For a neighbourhood grocer, bakery, café or restaurant, food that does not sell represents a direct financial loss. The business has already paid for the product, brought it into the store, handled it and put it in front of customers. If it reaches the end of its selling window without finding a buyer, much of that investment can disappear.
For independent operators working with tight margins, the impact can be substantial. Renaud LeBlanc, President of Montreal-based FoodHero, said food-related shrink can range from roughly two per cent of sales among strong operators to five per cent or higher in some businesses.
“The rule of thumb we often hear is that the cost of shrink can be similar to the net profit at the end of the year,” said LeBlanc. “When you have a solution that can put a serious dent in that shrink, it can significantly impact profitability.”
The scale of food waste across Canada is significant. Research released in 2024 by Second Harvest and Value Chain Management International found that 46.5 per cent of food produced for Canada is lost or wasted. Of that, 41.7 per cent is considered avoidable, with an estimated annual value of $58 billion.
FoodHero has spent the past several years addressing part of that problem at the retail level. Its technology platform allows retailers to sell surplus and short-dated food to consumers at reduced prices, helping merchants recover revenue from inventory that could otherwise become a write-off. After establishing the model with some of Canada’s largest grocery retailers, FoodHero is now expanding its offering to independent businesses.
The Economics Behind Food Waste
Surplus is difficult to eliminate entirely in food retail because merchants constantly have to balance inventory levels against unpredictable demand.
A produce department with abundant displays tends to be more appealing than one with only a handful of products remaining. The same applies to meat, bakery, prepared foods and other fresh categories. Retailers need enough inventory to give customers choice and avoid missing sales, but predicting exactly how much will sell is difficult.
“The grocery business is always trying to manage having shelves full enough to be attractive without wasting food,” said LeBlanc. “You want to maximize the appeal of the store and make sure you’re not missing potential sales, but at the same time you don’t want to order too much.”
FoodHero provides another sales channel when retailers find themselves with excess inventory. The company has worked with major Canadian grocery organizations including Sobeys and Metro since 2019 and now operates across approximately 1,100 stores nationally. LeBlanc said the platform is on track to help Canadian families save close to $50 million this year.
“We have a solution that has proven itself at scale with some of the largest retailers in Canada,” said LeBlanc. “Now we’re offering that solution to independent retailers that want to improve their margins, reduce food waste and gain new customers.”
Bringing the Model to Independent Businesses
A neighbourhood bakery or independent grocer operates very differently from a national supermarket network. Some of the businesses FoodHero is targeting may have only one, two or three people working in the store, leaving little time for additional administrative work.
That made simplicity an important part of FoodHero’s independent merchant program. The company tested the model with roughly 30 Montreal-area merchants, paying particular attention to the amount of work required to use the platform and whether customers would buy the products being listed.
“For a small independent retailer, the solution has to be extremely easy to use,” said LeBlanc. “They don’t have hours to spend adding inventory. We had to make sure the operational side worked for the merchant and that the inventory would sell.”
FoodHero allows independent merchants to choose how surplus products appear on the platform. Businesses can create surprise bags based around categories such as bakery, produce, deli or cheese, or they can list individual products for customers who prefer to know exactly what they are purchasing.
The company has focused on fitting the technology into existing store operations. LeBlanc said one of the metrics FoodHero watches closely is the amount of labour required to generate additional sales.
“One metric we’re obsessed with is the number of hours required to generate additional sales,” he said. “We’ve been able to scale with large retailers because the technology is simple to use and fits into the routines they already have in the store. That same principle is even more important for independents.”
Turning Surplus Into Revenue
Early results from FoodHero’s independent program indicate strong demand for the inventory merchants put on the platform.
LeBlanc said a previously cited 75 per cent sell-through rate is now on the low side, with participating merchants generally selling most of what they list.
“The last thing we want is for a merchant to spend time putting together a surprise bag or uploading inventory and then have it not sell,” he said. “We’re very happy with what we’re seeing on the demand side. Almost everything sells.”
For smaller businesses, those recovered sales can add up. LeBlanc said bakeries and similar independent merchants using FoodHero are currently generating approximately $1,000 to $2,000 in additional revenue per month, depending on the size of the operation. He said that can amount to roughly $15,000 to $20,000 annually for some businesses.
These sales come from products already sitting in the merchant’s inventory that risked becoming a loss if they could not be sold in time. For an operator dealing with food shrink of several percentage points, recovering part of that value can have a meaningful impact.
FoodHero expects its independent network to grow quickly following the pilot. LeBlanc said the company is working toward having several hundred independent retailers operating on the platform by the end of 2026. Independent grocery stores, bakeries and cafés have joined, while FoodHero is seeing growing interest from restaurants and even florists, where perishable inventory presents a similar challenge.
Finding New Customers Through Surplus
FoodHero can also give participating businesses exposure to customers who may not have encountered them before.
The platform has reached approximately two million Canadian users since launching. For an independent business with a limited marketing budget, that creates another way to put the store in front of potential customers.
“They gain visibility on the app, and they gain new customers when those customers come in to pick up their orders,” said LeBlanc. “We also see additional purchases happening when people are in the store.”
A FoodHero order can become a customer’s first visit to a bakery, restaurant or independent grocer. Some customers make additional purchases when collecting their orders, giving merchants an opportunity to generate sales beyond the original transaction and introduce shoppers to the broader business.
The model also comes at a time when Canadian households remain sensitive to food prices. Consumers can purchase products at reduced prices, while merchants have another opportunity to generate revenue before the inventory becomes unsellable.
How Much Food Waste Can Retailers Eliminate?
FoodHero’s experience with large grocery retailers provides some indication of how far surplus recovery can go.
LeBlanc said some of the strongest-performing stores in FoodHero’s network have dramatically reduced food waste by combining surplus sales with donations.
“Our best stores are getting very close to eliminating food waste in the categories we can address,” he said. “They monetize what they can through FoodHero, and because much of the remaining product has been frozen, it can then be directed to food banks.”
According to LeBlanc, the most performing stores can sell more than $250,000 worth of surplus inventory annually through FoodHero.
There are practical limits, particularly with produce and products that cannot easily be preserved or redistributed. LeBlanc does not suggest that every store can eliminate all food waste, but the results at some of FoodHero’s strongest locations show how much surplus can potentially be recovered.
FoodHero is also working with retailers on longer-shelf-life products that approach or pass a best-before date. Some retailers have internal standards requiring products to be removed from regular shelves even when they can legally continue to be sold and remain suitable for consumption.
The company is exploring a larger role as a liquidation channel for these products, giving retailers another opportunity to recover value from inventory before it leaves the commercial system.
More Room to Grow in Canada
FoodHero was founded by technology entrepreneur Jonathan Defoy after he became interested in the scale of food waste and began developing a technology-based solution. LeBlanc, an entrepreneur with experience in the food business, later joined Defoy as the company developed the platform that launched commercially in 2019.
Working with major grocery partners has allowed FoodHero to build its retailer network and Canadian consumer base. The company sees opportunities to expand within stores already using the platform while adding independent merchants across the country.
That includes introducing additional departments and product categories, helping store teams handle overstocks and short-dated products, and continuing to simplify the process of putting surplus inventory onto the marketplace.
LeBlanc said FoodHero wants to add at least 2,000 additional retailers in Canada by the end of 2027. Canada remains the immediate priority, although the company is beginning to examine an entry into selected U.S. markets in 2027.
There is still considerable room to grow in Canada. FoodHero is working to bring more merchants onto the platform while helping existing grocery partners recover a larger share of their surplus inventory.
For independent food businesses, products that go unsold have already cost the merchant money. Recovering $1,000 or $2,000 a month from that inventory can make a difference for a small operator, particularly when the platform can also introduce new customers to the business.
Across FoodHero’s growing network, those individual transactions also keep usable food from going to waste. For merchants, the opportunity is to recover revenue that might otherwise be lost. For consumers, it means access to food at lower prices. And for FoodHero, there remains a sizeable pool of surplus inventory across Canada that can still be put to use.
Visit the FoodHero website to learn more.
