On a video call in February 2021, Deirdre Mortell and Iseult Ward began reflecting on the unparalleled events of the previous 12 months, a period where Ireland had careened between various social and economic lockdowns as a result of Covid-19. The conversation centred around a single question: What if?

The restrictions had caused supply chains to seize up. With volunteers cocooning, many charities had effectively been mothballed. Meanwhile, with restaurants closed and panic buying setting in, the demand for food purchases had surged. 

As they spoke, Mortell, the chief executive of Rethink Ireland, and Ward, the co-founder and chief executive of FoodCloud, began asking some simple, yet profound, questions. What if Covid-19 had struck six to 12 months earlier? What if the crisis had struck before FoodCloud was really set up for the unprecedented level of expansion that was to follow?

Mortell said that FoodCloud was ready for it. “It is a huge tribute to the organisation, its leadership and the team that they had the ambition and fearlessness to get through an absolute storm,” she said.

Ward agrees: “We stepped up as an organisation during Covid-19. We had the confidence and strength to respond quickly. We couldn’t have done that without the capacity we built in the last three years. We’d never seen as many inbound requests for food from charities ever before. It was the first time in our history when we were running out of food.”  

Founded in 2013, FoodCloud collects fresh surplus food directly from local retailers using an app, and then gives charities access to large quantities of redistributed food through its hubs or partners. It may seem like a simple concept, but it is a demanding logistical jigsaw with thousands of partners in multiple locations and huge volumes of orders.

“We doubled the amount of food redistributed in Ireland from an average of 25 tonnes per week in February, before the pandemic, to over 60 tonnes per week,” Ward said. “We couldn’t have done it without Rethink Ireland and our partner AIB, the supermarkets and food producers who work with us, our supporters, the charities and our team.” 

By Christmas Eve 2020, FoodCloud had redistributed the equivalent of 100 million meals to community and charity groups in Ireland and Britain. It had worked flat-out during the pandemic as its three Irish hubs in Cork, Dublin and Galway distributed 75 per cent more food in 2020 than they had in 2019. Over 650 charities benefited, and tens of thousands of people were fed during a time of national crisis. 

The other big benefit of saving food from being thrown into landfills was that it reduced the amount of greenhouse gases going into the atmosphere. Global research group Project Drawdown estimated that reducing food waste was the number three solution to reversing global warming. FoodCloud, Ward said, had rescued 42,000 tonnes of food from going to waste, which was the equivalent of 134,397 tonnes of CO₂. 

Before Rethink Ireland

Iseult Ward first got interested in the ideas of food waste and food poverty while studying business and economics in her early 20s in Trinity College Dublin. “I loved the idea of doing something that could have a really positive social and environmental outcome,” she said.

In 2013, she met Aoibheann O’Brien, a banker with JP Morgan in London who had returned home to Ireland to complete a postgraduate course in environmental science. They were both interested in creating a social enterprise around food waste, and so FoodCloud was formed. 

They realised from early on that FoodCloud needed to develop a technology platform that was capable of allowing it to scale. They also knew that they needed a consistent source and volume of quality food so decided to focus on supermarkets as their primary target. There were no formal guidelines around food donations at the time so they worked on developing them with the Food Safety Authority of Ireland (FSAI). 

More than one of every five euro spent on groceries in the Republic of Ireland goes to Tesco, a stalwart of the London Stock Exchange. It is the biggest supermarket chain in Britain and one of the biggest in Ireland, a powerhouse with global sales of more than €70 billion. 

Yet, even like a modest corner shop, it cannot sell all of the food in its stores. This means it has to throw out food, which goes into landfills where it releases methane, a damaging greenhouse gas.

About ten years ago, Tesco decided that reducing food waste was a priority. Over a video call, Christine Heffernan, group communications director with Tesco and a member of its executive committee, recalled how one of the world’s biggest companies chose the then tiny FoodCloud to help it fulfil this vital mission.  

“Iseult and Aoibheann were very, very compelling,” said Heffernan, who studied history and political science at Trinity. “They had a real passion for what they wanted to do. I think part of the challenge for charities and start-ups working with an organisation like Tesco is that we have such scale that it can be hard to find a route in.” 

“It felt like something we could trial really quickly. Either we proved the concept, or it failed quickly,” Heffernan said. “The other thing I’d say is that timing is everything. There was a big discussion of food waste in our business. Our colleagues in stores were saying that morally it felt wrong that we had all this food in our stores at the end of the day, but we had no systematic way of redistributing it.”

Some Tesco stores were giving out food, but it was on an ad hoc basis without uniform governance. “FoodCloud solved a problem that we wanted to solve ourselves,” Heffernan said. “Tesco agreed to try to trial working with FoodCloud and were so impressed they decided to roll it out nationwide. The primary focus at the start was that we had food that was perfectly good to eat and we wanted to give it to people who would need it and might otherwise not get fed.”

“The sustainability point is something that’s publicly come to the fore an awful lot more since. More recently, there is a big focus on what a huge contributor food waste is to climate change and greenhouse gas emissions, etc.”

Tesco was impressed by FoodCloud. It decided to sign up to a contract for €250,000 allowing it to grow. Soon FoodCloud was working with Aldi, Musgraves and Lidl in Ireland as well as directly with food producers. It was growing quickly in Ireland when, suddenly, Tesco asked it to go into Britain in 2014. 

It was a big ask for a young organisation, but FoodCloud was determined to do it. “We decided to partner with FareShare, the UK’s largest redistribution network, because one of the hardest things is getting the network of charities built up. It would have been next to impossible for us to do that quickly in the UK,” Ward said.

“FareShare took on the responsibility of building the network of charities and we took the responsibility of making our solution scale and work.” 

Thinking, technology and Thinktech

Rethink Ireland was founded in 2013, and Deirdre Mortell is its founding CEO. It is a non-profit growth capital fund backed by the Irish state that invests in up-and-running social innovations that tackle Ireland’s critical social issues. 

Rethink Ireland stimulates philanthropy from private investors by providing matching funding for charities and social enterprises from the Department of Rural and Community Development via the Dormant Accounts Fund. 

To date, it has developed 24 different funds, and its second fund was called Thinktech. This fund launched in June 2016 with €1 million from Google and the Department of Environment, Community, and Local Government. 

FoodCloud was one of the successful winners of backing from Thinktech, receiving €170,000 in cash investment, and €50,000 in non-financial support over a six month period. 

Thinktech helped FoodCloud develop a robust three-year strategy to strengthen its organisational core. “Thinktech ticked a lot of boxes for us. It was about scaling, technology, partnering with Google, and starting to work with Rethink Ireland,” Aoibheann O’Brien said. FoodCloud also learned from working with the Rethink Ireland team. 

“Deirdre (Mortell) has scaled and been involved in many social enterprises, so we learned from her. Deirdre and Eoghan Ryan, (Head of Social Enterprise at Rethink Ireland) worked closely with us. They asked challenging questions and probed us on the direction we were taking.”

FoodCloud started targeting potential corporate supporters and perfecting its pitch and narrative. In 2018, AIB came on board with a €1.8 million multi-year investment as it could see what FoodCloud wanted to achieve and how that aligned with its own corporate social responsibility goals. This was a big win for FoodCloud. 

The importance of mission

Even in its early days, FoodCloud had a strong sense of mission. But there were actually two problems it wanted to solve by reducing food waste: food poverty and carbon emissions. 

One of the big tasks for FoodCloud was to decide which part of its mission it wanted to focus on more. “It had to decide what mattered more, food poverty or food waste?” Mortell explained.  

“If you have a tension in your mission, when it comes to resource allocation, you need to be clear what’s the winner,” Mortell said. “We didn’t mind which they chose but we wanted them to be clear.”

Deciding on its priorities, Mortell said, would allow FoodCloud to decide how to measure its impact. It considered measuring tonnes of carbon dioxide reduced, tonnes of food moved, or millions of meals served. 

O’Brien said Rethink Ireland’s funding helped it hone its priorities and decide how it measured success. “Primarily, we decided we are an environmental organization that wants to tackle and raise awareness around food waste,” she said. “Equitable access to food and building resilience in local communities is also an important part of what we do.”

“The reality is, the food system is so complex that we actually touch off lots of different things,” she said. “So, I suppose what we landed on was primarily food waste but we also play our part in creating more resilient communities.”

FoodCloud decided to measure both. “Millions of meals is what the public understands,” Mortell explained. “But what matters to them is not just the millions of meals but actually the CO₂ moved and the tons of food moved.”

Teaming up

When Rethink Ireland opened its first growth fund, Deirdre Mortell felt FoodCloud was a good candidate for further funding after the positive experience of Thinktech.

One of the criteria it had for the growth fund was that organisations needed to raise matching funds from the private sector to go along with its backing. FoodCloud had signed up AIB in 2017 as a major supporter so it was clear that combining with Rethink Ireland too would give it access to even greater resources to make an impact.  

In  2018, the three-way partnership between Rethink Ireland, AIB and FoodCloud was made public. AIB committed €600,000 per year for three years to FoodCloud. 

Of this €500,000 went to Rethink Ireland first, who matched it with their funding of €360,000 per annum in financial and non-financial funds into the social enterprise, supported by the Department of Rural and Community Development via the Dormant Accounts Fund. AIB then put another €100,000 a year into FoodCloud directly to support a volunteer programme for its staff.

Investment goals and merger

FoodCloud agreed three investment goals with Rethink Ireland it wanted to achieve for the investment period. First, FoodCloud wanted to merge its technology business with its warehouse distribution arm to allow it scale. Second, it wanted to double its impact between 2018 and 2020 in terms of food delivered. Finally, it wanted to ensure it had a financially sustainable business model at the end of the investment period. These were ambitious goals and one of the things they needed to do to get there was a merger. 

Merging two private companies is hard, but there is an added level of complexity in the non-profit sector. One of the big goals that Rethink Ireland helped with was combining FoodCloud with its food warehousing division FoodCloud Hubs. 

FoodCloud Hubs (formerly called BiaFood Initiative) traced its origins back to 2011 when Jack Dunphy, a 40-year veteran of the non-profit sector, wanted to set up a national food surplus collecting system along with other activists including Eoin McCuirc, a civil servant, chair of Cork Simon, and others in the sector.

While FoodCloud and FoodHubs had a shared board, then chaired by Dunphy,  legally and structurally they were different entities. “We were running on parallel tracks but still not officially connected,” Dunphy said. 

FoodCloud and FoodHubs had wanted to merge for some time but the two organisations found it hard to devote the time and resources needed.

“The Rethink funding gave us the headspace, the money, and the time to get it done,” O’Brien said. “It was really crucial to be one organisation, in order to be set up to scale.”

According to Mortell, “Mergers are complex and expensive. We were willing to put money down both in cash and in non-financial support to ensure it was a successful merger.

“It was very challenging to deliver internally. It costs money to produce change management plans and pay legal fees. There were also significant negotiations with the Revenue and the Charities Regulator.”

“One of the challenges of mergers in the non-profit sector is that there’s no real beneficiary. If you merge two businesses, there’s extra value added to the company or you save on costs or whatever.

“But with non-profits the benefit is in terms of mission.  When there’s no individual stakeholder that’s benefiting, there’s no natural payer. And that, in my opinion, is why more charities don’t merge because nobody wants to pay for it.”

“The way we were structured didn’t lend itself to adapting quickly,” O’Brien said. “Before the merger, we had two teams who didn’t always talk to each other.”

“There was a consultative period with everybody in the organisation and we spoke to all our key stakeholders,” Ward recalled. “We were lucky that our team really got the vision. Probably the most challenging thing was pulling away from driving growth to actually having a fully internal focus. It was a different mindset for me.”

“But the merger has been transformative in preparing us to scale into the future. Especially with climate change, the next ten years need to be big in terms of taking action.  We feel like we’re more organisationally set up now to play our part.” 

The unforeseen impact of the merger was that initial income and tonnage numbers were relatively flat across 2018 and 2019, with project investment targets often not being met. 

Once the structures of the amalgamated organization were embedded, however, FoodCloud now had the capacity to really grow.

Measuring what matters

Social enterprises are unusual organisations. Like any company, they bring employees together in order to achieve a goal. Where they differ from ordinary companies is that they don’t have a clear bottom line. Where a normal company gets judged solely by the cash flows it generates, social enterprises are judged by their impact. Impact is a number that varies depending on the social enterprise. 

Because social enterprises have idiosyncratic bottom lines, people sometimes assess them unfairly. There’s been a big push in recent years with the likes of givewell.org to rate charities and social enterprises and hold them to account. And of course, there’s nothing wrong with measuring charities. Donors want to maximise their impact per euro spent. 

Measured by overheads, every penny spent by a charity reduces impact, and is in itself a bad thing. The result is that charities are measured by how little they spend, rather than the impact they have.

“There is a lack of investment in the charity sector. I don’t mean as in money, but I mean in the concept of investment.”

Iseult Ward

Clearly, there’s a problem with this line of thinking. Charities are like any other business, in that the reason they incur costs is to derive a benefit greater than those costs.

Judging charities only by their overheads is like assessing companies only by their profit margin. Companies don’t try to maximise their margin – they try to maximise their profit. A company will happily reduce its margin if it thinks it will lead to higher profit. 

Similarly, a smart social enterprise will invest in its products, or its people, if it thinks those investments will result in greater overall impact. 

If overhead is the wrong way to think about assessing a charity, what’s right? In FoodCloud’s case, tonnage is the metric that best describes its impact. 

Judged by tonnage, FoodCloud has been able to generate an extraordinary return on its investments. Each incremental employee contributes 221 additional tonnes of product per year. That works out as 526,000 meals per employee per year, or 2,100 meals per employee per day. The average salary is €36,000 excluding pension and payroll taxes. So every euro spent on a salary generates 14.6 meals per year.

Increasing returns to scale – like Amazon

Return on investment (which is defined here as tonnage per euro, or per staff member) is one thing. But what’s exciting about FoodCloud is that it’s showing increasing returns to scale: As it gets bigger, its impact is growing faster than its costs. 

The following chart shows the annual tonnage per employee since 2017. As you can see, the average employee in 2020 generates almost a third more tonnage than in 2017. To be sure, Covid-19 has accelerated this trend. But it was well established in the three previous years. 

The trend can also be seen in FoodCloud’s tonnage per million of expenditure, where tonnage per euro spent has been rising year on year. 

Though the scales are totally different, FoodCloud is a bit like Amazon. Both are first and foremost logistics companies. By investing heavily in software and physical infrastructure, they’ve both established themselves in the centre of their markets. 

Growing internationally

Rethink Ireland’s remit was to build FoodCloud’s capacity in Ireland only, but it realised it could do this better if it helped it achieve its international ambitions. Yet Rethink Ireland was conscious it was being funded by the state’s dormant accounts money, which was ringfenced to tackle disadvantage in Ireland. 

Rethink Ireland, Mortell said, understood FoodCloud’s need to grow outside Ireland. 

“They're a classic tech company where, if you invest in the core of the organisation, it benefits everything,” she said. “You can't really say, well, this tech is for Ireland and this tech is for the UK… It’s all integrated. 

“In the end, it wasn’t really difficult to track where the money went and to make sure it benefitted Ireland. Our view was, well, if it also helps them to scale globally, that’s great. It’s not our core business, but it helps it.”

“Rethink has an investment mindset. It understands risk is inherent in it,” Ward said. “If you are an early-stage charity with a big vision, you need high-risk investment to get where you want to go. By getting better at what we did in Ireland, we were also becoming able to scale overseas.

“Charities often end up chasing very project-based funding.  You get funding for delivering a low-risk proven project so that’s the cycle you’re stuck in. There’s no money to innovate and take a risk.  

“Our platform needed to be much more accessible to other food banks internationally and needed to work across the supply chain, and that fundamentally meant a restructure in how the platform works. These were big decisions that the three-year funding allowed us to do.

“One of the things that’s a challenge for social enterprises is there’s no definition around financial sustainability.”

Aoibheann O’Brien

“We've launched our new platform, which we’ve been building for about a year and a half now. It’s been designed kind of like a social network architecture in that you’ve got a network of businesses, charities, foodbanks, support and can set up private groups. This means it’s inherently a lot more scalable and that we’re not going to deal with an exponential increase in costs and complexity when we grow.”

“The new platform has been designed with scale from the beginning,” she said. “It means that if Tesco is using it in five different countries, they can log in to their global account and see everything.”

“That wasn’t possible before, but now we have the ability to do so, so much more.”

Solutions, supply chains and a ten-year vision

Having built its base in Ireland with the support of Rethink Ireland, FoodCloud now wants to grow both here and overseas.

“We’re working with the Global Food Banking Network to identify food banks internationally that could benefit most from using the technology,” Ward said.

She said working with Rethink Ireland had enabled this international expansion – as well as giving FoodCloud the resilience to survive the pandemic in its Irish home market. 

“The pandemic is like nothing we had ever experienced before in Ireland. But we rose to it and responded. We could not have done that before Rethink Ireland,” Ward said.   

She said FoodCloud was now able to stand on its own financially. “Part of making it a sustainable social enterprise was that the international business could support the Irish business because Ireland is such a small market,” Mortell said. 

From a partner's perspective, Christine Heffernan from Tesco said she could see the difference Rethink Ireland and AIB had made to FoodCloud and it was now ready to bring it into new Central European markets.

“FoodCloud is a very young Irish social enterprise that, to all intents and purposes, has created what potentially could be a global platform for redistributing surplus food in a retail context,” she said.

“One of the things we worked on with Rethink Ireland was achieving a healthy funding mix from both the state, private sector and international partners. We didn’t want to be dependent on one source,” O’Brien explained. “We didn’t want to be over-reliant on fundraising.”

“We wanted to have good traded income from retailers as well. This decade is really important in terms of climate change. Covid-19 has been a big shock to the food system but there’s going to be a lot more shocks to the food system.” 

“Our big focus now is on creating innovative solutions across the supply chain in an Irish context and making sure that we can support Ireland in achieving Ireland’s goals around reduction in food waste by 2030.” 

“We are now part of a global community sharing best practice and technology and want to make a global impact.  That’s the vision.”  

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This is an extract of a full report commissioned by Rethink Ireland and written by Tom Lyons and Sean Keyes. Click here to read the full FoodCloud report.