying that all SVB depositors will have access to their accounts starting Monday 3/13! We won’t breathe easy until we have access to our funds, but this is DEFINITELY a win 😭.

But like founders across the startup world, those leading food tech companies are newly aware of institutional risk and are figuring out how to manage it going forward.

Stephen Kalb, the CEO of Seattle-based Shelf Engine, started transferring his money out of SVB on Monday, telling PBS he had learned a “very hard lesson.”

“I obviously now know banks aren’t as safe as I used to think they were,” he said.

Food Tech News: Shelf Engine Raises $12M, Willie Nelson Does AgTech

There was much ado about food tech funding this week. Seriously. Between Cooks Ventures’ Series A, Zuul’s $9 million round, and all the figures in between, we barely had time to write about anything else. With that in mind, here are a few more bites of food tech news before another weekend of staying at home starts.

Shelf Engine raises $12 million.

Seattle-based Shelf Engine, whose AI tech manages grocery store inventory to cut down on food waste, announced this week it had raised $12 million. The round was led by GGV Capital and included participation from Initialized Capital, Foundation Capital, Correlation Ventures, 1984, Founders’ Co-op, and Liquid 2 Ventures.

Ikea sets launch date for plant-based meatballs.

This one’s for fans of DIY furniture who also happen to love plant-based meat. Ikea finally unveiled a plant-based version of its famous meatball made from yellow pea protein. Meatballs will be available on August 3 in the U.K. and September 28 in the U.S. in the frozen food section of its stores as well as in the cafeteria. That’s assuming, of course, that the pandemic hasn’t shut us all down again.

Image via Shock Ink/Pamela Springsteen.

Willie Nelson backs regenerative agriculture.

Last year it was CBD-infused coffee. This year, Willie Nelson is making his contribution to the food industry by backing regenerative agriculture. AFN reported this week that regenerative ag business TerraPuerzza has partnered with the country icon to bring regenerative land, water, and resource management techniques to Willie’s 500-acre Luck Ranch in Texas.

Domino’s launches a website for recycling pizza boxes. 

Domino’s and its main box supplier, WestRock, launched recycling.dominos.com this week to better educate consumers on how to recycle their pizza boxes. That includes clearing up some recycling myths (yes, you can recycle a box with grease on it) as well as helping folks understand what to do if their area does not accept recycling.

 

SKS 2019: Food Retail is Evolving Fast, but Some Things Aren’t Going Anywhere (Hint: Brick & Mortar)

The next time you step into a grocery store, take a look around and think about how much work went into orchestrating the selection. Which CPG products should the store stock? How many? And how does fresh food factor in?

Those questions don’t have an easy answer, and they’re the reason that food retail is such a tricky business. Thankfully, there are companies trying to reinvent the space with the help of tech, innovation, and creative thinking. And we heard from a few of them onstage last month during a panel at SKS 2019.

In the panel, Brita Rosenheim of Better Food Ventures spoke with Stefan Kalb of Shelf Engine, Mike Fogarty of Choice Market and Andreas Wuerfel of METRO Group about how companies are re-imagining food suppliers to be more sustainable, more efficient, and be better at serving quick-shifting consumer demands. 

You should check out the video below to get a deeper look into how companies are leveraging tech to transform food retail. First, here are a few high-level takeaways:

Food retail is changing — and fast
 Kalb kicked off the panel by pointing out that the grocery space is in the midst of rapid transformation. “Because it’s a highly commoditized industry, changes spread quickly,” he said. His company Shelf Engine helps retailers stay on top of fast-moving trends by crunching customer data to forecast exactly how much of each SKU needs to be ordered. The more retailers they work with, the more data they get, the better they can help grocers optimize selection. Which, in today’s incredibly competitive food retail market, is crucial. 

Brick and mortar isn’t going anywhere
“In retail, the physical space is always going to be a quintessential part of people’s lives,” Fogarty told the SKS audience. Right now, only a small percentage of grocery sales happen online (though that number is growing). Physical retail space, he argues, will be an “anchor” for all the different sales channels that are emerging now, like pickup, delivery, vending machine, and more. 

Food retail is a slippery challenge. Tech can help
Wuerfel pointed out that optimizing retail in a company with a global presence (Metro has 750 stores in 35 countries) is, unsurprisingly, incredibly tricky. They have to “cater to every possible palate out there,” all while ordering the right number of products to reduce waste and maximize profit. To do so, Metro knew it would have to leverage new technologies. So it teamed up with TechStars to make an accelerator program to catalyze outside-in innovation for the company. That, according to Wuerfel, has helped their company stay on the cutting edge of food retail.

Check out the full video below to hear more insights from these three thought leaders in grocery and food sales. It’ll make you think a lot more the next time you set food in your local grocery store.

SKS 2019: Re-Imagining Food Retail

Food Retail AI Startup Shelf Engine Raises $800K

One of the biggest headaches for anyone purchasing food in bulk – whether it’s grocery stores or restaurants – is figuring out how much to buy. Perishable foods go bad quickly and if ordering is off, the food that’s thrown out has a direct impact on the bottom line. This problem is what led Stefan Kalb, a Seattle food entrepreneur and owner of a local sandwich and salad distributor, to create a software platform that could use artificial intelligence and predictive analytics to cut waste.

Shelf Engine is a Seattle startup that just announced an $800K seed round of funding to deliver a software platform to grocery stores and food distributors that would predict and in some cases automate perishable food ordering. The software works with the retailer’s existing system, pulling in historical sales data, profit margins and combines it with external factors like seasonality, volatility and gross profit by product to deliver precise food orders.

Reddit co-founder and Shelf Engine seed investor Alexis Ohanian commented about the startup’s potential on Product Hunt, saying:

As seed investors, we’re always excited to learn about new problems that have potentially valuable software solutions — food waste is one of them. The food industry hasn’t had the ability to solve this with software and this app helps retailers and distributors reduce their waste.

Kalb uses Molly’s, the food distributor he founded, as a case study for Shelf Engine. Molly’s distributed fresh, locally sourced sandwich, salad and deli products to local businesses and guaranteed their sales – meaning, if they didn’t sell, Molly’s refunded the retailers. And because they used such fresh ingredients, the food only had a shelf life of five days or less.

Often, Kalb found, the company was using waste data as the sole metric to predict future orders. If waste was high for one account, they’d lower the next order. If it was low, they’d increase the next order. But this method is highly problematic – according to the study, “when managers react to waste, they are reacting to a single point of data. That decision isn’t based on a cumulation of waste and deliveries.” It often led to volatile availability of their products at places like Seattle Children’s Hospital cafeteria – at times the shelves would be full, and other times they would be empty. There was little predictability for customers looking for Molly’s food at meal time.

The company then began using Shelf Engine, which generated a probability model for all ten of their accounts. Basically, the model looked at the likelihood of products selling or products being wasted at any given level of availability and would then find the maximum between the two.

After using Shelf Engine for just a few months, the company saw a 7% leap in profitability.

Kalb opened Molly’s at the age of 23, with a degree in actuarial science and economics and on a 2014 ski trip with friend and engineer Bede Jordan found themselves wondering why the processes and systems in the food industry were so outdated.

 Could we create a platform that enables retailers to buy food and eliminate significant waste?  Could we create a platform that eliminates redundant busy work between vendors and retailers?  Could we create a more perfect marketplace?

These questions led the pair to create a product that would move the food industry towards more efficient systems using technology. Jordan himself is a former engineering lead at Microsoft who worked on HoloLens, an augmented reality technology. He will now lead the development of Shelf Engine as its CTO.

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